UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Apple Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Apple Inc.
Notice of 2019 Annual Meeting of Shareholders and Proxy Statement
In this Proxy Statement, the terms “Apple,” “we,” and “our” refer to Apple Inc. Information presented in this Proxy Statement is based on Apple’s fiscal calendar, other than references to particular years in the biographies of our directors and executive officers, which refer to calendar years. The information contained onapple.com is not incorporated by reference into this Proxy Statement.
These materials were first sent or made available to shareholders on January 8, 2019.
Apple Inc.
Notice of 2019 Annual Meeting of Shareholders | ||||||
Apple Park Cupertino, California 95014 |
9:00 a.m. Pacific Time | |||||
The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are available free of charge atinvestor.apple.com |
Items of Business
(a) | To elect to the Board of Directors the following eight nominees presented by the Board: James Bell, Tim Cook, Al Gore, Bob Iger, Andrea Jung, Art Levinson, Ron Sugar, and Sue Wagner; |
(b) | To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for |
(c) | To vote on an advisory resolution to approve executive compensation; |
(d) | To |
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To transact such other business as may properly come before the Annual Meeting and any |
Record Date
Close of business on December 28, 2015January 2, 2019
Sincerely, |
Katherine Adams Senior Vice President, General Counsel and Secretary |
Cupertino, California January |
Your vote is important. Please exercise your shareholder right to vote.
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement and our Annual Report on Form 10-K before voting. In this Proxy Statement, the terms “Apple,” “we,” and “our” refer to Apple Inc. Unless otherwise stated, all information presented in this Proxy Statement is based on Apple’s fiscal calendar.
2015 FINANCIAL HIGHLIGHTS
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Apple Inc. | 2016 Proxy Statement Summary | i
EXECUTIVE COMPENSATION
For a detailed discussion of our executive compensation program, please see the “Compensation Discussion and Analysis” beginning on page 24 of this Proxy Statement.
Guiding Principles
Team-based approach
Internal equity
Clear performance expectations
Program Design
Simple and effective
Emphasis on long-term equity
Strong alignment with shareholder interests
Elements of 2015 Named Executive Officer Compensation
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2015 Named Executive Officer Target Pay Mix
The chart above shows target dollar values for each element of our named executive officers’ 2015 compensation. Annual cash incentives for 2015 paid out at 200% of target. For more information, please see the Summary Compensation Table on page 35 of this Proxy Statement.
Apple Inc. | 2016 Proxy Statement Summary | ii
APPLE VALUES
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Learn more about Apple Values atapple.comMeeting – Advance Registration Required
The information contained onapple.com is not incorporated by reference into this Proxy Statement.
We are pleased to welcome shareholders to Steve Jobs Theater at Apple Inc. | 2016 Proxy Statement Summary | iii
CORPORATE GOVERNANCE
DuringPark for the past year,2019 Annual Meeting. To make sure we reached outcan accommodate as many attendees as possible, we have established a registration process. Shareholders will need to many of our shareholders regarding corporate governance matters, including proxy access for director nominations. Based on these discussions, Apple adopted proxy access provisions that protect Apple and best serve the interests of our shareholders. For a detailed discussion of our Corporate Governance framework, please refer to “Directors, Corporate Governance, and Executive Officers”register in advance atproxyvote.com beginning on page 10 of this Proxy Statement.
Adopted Proxy Access for Director Nominations
Ownership threshold of 3%
Holding period of 3 years
May submit nominees consisting of up to 20% of our Board
Up to 20 shareholders may group together to reach 3% ownership threshold
Enhances Strong Shareholder Rights
Majority voting in uncontested elections
Shareholders may call special meetings
Board has no “blank check” authority to issue preferred stock
BOARD OF DIRECTORS AND COMMITTEES
Director Since (calendar year) | Audit | Compensation | Nominating | |||||
James Bell
| 2015 | Member | – | – | ||||
Tim Cook Chief Executive Officer | 2011 | – | – | – | ||||
Al Gore
| 2003 | – | Member | Member | ||||
Bob Iger
| 2011 | – | Member | Chair | ||||
Andrea Jung
| 2008 | – | Chair | Member | ||||
Art Levinson Chairman of the Board | 2000 | Member | – | – | ||||
Ron Sugar
| 2010 | Chair | – | – | ||||
Sue Wagner | 2014 | Member | – | – |
ANNUAL MEETING PROPOSALS
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Apple Inc. | 2016 Proxy Statement Summary | iv
Apple Inc. | 2016 Proxy Statement
Apple Inc. | 2016 Proxy Statement
Why am I receiving these materials?
Apple has prepared these materials for our 2016 annual meeting of shareholders (the “Annual Meeting”) to be held on Friday, February 26, 2016 at 9:8:00 a.m. Pacific Time. Apple is soliciting proxies for use at the Annual Meeting, including any postponements or adjournments.
The Annual MeetingTime on February 6, 2019 and registration will be held in Building 4 (Town Hall) of Apple’s principal executive offices located at 1 Infinite Loop, Cupertino, California, 95014. You are invited to attend the Annual Meeting and requested to vote on the proposals described in this proxy statement (the “Proxy Statement”).
These materials were first sent or made available to shareholders on January 6, 2016.
What is included in these proxy materials?
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If you requested printed versions by mail, these proxy materials also include the proxy card or voting instruction form for the Annual Meeting.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In accordance with SEC rules, Apple uses the Internet as the primary means of furnishing proxy materials to shareholders. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders with instructions on how to access the proxy materials over the Internet or request a printed copy of the materials, and for voting over the Internet.
Shareholders may follow the instructions in the Notice to elect to receive future proxy materials in print by mail or electronically by email. We encourage shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings, and reduce the cost to Apple associated with the printing and mailing of materials.
Apple’s proxy materials are also available atinvestor.apple.com. This website address is included for reference only. The information contained on Apple’s website is not incorporated by reference into this Proxy Statement.
What items will be voted on at the Annual Meeting?
There are eight items that shareholders may vote on at the Annual Meeting:
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Apple Inc. | 2016 Proxy Statement | 1
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Will any other business be conducted at the meeting?
Other than the proposals referred to in this Proxy Statement, Apple knows of no other matters to be submitted to the shareholders at the Annual Meeting. If any other matters properly come before the shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote upon such matters in accordance with their best judgment.
What are the Board’s voting recommendations?
The Board recommends that you vote your shares:
• “FOR” election of each of the nominees named in this Proxy Statement to the Board (Proposal No. 1);
• “FOR” ratification of the appointment of Ernst & Young LLP as Apple’s independent registered public accounting firm for 2016 (Proposal No. 2);
• “FOR” approval of the advisory resolution to approve Apple’s executive compensation (Proposal No. 3);
• “FOR” approval of the amended and restated Apple Inc. 2014 Employee Stock Plan (Proposal No. 4); and
• “AGAINST” each of the proposals submitted by shareholders (Proposals No. 5 through No. 8).
Who may vote at the Annual Meeting?
