Apple 2015 Annual Report Download - page 64

Note 9 – Benefit Plans
2014 Employee Stock Plan
In the second quarter of 2014, shareholders approved the 2014 Employee Stock Plan (the “2014 Plan”) and terminated the Company’s
authority to grant new awards under the 2003 Employee Stock Plan (the “2003 Plan”). The 2014 Plan provides for broad-based equity
grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock
options and stock appreciation rights, as well as cash bonus awards. RSUs granted under the 2014 Plan generally vest over 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 RSUs granted under the 2014 Plan reduces the number of shares available for grant under the plan by two
shares. RSUs cancelled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under
the 2014 Plan utilizing a factor of two times the number of RSUs cancelled or shares withheld. Currently, all RSUs granted under the 2014
Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common
stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are
accumulated and paid when the underlying shares vest. Upon approval of the 2014 Plan, the Company reserved 385 million shares plus
the number of shares remaining that were reserved but not issued under the 2003 Plan. Shares subject to outstanding awards under the
2003 Plan that expire, are cancelled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will
also be available for awards under the 2014 Plan. As of September 26, 2015, approximately 442.9 million shares were reserved for future
issuance under the 2014 Plan.
2003 Employee Stock Plan
The 2003 Plan is a shareholder approved plan that provided for broad-based equity grants to employees, including executive officers. The
2003 Plan permitted 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. All RSUs, other than RSUs held by the Chief Executive Officer,
granted under the 2003 Plan have DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding
unvested RSUs. DERs are accumulated and paid when the underlying shares vest. In the second quarter of 2014, the Company
terminated the authority to grant new awards 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 DERs. DERs
are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid
when the underlying shares vest. As of September 26, 2015, approximately 1.2 million shares were reserved for future issuance under the
Director Plan.
Rule 10b5-1 Trading Plans
During the fourth quarter of 2015, Section 16 officers Timothy D. Cook, Angela Ahrendts, Luca Maestri, Daniel Riccio, Philip Schiller and
Jeffrey Williams 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 26, 2015, approximately 53.0 million shares were reserved for future issuance under the Purchase Plan.
Apple Inc. | 2015 Form 10-K | 62