Apple 2007 Annual Report Download - page 109

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Percentage of Salary Payable As Performance-Based Cash Incentives
The performance goals are aggressive. Thus, there is considerable risk that payments will not be made at all or will be made at
less than 100%. For the past three years, the performance goals have reflected double-digit growth in both revenue and operating
income. In four of the past eight years, Apple did not meet one or both performance goals. This uncertainty ensures that any
payments under the plan are truly performance-based, consistent with the plan's objectives.
At the end of the year, the Committee determines the amount of the award to be paid to each officer by comparing actual results
to the performance goals. The Committee may, in its discretion, reduce (but not increase) the amount of any individual award
based on the officer's overall performance. The plan does not provide for the adjustment or recovery of an award paid to a named
executive officer if the results in a previous year are subsequently restated or adjusted in a manner that would have originally
resulted in a smaller award.
5.
Revenue
Operating Income
Below Objective
Meet Objective
Above Objective
Below Objective
0
%
25
%
up to 50
%
Meet Objective
25
%
50
%
up to 75
%
Above Objective
up to 50
%
up to 75
%
up to 100
%
The Role of Consultants
The Compensation Committee has selected and directly retained the services of Frederic W. Cook & Co., Inc., an executive
compensation consulting firm. No member of the Compensation Committee or any named executive officer has any affiliation
with F.W. Cook. The Committee periodically seeks input from F.W. Cook on a range of external market factors, including
evolving compensation trends, appropriate comparison companies and market survey data. F.W. Cook also provides general
observations on Apple's compensation programs, but it does not determine or recommend the amount or form of compensation
for any executives.
6.
The Role of Peer Groups, Surveys and Benchmarking
With the assistance of F.W. Cook, the Committee identified peer companies for fiscal 2007 that compete with Apple in the labor
and capital markets and that follow similar pay models. The Committee established the two peer groups listed below, one
consisting of large technology companies and another consisting of large retailers. The retail peer group is a relevant comparison
group for the Senior Vice President, Retail Sales; the technology peer group is relevant for the other four named executive
officers.
105
Technology Companies
Retail Companies
Adobe Systems
Amazon.com
Applied Materials
Cisco Systems
Comcast
Dell
eBay
EMC
Google
Hewlett
-
Packard
IBM
Intel
Microsoft
Motorola
Oracle
Qualcomm
Sprint Nextel
Sun Microsystems
Texas Instruments
Xerox
The Gymboree Corporation
Limited Brands
Nike
Polo Ralph Lauren
Restoration Hardware
Sharper Image
Target
Tiffany & Co.
Tween Brands
Wal
-
Mart