Each share of Apple’s common stock has one vote on each matter. Only shareholders of record as of the close of business on December 28, 2015 (the “Record Date”) are entitled to receive notice of, to attend, and to vote at the Annual Meeting. As of the Record Date, there were 5,544,487,000 shares of Apple’s common stock issued and outstanding, held by 26,000 holders of record. In addition to shareholders of record of Apple’s common stock, beneficial owners of shares held in street name as of the Record Date can vote using the methods described below.
Apple Inc. | 2016 Proxy Statement | 2
What is the difference between a shareholder of record and a beneficial owner of shares held in street name?
Shareholder of Record. If your shares are registered directly in your name with Apple’s transfer agent, Computershare Trust Company, N.A. (“Computershare”), you are the shareholder of record with respect to those shares, and the Notice was sent directly to you by Apple.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and a Notice was forwarded to you by that organization. As a beneficial owner, you have the right to instruct your broker, bank, trustee, or nominee how to vote your shares.
If I am a shareholder of record of Apple’s shares, how do I vote?
If you are a shareholder of record, there are four ways to vote:
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If I am a beneficial owner of shares held in street name, how do I vote?
If you are a beneficial owner of shares held in street name, there are four ways to vote:
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You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot from an usher when you arrive. You must also bring valid photo identification such as a driver’s license or passport. In order for your vote to be counted, you must hand both the copy of the legal proxy and your completed ballot to an usher to be provided to the inspector of election.
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What is the quorum requirement for the Annual Meeting?
A majority of the shares entitled to vote at the Annual Meeting must be present at the Annual Meeting in person or by proxy for the transaction of business. This is called a quorum. Your shares will be counted for purposes of determining if there is a quorum if you:
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If a quorum is not present, we may propose to adjourn the Annual Meeting to solicit additional proxies.
How are proxies voted?
All shares represented by valid proxies received prior to the taking of the vote at the Annual Meeting will be voted and, where a shareholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder’s instructions.
What happens if I do not give specific voting instructions?
Shareholders of Record. If you are a shareholder of record and you:
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then the persons named as proxy holders, Luca Maestri and Bruce Sewell, will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name.If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions then, under applicable rules, the organization that holds your shares may generally vote your shares in their discretion on “routine” matters but cannot vote on “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
Apple Inc. | 2016 Proxy Statement | 4
Which proposals are considered “routine” or “non-routine”?
The ratification of the appointment of Ernst & Young LLP as Apple’s independent registered public accounting firm for 2016 (Proposal No. 2) is considered a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected in connection with Proposal No. 2.
Each of the other proposals, including the election of directors (Proposal No. 1), the advisory resolution approving Apple’s executive compensation (Proposal No. 3), the proposal to approve the amended and restated Apple Inc. 2014 Employee Stock Plan (Proposal No. 4), and each of the shareholder proposals (Proposals No. 5 through No. 8), are considered non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore broker non-votes may exist in connection with Proposal No. 1 and Proposals No. 3 through No. 8.
What is the voting requirement to approve each of the proposals?
With respect to the election of directors (Proposal No. 1), Apple’s bylaws provide that in an uncontested election of directors the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum is required to elect a director.
An “uncontested election of directors” means an election of directors in which, at the expiration of the later of the time fixed for nomination of director candidates pursuant to the advance notice and proxy access provisions in Apple’s bylaws, the number of candidates for election does not exceed the number of directors to be elected by the shareholders at that election. Also, under Apple’s bylaws, the term of any incumbent director who (1) does not receive the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum, and (2) has not earlier resigned, will end on the date that is the earlier of (a) 90 days after the date on which the voting results for the Annual Meeting are determined by the inspector of election, or (b) the date on which the Board selects a person to fill the office held by that director in accordance with Apple’s bylaws.
Approval of Proposals No. 2 through No. 8 requires, in each case, the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
How are broker non-votes and abstentions treated?
Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Only “FOR” and “AGAINST” votes are counted for purposes of determining the votes received in connection with each proposal. Broker non-votes and abstentions will have no effect on determining whether the affirmative vote constitutes a majority of the shares present or represented by proxy and voting at the Annual Meeting. However, in each case, the affirmative vote of a majority of the shares necessary to constitute a quorum is also required for approval, and therefore broker non-votes and abstentions could prevent the election of a director or the approval of a proposal because they do not count as affirmative votes.
Apple Inc. | 2016 Proxy Statement | 5
In order to minimize the number of broker non-votes, Apple encourages you to provide voting instructions on each proposal to the organization that holds your shares by carefully following the instructions provided in the Notice and the voting instruction form.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the taking of the vote at the Annual Meeting. Prior to the applicable cutoff time, you may change your vote using the Internet or telephone methods described above, in which case only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted. You may also revoke your proxy and change your vote by signing and returning a new proxy card or voting instruction form dated as of a later date, or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you properly vote at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to Apple’s Secretary at 1 Infinite Loop,MS: 301-4GC, Cupertino, California 95014, prior to the Annual Meeting.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Apple or to third parties, except:
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If you write comments on your proxy card or ballot, the proxy card or ballot may be forwarded to Apple’s management and the Board to review your comments.
Who will serve as the inspector of election?
A representative from Computershare will serve as the inspector of election.
Where can I find the voting results of the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote at the Annual Meeting. Apple will publish the final voting results in a Current Report on Form 8-K within four business days following the Annual Meeting.
What is the deadline to propose matters for consideration at the 2017 annual meeting of shareholders?
Proposals to Be Considered for Inclusion in Apple’s Proxy Materials. A proposal that a shareholder intends to present at the 2017 annual meeting of shareholders and wishes to be considered for inclusion in
Apple Inc. | 2016 Proxy Statement | 6
Apple’s proxy materials must be received no later than September 8, 2016. All proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Other Proposals to Be Brought Before the 2017 Annual Meeting of Shareholders. Notice of any proposal that a shareholder intends to present at the 2017 annual meeting of shareholders, but does not intend to have included in Apple’s proxy materials, must be received no earlier than October 29, 2016, and no later than November 28, 2016. The notice must be submitted by a shareholder of record and must set forth the information required by Apple’s bylaws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
What is the deadline to nominate individuals for election as directors at the 2017 annual meeting of shareholders?
Director Nominations for Inclusion in Apple’s Proxy Materials (Proxy Access).We recently amended Apple’s bylaws to permit a shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of Apple stock representing an aggregate of at least 3% of our outstanding shares, to nominate and include in Apple’s proxy materials director nominees constituting up to 20% of Apple’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in Apple’s bylaws. Notice of proxy access director nominees must be received no earlier than August 9, 2016, and no later than September 8, 2016.
Director Nominations to Be Brought Before the 2017 Annual Meeting of Shareholders.Director nominations that a shareholder intends to present at the 2017 annual meeting of shareholders, but does not intend to have included in Apple’s proxy materials, must be received no earlier than October 29, 2016 and no later than November 28, 2016. The notice must be submitted by a shareholder of record and must set forth the information required by Apple’s bylaws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
Where should I send proposals and director nominations for the 2017 annual meeting of shareholders?
Shareholder proposals and director nominations must be delivered to Apple’s Secretary by mail at 1 Infinite Loop, MS: 301-4GC, Cupertino, California 95014, or by email atshareholderproposal@apple.com and received by Apple’s Secretary by the dates set forth above.
