Apple 2003 Annual Report Download - page 86

(1)
Equity compensation plans not
approved by shareholders
43,343,560
$
19.29
20,689,245
(2)
Total equity compensation plans (3)
62,851,184
$
19.12
49,832,152
(2)
This number includes 4,002,123 shares of common stock reserved for issuance under the Employee Stock Purchase Plan, 310,000
shares available for issuance under the 1997 Director Stock Option Plan and 24,830,784 shares available for issuance under the 2003
Employee Stock Plan. It does not include shares under the 1990 Stock Option Plan which was terminated in 1997. No new options can
be granted under the 1990 Stock Option Plan.
(2) On October 22, 2003, the Company granted 6,697,368 shares under the 1997 Employee Stock Option Plan (the "1997 Plan") pursuant
to the stock option exchange program (see Part II, Item 8 of this
110
Form 10-K in the Notes to Consolidated Financial Statements at Note 8, under the heading "Employee Stock Option Exchange
Program"). Following that grant, the Company terminated the 1997 Plan, its only non-shareholder approved equity plan. All remaining
unissued shares in that plan were cancelled and no new options can be granted under that plan.
(3) This table does not include 160,975 outstanding options assumed in connection with mergers with and acquisitions of the companies
which originally established those plans. These assumed options have a weighted average exercise price of $3.69 per share. No
additional options may be granted under those assumed plans.
Arrangements with Named Executive Officers
Change In Control Arrangements—Stock Options
In the event of a "change in control" of the Company, all outstanding options under the Company's stock option plans, except the Director Plan,
will, unless otherwise determined by the plan administrator, become exercisable in full, and will be cashed out at an amount equal to the
difference between the applicable "change in control price" and the exercise price. The Director Plan provides that upon a "change in control"
of the Company, all unvested options held by non-employee directors will automatically become fully vested and exercisable and will be
cashed out at an amount equal to the difference between the applicable "change in control price" and the exercise price of the options. A
"change in control" under these plans is generally defined as (i) the acquisition by any person of 50% or more of the combined voting power of
the Company's outstanding securities or (ii) the occurrence of a transaction requiring shareholder approval and involving the sale of all or
substantially all of the assets of the Company or the merger of the Company with or into another corporation.
In addition, options granted to the Named Executive Officers generally provide that in the event there is a "change in control," as defined in the
Company's stock option plans, and if in connection with or following such "change in control," their employment is terminated without
"Cause" or if they should resign for "Good Reason," those options outstanding that are not yet vested and exercisable as of the date of such
"change in control" shall become fully vested and exercisable. Generally, "Cause" is defined to include a felony conviction, willful disclosure
of confidential information or willful and continued failure to perform his or her employment duties. "Good Reason" includes resignation of
employment as a result of a substantial diminution in position or duties, or an adverse change in title or reduction in annual base salary.
Item 13. Certain Relationships and Related Transactions
In connection with a relocation assistance package, the Company loaned Mr. Johnson (Senior Vice President, Retail) $1,500,000 for the
purchase of his principal residence. The loan is secured by a deed of trust and is due and payable in May 2004. Under the terms of the loan,
Mr. Johnson agreed that should he exercise any of his stock options prior to the due date of the loan, he would pay the Company an amount
equal to the lesser of (1) an amount equal to 50% of the total net gain realized from the exercise of the options; or (2) $375,000 multiplied by
the number of years between the exercise date and the date of the loan. The largest amount of the indebtedness outstanding on this loan during
fiscal year 2003 was $1,500,000. Mr. Johnson repaid the Company $750,000 during the fiscal year and the amount remaining on the loan is
$750,000.
Mr. Jerome York, a member of the Board of Directors of the Company, is a member of an investment group that purchased
MicroWarehouse, Inc. (" MicroWarehouse"
) in January 2000. Until September 2003, he served as its Chairman, President and Chief Executive
Officer. MicroWarehouse is a reseller of computer hardware, software and peripheral products, including products made by the Company.
During fiscal year 2003, MicroWarehouse accounted for 2.4% of the Company's net sales. The Company also purchased products from
MicroWarehouse for its own internal use.