Apple 2007 Annual Report Download - page 105

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•
Cash bonuses other than the performance
-
based cash incentives under the Performance Bonus Plan and payments under
the patent bonus program
• Severance and change of control arrangements beyond what is available to all U.S. employees (with the exception of
rights to accelerated vesting previously granted as part of equity awards that will fully vest in March 2008)
•
Perquisites or personal benefits that are not available to employees generally
• Guarantees of the value of equity awards
4.
CEO Compensation
Apple's CEO, Steve Jobs, currently holds approximately 5.5 million shares of Apple common stock. Since rejoining Apple in
1997, Mr. Jobs has never sold a share of Apple stock. His last equity grant was awarded in 2003, and vested in full in 2006.
Mr. Jobs currently holds no unvested equity awards. In fiscal 2007, Mr. Jobs's entire compensation consisted of his $1 annual
salary. Because Mr. Jobs's continued leadership is critical to Apple, the Compensation Committee is considering additional
compensation arrangements for him.
Mr. Jobs has received a $1 annual salary since he rejoined Apple in 1997 and began serving as interim CEO. In 1999, Apple
awarded Mr. Jobs an aircraft as an executive bonus in recognition of his outstanding performance during the previous two years.
Mr. Jobs also received two stock option grants, one in 2000 and another in 2001. Mr. Jobs never exercised these grants, and they
were both cancelled in March 2003, when Apple awarded Mr. Jobs a grant of 5 million shares of restricted stock.
The 2003 restricted stock grant required Mr. Jobs to remain employed by Apple for three more years before it vested. This grant,
which increased to 10 million shares when Apple's common stock split in 2005, vested in full in March 2006. After a portion of
these shares was withheld for the payment of taxes, Mr. Jobs received the remaining 5,426,447 shares. Due in large part to
Mr. Jobs's leadership, Apple's stock price (after accounting for a stock split) increased from $7.47 on the March 2003 grant date to
$64.66 on the March 2006 vesting date—more than an eight-fold increase in three years. Under Mr. Jobs's continued leadership,
Apple's stock price increased from $64.66 per share in March 2006 to $189.95 per share as of October 31, 2007—a three-fold
increase in approximately 18 months.
When he was elected to Apple's Board of Directors in 1997, Mr. Jobs received the standard director's stock option grant for
30,000 shares. Because Mr. Jobs became employed later that year as Apple's interim CEO, he was no longer eligible for such
director grants. When the 1997 director grant (which increased to 120,000 shares after two stock splits) was due to expire in
August 2007, Mr. Jobs exercised the option and he currently holds these 120,000 shares.
D. EXECUTIVE COMPENSATION PROGRAM DESIGN AND IMPLEMENTATION
1.
Team
-
Based Compensation
The compensation program for the named executive officers rests on two assumptions. First, each officer must demonstrate
exceptional personal performance in order to remain part of the executive team. Second, each officer must contribute as a member
of the team to Apple's overall success rather than merely achieve specific objectives within that officer's area of responsibility.
2.
Independent Compensation Committee Determines All Executive Compensation
The Compensation Committee determines all compensation for the named executive officers. All three Committee members are
independent of Apple's management.
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