I share an address with another shareholder, and we received only one paper copy of the proxy materials. How can I obtain an additional copy of the proxy materials?
Apple has adopted an SEC-approved procedure called “householding.” Under this procedure, Apple may deliver a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple shareholders who share the same address unless Apple has received contrary instructions from one or more of the shareholders. This procedure reduces the environmental impact of Apple’s annual meetings, and reduces Apple’s printing and mailing costs. Shareholders who participate in householding will continue to receive separate proxy cards. Upon written or oral request, Apple will deliver promptly a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to any shareholder at a shared address to which Apple delivered a single copy of any of these documents.
Apple Inc. | 2016 Proxy Statement | 7
To receive, free of charge, a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or separate copies of any future notice, proxy statement or annual report, shareholders may write or call Apple at the following:
Apple Investor Relations
1 Infinite Loop MS: 301-4IR
Cupertino, California 95014
(408) 974-3123
If you are receiving more than one copy of the proxy materials at a single address and would like to participate in householding, please contact Apple using the mailing address and phone number above. Shareholders who hold shares in “street name” may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.
What is Apple’s fiscal year?
Apple’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. Unless otherwise stated, all information presented in this Proxy Statement is based on Apple’s fiscal calendar.
Who is paying the costs of this proxy solicitation?
Apple is paying the costs of the solicitation of proxies. Apple has retained Georgeson Inc. to assist in the distribution of proxy materials and the solicitation of proxies from brokerage firms, banks, broker-dealers and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson Inc. a fee of approximately $15,000 plus out-of-pocket expenses. Georgeson Inc. may be contacted at (866) 828-4304.
Apple must also pay brokerage firms, banks, broker-dealers and other similar organizations representing beneficial owners certain fees associated with:
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In addition to solicitations by mail, the proxy solicitor and Apple’s directors, officers, and employees, without additional compensation, may solicit proxies on Apple’s behalf in person, by telephone, or by electronic communication.
Where are Apple’s principal executive offices located and what is Apple’s main telephone number?
Apple’s principal executive offices are located at 1 Infinite Loop, Cupertino, California 95014. Apple’s main telephone number is (408) 996-1010.
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How can I attend the Annual Meeting?
first-come, first-served basis. Only shareholders as of the Record Date are entitledwho have registered in advance and have a valid confirmation of registration will be admitted to the meeting. Please note that due to space constraints and security concerns, we will not be able to provide access to the Apple campus to any shareholders who have not registered in advance.
Your proxy materials will include a unique control number to be used atproxyvote.com to vote your shares and register to attend the meeting. If you have any questions aboutproxyvote.com or your control number, please contact the bank, broker, or other organization that holds your shares. The availability of online voting may depend on the voting procedures of the organization that holds your shares.
No recording is allowed at the Annual Meeting. Admission will be on a first-come, first-served basis. Admission will begin at 7:30 a.m. Pacific Time onThis includes photography, audio recording, and video recording. In addition, the Annual Meeting date. Each shareholder must present valid photo identification such as a driver’s license or passport and, if asked, provide proof of stock ownership as of the Record Date. The use of mobile phones, pagers, recording or photographic equipment, tablets, or computers is not permitted atstrictly prohibited. Attendees are welcome to visit the Apple Park Visitor Center after the Annual Meeting.Meeting, but we are not able to accommodate tours of the campus.
Even if you successfully register and plan on attending the Annual Meeting in person, we encourage you to vote your shares in advance using one of the methods outlineddescribed in this Proxy Statement to ensure that your vote will be represented at the Annual Meeting. We reserve the right to revoke admission privileges or to eject an attendee for behavior likely to cause damage, injury, disruption, or annoyance or for failure to comply with reasonable requests or the rules of conduct for the meeting, including time limits applicable to those in attendance who are permitted to speak.
Apple Inc. | 2019 Proxy Statement
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Apple Inc. | 2019 Proxy Statement
Apple Inc. | 20162019 Proxy Statement
This summary includes the proposals to be acted upon at the Annual Meeting, as well as business highlights from 2018 and executive compensation and corporate governance information. In addition, this summary provides a brief description of Apple’s values.
Apple Inc. | 2019 Proxy Statement | 1
2018 Highlights
Apple’s 2018 financial results broke new records, and we achieved significant milestones across the company.
Financial Performance
2018 net sales set a new all-time record, and both net sales and operating income grew 16% compared to 2017. Earnings per share grew 29% compared to 2017.
Net Sales ($B) | Operating Income ($B) | |||||||
16% Year-over-year growth | 16% Year-over-year growth |
Achievements and Milestones
• | Topped $100 billion in cumulative amounts paid to App Store developers |
• | Held over 18,000 weekly sessions of Today at Apple at our retail stores |
• | Launched Everyone Can Create curriculum to help students of all ages succeed |
• | Achieved 100% renewable energy in our global facilities and launched a fund to invest in clean energy solutions with our suppliers |
• | Signed on as Malala Fund’s first laureate partner to support girls’ education |
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Executive Compensation Program
Our executive compensation program is designed to motivate and reward exceptional performance in a straightforward and effective way, while also recognizing the remarkable size, scope, and success of Apple’s business. The 2018 compensation of our named executive officers has three primary components: annual base salary, annual cash incentive, and long-term equity awards.
Annual Base Salary | • No change from 2017 • $3 million for our CEO and $1 million for our other named executive officers | |
Annual Cash Incentive | • No change in award opportunities from 2017 • Variable cash compensation based on annual net sales and operating income results measured against threshold, target, and maximum performance goals | |
Long-Term Equity Awards | • No change from 2017 to the grant value of time-based RSU awards • Time-based RSUs generally vest over four and one-half years with the first vest date approximately two and one-half years after grant • No change from 2017 to the dollar value used to determine the target number of performance-based RSUs granted; grant date fair value increased by approximately $1.5 million due to a change to align the grant methodology with time-based RSUs • Performance-based RSUs generally vest over a three-year performance period based on Apple’s total shareholder return relative to other S&P 500 companies • Our CEO did not receive an equity award in 2018 and has not received an equity award since 2011 | |
Aligned with Shareholder Interests and Performance | ||
95% Say-on-Pay approval for each of the last three years | • Annual cash incentives are capped and have rigorous performance goals tied to key annual financial results • Long-term equity awards are aligned with long-term shareholder value creation • More than 50% of the equity awards granted to our non-CEO named executive officers in 2018 were performance-based • Shareholders have an annual opportunity to cast an advisory say-on-pay vote, and for each of the past three years have indicated their strong support for our program |
For a detailed discussion of our executive compensation program, please see the section entitled “Compensation Discussion and Analysis” beginning on page 28.
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Corporate Governance
Our corporate governance structure fosters principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance.
