Apple 2004 Annual Report Download - page 95

either annual or quarterly vesting. The 2003 Plan permits the granting of incentive stock options, nonstatutory stock options, restricted stock
units, stock appreciation rights, and stock purchase rights.
1997 Employee Stock Option Plan
In August 1997, the Company's Board of Directors approved the 1997 Employee Stock Option Plan (the 1997 Plan), a non-
shareholder approved
plan for grants of stock options to employees who are not officers of the Company. Based on the terms of individual option grants, options
granted under the 1997 Plan generally expire 7 to 10 years after the grant date and generally become exercisable over a period of 4 years, based
on continued employment, with either annual or quarterly vesting. As a result of shareholder approval of amendments to the 1998 Executive
Officer Stock Plan in April 2003, the Company terminated the 1997 Employee Stock Option Plan and cancelled all remaining unissued shares
totaling 14,295,351 following the completion of an employee stock option exchange program in October 2003.
Employee Stock Option Exchange Program
On March 20, 2003, the Company announced a voluntary employee stock option exchange program (the Exchange Program) whereby eligible
employees, other than executive officers and members of the Board of Directors, had an opportunity to exchange outstanding options with
exercise prices at or above $25.00 per share for a predetermined smaller number of new stock options issued with exercise prices equal to the fair
market value of one share of the Company's common stock on the day the new awards are issued, which was to be at least six months plus one
day after the exchange options are cancelled. On April 17, 2003, in accordance with the Exchange Program, the Company cancelled options to
purchase 16,569,193 shares of its common stock. On October 22, 2003, new stock options totaling 6,697,368 shares were issued to employees at
an exercise price of $22.76 per share, which is equivalent to the closing price of the Company's stock on that date. No financial or accounting
impact to the Company's financial position, results of operations or cash flow was associated with this transaction.
1997 Director Stock Option Plan
In August 1997, the Company's Board of Directors adopted a shareholder approved Director Stock Option Plan (DSOP) for non-employee
directors of the Company. Initial grants of 30,000 options under the DSOP vest in three equal installments on each of the first through third
anniversaries of the date of grant, and subsequent annual grants of 10,000 options are fully vested at grant.
Rule 10b5
-1 Trading Plans
Certain of the Company's executive officers, including Mr. Timothy D. Cook, Mr. Jonathan Rubinstein, Mr. Bertrand Serlet, and Mr. Avadis
Tevanian, Jr., have entered into trading plans pursuant to Rule 10b5-1(c)(1) of the Securities Exchange Act of 1934, as amended. A trading plan
is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future
purchases or sales of the Company's stock including the exercise and sale of employee stock options and shares acquired pursuant to the
Company's employee stock purchase plan and upon vesting of restricted stock units.
Employee Stock Purchase Plan
The Company has a shareholder approved employee stock purchase plan (the Purchase Plan), under which substantially all employees may
purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market values as of the beginning and end of
six month offering periods. Stock purchases under the Purchase Plan are limited to 10% of an employee's compensation, up to a maximum
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