Apple 2013 Annual Report Download - page 71

Note 9 – Benefit Plans
Stock Plans
2003 Employee Stock Plan
The 2003 Employee Stock Plan (the “2003 Plan”) is a shareholder approved plan that provides for broad-based
equity grants to employees, including executive officers. The 2003 Plan permits the granting of incentive stock
options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-
based awards. Options granted under the 2003 Plan generally expire seven to ten years after the grant date and
generally become exercisable over a period of four years, based on continued employment, with either annual,
semi-annual or quarterly vesting. RSUs granted under the 2003 Plan generally vest over two to four years, based
on continued employment and are settled upon vesting in shares of the Company’s common stock on a one-for-
one basis. Each share issued with respect to an award granted under the 2003 Plan (other than a stock option or
stock appreciation right) reduces the number of shares available for grant under the plan by two shares, whereas
shares issued in respect of an option or stock appreciation right count against the number of shares available for
grant on a one-for-one basis. All RSUs, other than RSUs held by the Chief Executive Officer, granted under the
2003 Plan have dividend equivalent rights (“DER”), which entitle holders of RSUs to the same dividend value
per share as holders of common stock. DER are subject to the same vesting and other terms and conditions as the
corresponding unvested RSUs. DER are accumulated and paid when the underlying shares vest. As of
September 28, 2013, approximately 28.3 million shares were reserved for future issuance under the 2003 Plan.
1997 Director Stock Plan
The 1997 Director Stock Plan (the “Director Plan”) is a shareholder approved plan that (i) permits the Company
to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic
initial grants of RSUs upon a non-employee director joining the Board of Directors and automatic annual grants
of RSUs at each annual meeting of shareholders, and (iii) permits the Board of Directors to prospectively change
the relative mixture of stock options and RSUs for the initial and annual award grants and the methodology for
determining the number of shares of the Company’s common stock subject to these grants without shareholder
approval. Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares
available for grant under the plan by two shares. The Director Plan expires November 9, 2019. All RSUs granted
under the Director Plan are entitled to DER. As of September 28, 2013, approximately 176,000 shares were
reserved for future issuance under the Director Plan.
Rule 10b5-1 Trading Plans
During the fourth quarter of 2013, executive officers Timothy D. Cook, Peter Oppenheimer, D. Bruce Sewell,
Philip W. Schiller, Daniel Riccio and Jeffrey E. Williams and director William V. Campbell had equity trading
plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity 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 shares acquired pursuant to the Company’s
employee and director equity plans.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder approved plan under which
substantially all employees may purchase the Company’s common stock through payroll deductions at a price
equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month
offering periods. An employee’s payroll deductions under the Purchase Plan are limited to 10% of the
employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar
year. As of September 28, 2013, approximately 1.8 million shares were reserved for future issuance under the
Purchase Plan.
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