Excellence on our Board | • | Separation of the Chairman and CEO roles allows our CEO to focus his time and energy on operating and managing Apple while leveraging our independent Chairman’s experience and perspectives |
Annual elections for all directors so that director terms are not staggered
Majority voting standard for uncontested elections of directors provides accountability to shareholders
Annual board and committee evaluations led by the independent Chairman
All members of the Audit and Finance Committee are financial experts
Progressive Shareholder Rights | • | Single class of shares so that all shareholders have an equal vote |
Proxy access rights allowing up to 20 shareholders owning at least 3% of shares continuously for three years to nominate up to 20% of the Board
Right to call special meetings for shareholders owning at least 10% of outstanding shares
Long-Term Shareholder Alignment | • | Prohibition on short sales, transactions in derivatives, and hedging and pledging of Apple stock by directors and executive officers |
Robust stock ownership guidelines for directors and executive officers
Board of Directors and Committees
Chair Member
Audit and Finance Committee | Compensation Committee | Nominating and Corporate Governance | Independent | # of Other Public Company Boards | ||||||||
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Tim Cook(CEO) | 1 | |||||||||||
Al Gore | ✔ | 0 | ||||||||||
Bob Iger | ✔ | 1 | ||||||||||
Andrea Jung | ✔ | 2 | ||||||||||
Art Levinson(Chairman) | ✔ | 0 | ||||||||||
Ron Sugar | ✔ | 3 | ||||||||||
Sue Wagner | ✔ | 2 |
For a detailed discussion of our corporate governance and directors, please see the section entitled “Corporate Governance” beginning on page 7 and the section entitled “Directors” beginning on page 15.
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Apple Values
Accessibility apple.com/accessibility Apple believes accessibility is a fundamental human right and technology should be accessible to everyone. Our products are powerful and affordable assistive devices, with built-in accessibility features such as VoiceOver, Switch Control, and support for Made for iPhone hearing aids. In 2018, we expanded our Everyone Can Code initiative with resources specifically tailored to support students who are blind, deaf, or have physical motor limitations. | Education apple.com/education For more than 40 years, Apple has worked alongside educators to unleash the creative potential in every student. We launched Everyone Can Create to help bring creative expression into the classroom. And Apple Teacher, our free online professional learning program, helps teachers get the most out of Apple technology. We continue to work closely with schools to raise the bar for what’s possible for learning with technology and to prepare students for a rapidly changing world. | |||
Environment apple.com/environment Apple drives environmental responsibility in product design and manufacturing. In 2018, we reached our goal of powering all of Apple’s global facilities with 100% renewable energy. We’re committed to one day making our products from only recycled or renewable materials. In a major step toward that goal, in October 2018 we introduced Apple’s first product made with a 100% recycled aluminum enclosure. | Inclusion and Diversity apple.com/diversity The strength of our innovation depends on a diverse workforce that is a reflection of the world around us. We’re deeply committed to hiring and promoting more inclusively, fostering a culture that allows people to do their life’s best work, compensating equally, and working to create more access and opportunities. As we continue to grow, we’re striving to better represent the communities we’re a part of and to help break down historical barriers in the tech industry. | |||
Privacy and Security apple.com/privacy Apple believes privacy is a fundamental human right. Every Apple product is designed from the ground up to protect your privacy and security. Great experiences do not have to come at the expense of your privacy and security. Instead, they can support them. In November 2018 we launched our Privacy Portal worldwide so that all our users can manage their data. | Supplier Responsibility apple.com/supplier-responsibility Apple educates and empowers the people in our supply chain and helps preserve our environment’s most precious resources. We set an ambitious goal of providing health education to over one million supply chain employees by 2020. Through our partnerships with suppliers, all final assembly facilities for iPhone are now zero waste certified worldwide. |
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Annual Meeting Proposals
Proposal | Recommendation | |||||||||
1. | Election of Directors | FOR each of the nominees | ||||||||
2. | Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | ||||||||
3. | Advisory Vote to Approve Executive Compensation | FOR | ||||||||
4. | Shareholder Proposal Shareholder Proxy Access Amendments | AGAINST | ||||||||
5. | Shareholder Proposal True Diversity Board Policy | AGAINST |
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Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on aday-to-day basis and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
The Board believes that Apple’s governance structure fosters principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance. Apple’s key governance documents, including our Corporate Governance Guidelines, are available athttps://investor.apple.com/investor-relations/leadership-and-governance/default.aspx. The Board met four times during 2018, and each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board held during 2018, and (ii) the total number of meetings held by each committee of the Board on which such member served during 2018.
The Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that the Chairs of each committee and all committee members are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), the New York Stock Exchange LLC (“NYSE”), and the Securities and Exchange Commission (“SEC”) for committee memberships. Each committee operates under a written charter adopted by the Board, which is available athttps://investor.apple.com/investor-relations/leadership-and-governance/default.aspx.
Audit Committee
The Audit Committee assists the Board in oversight and monitoring of:
• | Apple’s financial statements and other financial information provided by Apple to its shareholders and others; |
• | Compliance with legal, regulatory, and public disclosure requirements; |
• | The independent auditors, including their qualifications and independence; |
• | Apple’s systems of internal controls, including the internal audit function; |
• | Treasury and finance matters; |
• | Enterprise risk management, privacy, and data security; and |
• | The auditing, accounting, and financial reporting process generally. |
The Audit Committee appoints Apple’s independent registered public accounting firm and reviews the services performed by such firm. The Audit Committee met eight times during 2018.
Compensation Committee
The Compensation Committee reviews and approves the compensation arrangements for the CEO, Apple’s other executive officers, and, to the extent it deems appropriate, other employees; administers Apple’s equity compensation plans; reviews the Board’s compensation; and performs such other duties and responsibilities as
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set forth in its charter. The Compensation Committee’s authority to grant equity awards or to take any other action with respect to equity awards (other than the performance of ministerial duties) may not be delegated to Apple’s management or others. For a description of the Compensation Committee’s processes and procedures, including the roles of its independent compensation consultant and the CEO in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” below. The Compensation Committee met five times during 2018.
Nominating Committee
The Nominating Committee’s duties and responsibilities include assisting the Board in identifying qualified individuals to become directors; making recommendations to the Board concerning the size, structure, and composition of the Board and its committees; and overseeing and making recommendations regarding corporate governance matters, including Apple’s Corporate Governance Guidelines. The Nominating Committee also oversees the annual Board performance evaluation process, including the format of the annual Board self-evaluation. The Nominating Committee met four times during 2018.
In accordance with its charter and Apple’s Corporate Governance Guidelines, the Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
Annual Board and Committee Self-Evaluations
Annual Board Self-Evaluations
The Board conducts an annual self-evaluation that is intended to determine whether the Board, its committees, and each member of the Board are functioning effectively, and to provide them with an opportunity to reflect upon and improve processes and effectiveness.
Dr. Levinson, the independent Chairman of the Board, leads the evaluation process. Dr. Levinson conductsone-on-one discussions with each director to obtain their assessment of the effectiveness and performance of the Board, its committees, and each member of the Board. Board members are also invited to discuss the performance of Dr. Levinson directly with the Chair of the Nominating Committee. A summary of the results is presented to the Nominating Committee on a“no-names” basis identifying any themes or issues that have emerged. The results are then reported to the Board, which considers the results and ways in which Board processes and effectiveness may be enhanced.
Annual Committee Self-Evaluations
In addition, each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s report includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter, as well as ways in which committee processes and effectiveness may be enhanced.
The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, and Apple’s overall corporate governance. The Board also believes that the separation of the Chairman and CEO roles
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allows the CEO to focus his time and energy on operating and managing Apple, while leveraging the Chairman’s experience and perspectives. The Board periodically reviews its leadership structure to determine whether it continues to best serve Apple and its shareholders.
