Apple 2006 Annual Report Download - page 105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8—Shareholders’ Equity (Continued)
1997 Director Stock Option Plan
In August 1997, the Company’s Board of Directors adopted a Director Stock Option Plan (“Director Plan”) for non-employee directors of the
Company, which was approved by shareholders in 1998. Pursuant to the Director Plan, the Company’s non-employee directors are granted an
option to acquire 30,000 shares of Common Stock upon their initial election to the Board (“Initial Options ” ). The Initial Options vest and
become exercisable in three equal annual installments on each of the first through third anniversaries of the grant date. On the fourth
anniversary of a non-employee director’s initial election to the Board and on each subsequent anniversary thereafter, the director will be
entitled to receive an option to acquire 10,000 shares of Common Stock (“Annual Options”). Annual Options are fully vested and immediately
exercisable on their date of grant.
Rule 10b5
-1 Trading Plans
Certain of the Company’s executive officers, including Mr. Timothy D. Cook, Mr. Peter Oppenheimer, Mr. Philip W. Schiller, and
Dr. Bertrand Serlet, 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 of
$25,000 in any calendar year. The number of shares authorized for issuance is limited to a total of 1 million shares per offering period. During
2006, 2005, and 2004, adjusted for the February 2005 stock split, 1.5 million, 2.3 million, and 3.9 million shares, respectively, were issued
under the Purchase Plan. As of September 30, 2006, approximately 2.3 million shares were reserved for future issuance under the Purchase
Plan.
Employee Savings Plan
The Company has an employee savings plan (the “Savings Plan”) qualifying as a deferred salary arrangement under Section 401(k) of the
Internal Revenue Code. Under the Savings Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the Internal
Revenue Service annual contribution limit ($15,000 for calendar year 2006). The Company matches 50% to 100% of each employee’s
contributions, depending on length of service, up to a maximum 6% of the employee’s earnings. The Company’s matching contributions to the
Savings Plan were approximately $33 million, $28 million, and $24 million in 2006, 2005, and 2004, respectively.
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