Apple 2005 Annual Report Download - page 110

applicable NASDAQ rules. There were no interlocks or insider participation between any member of the Board or Compensation Committee
and any member of the board of the directors or compensation committee of another company.
Arrangements with Named Executive Officers
Change In Control Arrangements—Stock Options, Restricted Stock, and Restricted Stock Units
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 fully exercisable, 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 outstanding options held by non-employee directors will automatically become fully 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, restricted stock grants, and restricted stock units 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, restricted stock, and
restricted stock units outstanding that are not yet vested as of the date of such “change in control” shall become fully vested. Further, restricted
stock and restricted stock units granted to the Named Executive Officers also provide that, in the event the Company terminates the Officer
without cause at any time, the restricted stock units and restricted stock will vest in full. 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 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of October 31, 2005 (the “ Table Date ”) with respect to the beneficial ownership of the
Company’s Common Stock by (i) each person the Company believes beneficially holds more than 5% of the outstanding shares of Common
Stock; (ii) each director; (iii) each Named Executive Officer listed in the Summary Compensation Table under the heading “ Executive
Compensation; ” and (iv) all directors and executive officers as a group. On the Table Date, 839,776,934 shares of Common Stock were
issued and outstanding. Unless otherwise indicated, all persons named as beneficial owners of Common Stock have sole voting power and sole
investment power with respect to the shares indicated as beneficially owned. In addition, unless otherwise indicated, all persons named below
can be reached at Apple Computer, Inc., 1 Infinite Loop, Cupertino, CA 95014.
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