DIRECTORS, CORPORATE GOVERNANCE AND EXECUTIVE OFFICERSBoard Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the various risks confronting Apple is one of its most important areas of oversight. In carrying out this critical responsibility, the Board has designated the Audit Committee with primary responsibility for overseeing enterprise risk management. In accordance with this responsibility, the Audit Committee monitors Apple’s significant business risks, including financial; operational; privacy; data security; business continuity; legal; regulatory; and reputational risks. The Audit Committee reviews the steps management has taken to monitor and mitigate these risks. With respect to privacy and data security, the Audit Committee reviews reports from Apple’s General Counsel and the heads of information security, business conduct and compliance, business assurance, and internal audit. These reports include updates on risk management, Apple’s privacy program, and relevant legislative, regulatory, and technical developments.
The Audit Committee is assisted in its risk oversight duties by a Risk Oversight Committee consisting of key members of management, including, among others, Apple’s Chief Financial Officer, General Counsel, and head of business assurance. The Risk Oversight Committee reports regularly to the Audit Committee. Senior members of management responsible for risk management across a wide range of areas and functions also report regularly to the Audit Committee.
While the Audit Committee has primary responsibility for overseeing enterprise risk management and reports regularly to the Board, the other Board committees also consider risks within their areas of responsibility and apprise the Board of significant risks and management’s response to those risks. For example, the Nominating Committee reviews legal and regulatory compliance risks as they relate to Apple’s corporate governance structure and processes, and the Compensation Committee reviews risks related to compensation matters. While the Board and its committees oversee risk management strategy, management is responsible for implementing and supervisingday-to-day risk management processes and reporting to the Board and its committees.
In establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. Base salaries are fixed in amount and thus do not encourage risk-taking. Annual cash incentives are capped and payouts are formulaic and tied to specific company financial performance measures. A substantial portion of each executive officer’s compensation is in the form of time-based and performance-based equity awards that vest over several years and help align their interests with those of Apple’s shareholders in creating long-term shareholder value. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to Apple’s share price performance over several years and because awards are subject to regular vesting schedules.
The Compensation Committee has also reviewed Apple’s compensation programs for employees generally and has concluded that these programs do not create risks that are reasonably likely to have a material adverse effect on Apple. The Compensation Committee believes that Apple’s cash bonus programs and long-term equity awards provide an effective and appropriate mix of incentives to help ensure performance is focused on long-term shareholder value creation and do not encourage short-term risk taking at the expense of long-term results.
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Audit Committee Financial Experts
The Board has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined under applicable SEC rules and also meets the additional criteria for independence of audit committee members set forth in Rule10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Apple has a code of ethics, “Business Conduct: The way we do business worldwide,” that applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer, to the Board, and to independent contractors, consultants, and others who do business with Apple. The code is available at investor.apple.com/corporate-governance.cfm. Apple intends to disclose any changes in this code or waivers from this code that apply to Apple’s principal executive officer, principal financial officer, or principal accounting officer by posting such information to our website or by filing with the SEC a Current Report on Form8-K, in each case if such disclosure is required by SEC or Nasdaq rules.
Listed belowReview, Approval, or Ratification of Transactions with Related Persons
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year and the related party has or will have a direct or indirect interest in the transaction. A copy of this policy is available atinvestor.apple.com/corporate-governance.cfm. The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. In addition, the Audit Committee has delegated authority to the Chair of the Audit Committee topre-approve or ratify transactions under certain circumstances. In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:
• | The related person’s interest in the transaction; |
• | The approximate dollar value of the amount involved in the transaction; |
• | The approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; |
• | Whether the transaction was undertaken in the ordinary course of Apple’s business; |
• | Whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to Apple than terms that could have been reached with an unrelated third-party; |
• | The purpose of, and the potential benefits to Apple of, the transaction; |
• | Whether the transaction would impair the independence of anon-employee director; |
• | Required public disclosure, if any; and |
• | Any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
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The Audit Committee has considered and adopted the following standingpre-approvals under the policy for transactions with related persons:
• | Employment as an executive officer of Apple, if the related compensation is approved (or recommended to the Board for approval) by the Compensation Committee; |
• | Any compensation paid to a director if the compensation is consistent with Apple’s director compensation policies and is required to be reported in Apple’s proxy statement under Item 402 of SEC RegulationS-K; |
• | Any transaction with another company at which a related person’s only relationship is as an employee (other than an executive officer or director) or beneficial owner of less than 10% of that company’s equity, if the aggregate amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenue; |
• | Any charitable contribution, grant, or endowment by Apple to a charitable organization, foundation, or university at which a related person’s only relationship is as an employee (other than an executive officer or director), if the aggregate amount involved does not exceed the greater of $1 million or 2% of the charitable organization’s total annual receipts; and |
• | Any transaction where the related person’s interest arises solely from the ownership of Apple’s common stock and all holders of Apple’s common stock received the same benefit on apro-rata basis, such as dividends. |
A summary of new transactions covered by the standingpre-approvals, or approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review at each regularly scheduled Audit Committee meeting.
Transactions with Related Persons
Mr. Iger is Chairman and Chief Executive Officer of The Walt Disney Company. In the ordinary course of business, Apple enters into arms-length commercial dealings with The Walt Disney Company, including sales arrangements, digital services content licensing agreements, and similar arrangements. Apple does not believe that Mr. Iger has a material direct or indirect interest in any of such commercial dealings.
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable Nasdaq, NYSE, and SEC rules. In making these determinations, the eight nominees for electionBoard considered the types and amounts of the commercial dealings between Apple and the companies and organizations with which the directors are affiliated.
Attendance of Directors at Annual Meetings of Shareholders
Apple expects all of its directors to attend the Annual Meeting. All directors attended the 2018 annual meeting of shareholders.
Compensation Committee Interlocks and Insider Participation
Ms. Jung, Mr. Gore, and Mr. Iger were members of the Compensation Committee during 2018. None of the members of the Compensation Committee is or has been an executive officer of Apple, nor did any of them have any relationships requiring disclosure by Apple under Item 404 of SEC RegulationS-K. None of Apple’s executive
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officers served as a director eachor a member of whom serves ona compensation committee (or other committee serving an equivalent function) of any other entity, an executive officer of which served as a director of Apple or member of the Board. In this section (“Directors, Corporate Governance and Executive Officers—Directors”), referencesCompensation Committee during 2018.
Any matter intended for the Board, or for any individual member of the Board, should be directed to particular years referApple’s Secretary at One Apple Park Way, MS:169-5GC, Cupertino, California 95014, with a request to forward the communication to the calendar year.intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. However, Apple reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials. Information regarding the submission of comments or complaints relating to Apple’s accounting, internal accounting controls, or auditing matters is available under our Policy on Reporting Questionable Accounting or Auditing Matters atinvestor.apple.com/corporate-governance.cfm.
Name | Age as of the Annual Meeting | Director Since | ||||||
James Bell | 67 | 2015 | ||||||
Tim Cook, Chief Executive Officer | 55 | 2011 | ||||||
Al Gore | 67 | 2003 | ||||||
Bob Iger | 65 | 2011 | ||||||
Andrea Jung | 57 | 2008 | ||||||
Art Levinson, Chairman of the Board | 65 | 2000 | ||||||
Ron Sugar | 67 | 2010 | ||||||
Sue Wagner | 54 | 2014 |
TheApple Inc. | 2019 Proxy Statement | 13
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Apple’s Board consists of a highly qualified, diverse group of leaders in their respective fields. Most of our directors have senior leadership experience at major domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have experience serving as executive officers, or on boards of directors and board committees of other public companies, and have an understanding of corporate governance practices and trends. In addition, many of our directors have experience as directors or trustees of significant academic, research, nonprofit, and philanthropic institutions, and bring unique perspectives to the Board.
The Board and itsthe Nominating and Corporate Governance Committee (the “Nominating Committee”) believe the skills, qualities, attributes, and experience of our directors provide Apple with business acumen and a diverse range of perspectives to engage each other and management to effectively address effectively Apple’s evolving needs and represent the best interests of Apple’s shareholders.
The Nominating Committee considers candidates for director who are recommended by its members, by other Board members, by shareholders, and by management, as well as those identified by a third-party search firmfirms retained to assist in identifying and evaluating possible candidates. In evaluating potential nominees to the Board, the Nominating Committee considers, among other things, independence, character,things: independence; character; ability to exercise sound judgment, diversity, age,judgment; diversity; age; demonstrated leadership,leadership; and relevant skills and experience, including financial literacy, antitrust compliance, and other experience in the context of the needs of the Board. The Nominating Committee is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen.
The Nominating Committee considersevaluates candidates
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proposed recommended by shareholders and evaluates them using the same criteria as for other candidates recommended by its members, other members of the Board, or other persons.
In addition, our bylaws provide for proxy access for director nominations by shareholders. Athat a shareholder, or a group of up to 20 shareholders, owning continuously for at least three years shares of Apple stock representing an aggregate of at least 3% of our outstanding shares continuously for at least three years, may nominate and include in Apple’s proxy materials director nominees constituting up to 20% of Apple’s Board provided that the shareholder(s)would be included in our proxy statement pursuant to our proxy access provisions. Nominating shareholders and nominee(s)nominees must satisfy the requirements set forth in the bylaws.our bylaws, which can be found atinvestor.apple.com/corporate-governance.cfm.
Biographical InformationNominees for Our Director NomineesElection
The following biographies below describe the skills, qualities, attributes, and experience of the nominees that led the Board and the Nominating Committee to determine that it is appropriate to nominate these directors.directors for election to the Board. Each of the eight nominees currently serves on the Board.
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Art Levinson, 68, has served as the Chief Executive Officer of Calico, a company focused on health, aging, and well-being, since September 2013.
Dr. Levinson previously served as Chief Executive Officer of Genentech, Inc., a medical drug developer, from July 1995 to April 2009, and served as Genentech’s Chairman from September 1999 to September 2014.
Among other qualifications, Dr. Levinson brings to the Board executive leadership experience, including his service as a chairman and chief executive officer of a large international public company, along with extensive financial expertise and brand marketing experience.
Selected Directorships and Memberships
Board of Directors, Broad Institute of Harvard and MIT
Board of Scientific Consultants, Memorial Sloan Kettering Cancer Center
Industrial Advisory Board, California Institute for Quantitative Biomedical Research
Advisory Council, Lewis-Sigler Institute for Integrative Genomics
Advisory Council, Princeton University Department of Molecular Biology
Science Advisory Board, Chan Zuckerberg Initiative
Former Public Company Directorships Within the Last Five Years
Amyris, Inc.
F. Hoffman-La Roche Ltd.
Tim Cook, 58, has been Apple’s Chief Executive Officer since August 2011 and was previously Apple’s Chief Operating Officer since October 2005.
Mr. Cook joined Apple in March 1998 and served as Executive Vice President, Worldwide Sales and Operations from 2002 to 2005. From 2000 to 2002, Mr. Cook served as Senior Vice President, Worldwide Operations, Sales, Service and Support. From 1998 to 2000, Mr. Cook served as Senior Vice President, Worldwide Operations.
Among other qualifications, Mr. Cook brings to the Board extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service, and support.
Other Current Public Company Directorships
NIKE, Inc.
Selected Directorships and Memberships
Board of Directors, The National Football Foundation & College Hall of Fame, Inc.
Board of Trustees, Duke University
Leadership Council, Malala Fund
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James Bell, 70, is the retired Executive Vice President, Corporate President and Chief Financial Officer of The Boeing Company, an aerospace company.
Mr. Bell served in this role from 2008 to February 2012, having previously served as Executive Vice President, Finance and Chief Financial Officer from 2003 to 2008, and as Senior Vice President of Finance and Corporate Controller from 2000 to 2003. From 1992 to 2000, Mr. Bell held a series of positions with increasing responsibility at Boeing. Mr. Bell has served as a director of The Dow Chemical Company since December 2005, where he is the Chairman of the Audit Committee and a member of the Governance Committee, as a director of JPMorgan Chase & Co. since November 2011, where he serves as a member of the Audit Committee, and as a director of CDW Corporation since March 2015, where he serves as a member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Bell also serves on the board of trustees for Rush University Medical Center.
Among other qualifications, Mr. Bell brings to the Board financial and accounting expertise as a former chief financial officer of a large international public company, experience in strategic planning and leadership of complex organizations, and a global business perspective from his service on other boards.
Tim Cook has been Apple’s Chief Executive Officer since August 2011Other Current Public Company Directorships
DowDupont Inc.
JPMorgan Chase & Co.
CDW Corporation
Selected Directorships and was previously Apple’s Chief Operating Officer since October 2005. Mr. Cook joined Apple in March 1998 and served as Executive Vice President, Worldwide Sales and Operations from 2002 to 2005. In 2004, his responsibilities were expanded to include Macintosh hardware engineering. From 2000 to 2002, Mr. Cook served as Senior Vice President, Worldwide Operations, Sales, Service and Support. From 1998 to 2000, Mr. Cook served as Senior Vice President, Worldwide Operations. Mr. Cook has served as a directorMemberships
Board of NIKE, Inc. since November 2005, where he serves as the Chair of the Compensation Committee and as a member of the Nominating and Corporate Governance Committee. Mr. Cook has served as a director of The National Football Foundation & College Hall of Fame, Inc. since February 2010, on the advisory board of TsinghuaTrustees, Rush University School of Economics and Management since October 2013, and on the board of trustees of Duke University since July 2015. Among other qualifications, Mr. Cook brings to the Board extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service and support.Medical Center
Al Gore, 70, has served as Chairman of Generation Investment Management, an investment management firm, since 2004, and as a partner of Kleiner Perkins Caufield & Byers, a venture capital firm, since 2007.
Mr. Gore is also Chairman of The Climate Reality Project.
Mr. Gore was elected to the U.S. House of Representatives four times, to the U.S. Senate two times, and served two terms as Vice President of the United States.
Among other qualifications, Mr. Gore brings to the Board executive leadership experience, a valuable and different perspective due to his extensive background in digital communication and
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technology policy, politics, and environmental rights, along with experience in asset management and venture capital.
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Bob Iger, 68, has served as Chairman and Chief Executive Officer of The Walt Disney Company, a diversified media company, since March 2012.
Prior to that time, he served as President and Chief Executive Officer of Disney since October 2005, having previously served as President and Chief Operating Officer since January 2000 and as President of Walt Disney International and Chairman of the ABC Group from 1999 to 2000. From 1974 to 1998, Mr. Iger held a series of positions with increasing responsibility at ABC, Inc. and its predecessor, Capital Cities/ABC, Inc. Mr. Iger has served as a director of Disney since January 2000. Mr. Iger is a member of the board of directors of the National September 11 Memorial & Museum, the Lincoln Center for the Performing Arts, the U.S.-China Business Council, the Partnership for a New American Economy, and the Academy of Arts & Sciences. Mr. Iger has also served on the President’s Export Council since June 2010.
Among other qualifications, Mr. Iger brings to the Board executive leadership experience, including his service as a chairman and chief executive officer of a large international public company, along with extensive financial expertise and experience in international business and brand marketing.
Other Current Public Company Directorships
The Walt Disney Company
Selected Directorships and Memberships
Board of Directors, National September 11 Memorial & Museum
Member, Academy of Arts & Sciences
Board of Directors, Bloomberg Philanthropies
Andrea Jung, 60, has served as the President and Chief Executive Officer of Grameen America LLC, a nonprofit microfinance organization, since April 2014, where she also serves on the boardBoard of directors. Directors.
Ms. Jung previously served as Executive Chairman of Avon Products, Inc., a personal care products company, from April 2012 to December 2012, and as Chairman of the Board of Directors and Chief Executive Officer of Avon from September 2001 to April 2012. Prior to that, Ms. Jung served as Chief Executive Officer of Avon sincefrom November 1999 to April 2012, and served as a member of the boardBoard of directorsDirectors of Avon sincefrom January 1998. Ms. Jung has served as a member of the Supervisory Board of Daimler AG since April 2013 and has also been a director of General Electric Company since 1998 where she serves on the Management Development and Compensation Committee, the Governance and Public Affairs Committee, and the Science and Technology Committee. to December 2012.
Among other qualifications, Ms. Jung brings to the Board executive leadership experience, including her service as a chairman and chief executive officer of a large international public company, along with extensive brand marketing and consumer products experience.experience, and a global business perspective from her service on other boards.
Art Levinson has served asOther Current Public Company Directorships
Unilever PLC and Unilever N.V.
Wayfair Inc.
Selected Memberships
Committee for Economic Development
Rockefeller Capital Management
Former Public Company Directorships Within the Chief Executive Officer of Calico, a research and development company, since September 2013. Previously, Dr. Levinson served as the Chairman of Genentech, Inc. from September 1999 to September 2014 and as a director and member of the Remuneration Committee of F. Hoffman-La Roche Ltd. from March 2010 to September 2014. Dr. Levinson also served as Chief Executive Officer of Genentech from July 1995 to April 2009, and, from May 2009 to September 2013, served as an advisor to Genentech’s Research and Early Development center and as a member of Genentech’s external advisory group, the Scientific Resource Board. Dr. Levinson previously served as a director of NGM Biopharmaceuticals, Inc. and as Chairman of the Board of Amyris, Inc. Dr. Levinson also serves on the board of directors of the Broad Institute of Harvard and MIT, on the Board of Scientific Consultants of the Memorial Sloan-Kettering Cancer Center, on the Industrial Advisory Board of the California Institute for Quantitative Biomedical Research, on the Advisory Council for the Princeton University Department of Molecular Biology, on the Advisory Council for the Lewis-Sigler Institute for Integrative Genomics, and on the Innovation Advisory Board of the United States Commerce Department. Among other qualifications, Dr. Levinson brings to the Board executive leadership experience, including his service as a chairman of a large public company, along with extensive financial expertise and brand marketing experience.Last Five Years
Daimler AG
General Electric Company
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Ron Sugar, 70, is the retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global security company. Dr. Sugar served in this role from 2003 untilto 2010 and served as President and Chief Operating Officer from 2001 untilto 2003. He was President and Chief Operating Officer ofPrevious to Northrop Grumman, he held executive positions at Litton Industries and TRW Inc. from 2000 until the company was acquired by Northrop Grumman in 2001. He was earlier, where he served as Chief Financial Officer of TRW Inc. Officer.
Dr. Sugar serves as the Lead Director of Chevron Corporation, where he has served on the board of directors since April 2005. Dr. Sugar has also been a director of Air Lease Corporation since April 2010, where he is the Chair of the Compensation Committee and a member of the Governance Committee, and of Amgen Inc. since July 2010, where he is the Chair of the Corporate Responsibility and Compliance Committee and a member of the Governance and Nominating Committee. Dr. Sugar also serves as a senior advisor to various businesses and organizations, including Ares Management, LLC, Bain & Company, Temasek Americas Advisory Panel, and the G100 Network and the World 50, and as a member of the National Academy of Engineering, a trustee of the University of Southern California, a director of the Los Angeles Philharmonic Association, and a national trustee of the Boys and Girls Clubs of America. 50.
Among other qualifications, Dr. Sugar brings to the Board executive leadership experience as a chairman and chief executive officer of a large international public company, financial expertise as a former chief financial officer, understanding of advanced technology, and a global business perspective from his service on other boards.
Other Current Public Company Directorships
Air Lease Corporation
Amgen Inc.
Chevron Corporation
Selected Directorships and Memberships
Chairman, Board of Directors, Uber Technologies, Inc.
Member, National Academy of Engineering
Board of Trustees, University of Southern California
Board of Directors, Los Angeles Philharmonic Association
Board of Directors, Alliance College—Ready Public Schools
Sue Wagner, has served as 57, is a directorco-founder of BlackRock, Inc., an asset management company, since October 2012, where she serves on the Risk Committee.company. Ms. Wagner was a co-founder of BlackRock and previously served as BlackRock’s Vice Chairman from January 2006 to July 2012, and also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee until her retirement in July 2012.Committee. During her tenure at BlackRock, she alsoMs. Wagner served as BlackRock’s Chief Operating Officer and Head of Corporate Strategy, and led strategy and corporate development and the alternative investments and international client businesses. Since April 2014, Ms. Wagner has also served as a director on the boards of Swiss Re Ltd. and Swiss Reinsurance Company Ltd., and from March 2015 has served on the boards of Swiss Re Corporate Solutions Ltd. and Swiss Re Life Capital Ltd. Ms. Wagner serves as the Chair of the Investment Committee and as a member of the Finance and Risk Committee and the Chairman’s and Governance Committee of each Swiss Re company. Ms. Wagner also serves on the boards of DSP BlackRock Investment Managers Pvt. Ltd., Wellesley College, and the Hackley School.
Among other qualifications, Ms. Wagner brings to the Board operational experience, including her service as chief operating officer of a large internationalmultinational public company, along with extensive financial expertise and experience in the financial services industry.industry, and a global business perspective from her service on other boards.
Other Current Public Company Directorships
BlackRock, Inc.
Swiss Re
Selected Directorships and Memberships
Board of Directors, Color Genomics, Inc.
Board of Trustees, Wellesley College
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Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions, and set standards to enhance Apple’s commitment to business responsibility and ethics.
Apple’s key governance documents, including our Corporate Governance Guidelines, are available atinvestor.apple.com/corporate-governance.cfm. The governance structure is designed to foster principled actions, effective decision-making, and appropriate monitoring of both compliance and performance. The Board met four times during 2015.
The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, and Apple’s overall corporate governance. The Board also believes the separation of the Chairman and CEO roles allows the CEO to focus his time and energy on operating and managing Apple and leverages the Chairman’s experience and perspectives. The Board periodically reviews the leadership structure to determine whether it continues to best serve Apple and its shareholders.
The Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating Committee. The Board has determined that the Chair of each committee and all committee members are independent under applicable rules of The NASDAQ Stock Market LLC (“NASDAQ”), the New York Stock Exchange LLC (“NYSE”), and the SEC for committee memberships. The members of the committees are shown in the table below.
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The Audit Committee assists the Board in fulfilling its oversight and monitoring responsibility of reviewing the financial information provided to shareholders and others, appoints Apple’s independent registered public accounting firm, reviews the services performed by the independent registered public accounting firm and Apple’s internal audit department, evaluates Apple’s accounting policies and the system of internal controls established by management and the Board, reviews significant financial transactions, and oversees enterprise risk management. The Audit Committee met nine times during 2015.
The Compensation Committee reviews and approves the compensation arrangements for Apple’s executive officers, including the CEO, administers Apple’s equity compensation plans, and reviews the Board’s compensation. The Compensation Committee’s authority to grant equity awards may not be delegated to Apple’s management or others. For a description of the Compensation Committee’s processes and procedures, including the roles of Apple’s executive officers and independent compensation consultants in the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” below. The Compensation Committee met seven times during 2015.
The Nominating Committee assists the Board in identifying qualified individuals to become directors, makes recommendations to the Board concerning the size, structure and composition of the Board and its committees, monitors the process to assess the Board’s effectiveness and oversees corporate governance, including implementing Apple’s Corporate Governance Guidelines. The Nominating Committee met four times during 2015. The Nominating Committee has recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
The Audit Committee, Compensation Committee and Nominating Committee operate under written charters adopted by the Board. They are available atinvestor.apple.com/corporate-governance.cfm.
During 2015, each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board held during the period for which such person has been a director, and (ii) the total number of meetings held by each committee of the Board on which such person served during the periods that such person served.
Board Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the various risks confronting Apple is one of its most important areas of oversight. In carrying out this critical responsibility, the Board has designated the Audit Committee with primary responsibility for overseeing enterprise risk management. The Audit Committee is assisted by a Risk Oversight Committee consisting of key members of management, including Apple’s Chief Financial Officer and General Counsel. The Risk Oversight Committee reports regularly to the Audit Committee, which reports regularly to the Board. See the Audit Committee’s Charter atinvestor.apple.com/corporate-governance.cfm for more information about its risk oversight function.
In accordance with this responsibility, the Audit Committee monitors Apple’s major financial, operational, privacy, data security, business continuity, legal and regulatory, and reputational exposures, and reviews the steps management has taken to monitor and control these exposures. With respect to privacy and data security, the Audit Committee’s oversight includes, among other things, review of reports from Apple’s General Counsel, Chief Compliance Officer, and Vice President of Internal Audit, including updates on Apple’s privacy program and relevant legislative, regulatory and technical developments. As with other matters, the Audit Committee regularly discusses these topics with the full Board.
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While the Audit Committee has primary responsibility for overseeing enterprise risk management, the other Board committees also consider risk within their areas of responsibility. For example, the Nominating Committee reviews legal and regulatory compliance risks as they relate to corporate governance structure and processes, and the Compensation Committee reviews risks related to compensation matters. The committee Chairs regularly apprise the Board of significant risks and management’s response to those risks. While the Board and its committees oversee risk management strategy, management is responsible for implementing and supervising day-to-day risk management processes and reporting to the Board and its committees on such matters.
In establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. Executives’ base salaries are fixed in amount and thus do not encourage risk-taking. Annual cash incentives are capped and payouts are formulaic and tied to specific company financial performance metrics. The majority of compensation provided to the executive officers is in the form of time-based and performance-based equity awards that vest over several years and help further align executives’ interests with those of Apple’s shareholders. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to Apple’s stock price performance over several years and because awards are subject to regular vesting schedules to help ensure that a significant component of executive compensation is tied to long-term shareholder value creation.
The Compensation Committee has also reviewed Apple’s compensation programs for employees generally and has concluded these programs do not create risks that are reasonably likely to have a material adverse effect on Apple. The Compensation Committee believes that Apple’s annual cash and long-term equity awards provide an effective and appropriate mix of incentives to help ensure Apple’s performance is focused on long-term shareholder value creation and do not encourage short-term risk taking at the expense of long-term results.
Audit Committee Financial Experts
The Board has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined under applicable SEC rules and also meets the additional criteria for independence of audit committee members set forth in Rule 10A-3(b)(1) under the Exchange Act.
Apple has a code of ethics, “Business Conduct: The way we do business worldwide,” that applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer, as well as to the Board. The code is available atinvestor.apple.com/corporate-governance.cfm. Apple intends to disclose any changes in, or waivers from, this code by posting such information on the same website or by filing a Form 8-K, in each case if such disclosure is required by rules of the SEC or NASDAQ.
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Review, Approval or Ratification of Transactions with Related Persons
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than five percent beneficial owners and each of their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year and the party to the transaction has or will have a direct or indirect interest. A copy of this policy is available atinvestor.apple.com/corporate-governance.cfm.
The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. In doing so, the Audit Committee takes into account, among other factors it deems appropriate:
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In addition, the Audit Committee has delegated authority to the Chair of the Audit Committee to pre-approve or ratify transactions. A summary of any new transactions pre-approved or ratified by the Chair is provided to the Audit Committee for its review at its next scheduled meeting.
The Audit Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:
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A summary of new transactions covered by the standing pre-approvals, if any, is provided to the Audit Committee for its review at each regularly scheduled Audit Committee meeting.
Transactions with Related Persons
Mr. Iger is Chairman and Chief Executive Officer of Disney. In the ordinary course of its business, Apple enters into commercial dealings with Disney that it considers arms-length, including sales arrangements and iTunes Store content licensing agreements and similar arrangements. Apple does not believe that Mr. Iger has a material direct or indirect interest in any of such commercial dealings.
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable NASDAQ, NYSE, and SEC rules. In making these determinations, the Board considered the types and amounts of the commercial dealings between Apple and the companies and organizations with which the directors are affiliated.
Attendance of Directors at Annual Meetings of Shareholders
Apple expects all of its directors to attend the Annual Meeting. All of Apple’s directors who were standing for re-election attended the 2015 annual meeting of shareholders.
Compensation Committee Interlocks and Insider Participation
Mr. Drexler, Mr. Gore, Ms. Jung, and Dr. Levinson were the members of the Compensation Committee during 2015. Mr. Drexler retired from the Board in March 2015. None of the members of the Compensation Committee is or has been an executive officer of Apple, nor did they have any relationships requiring disclosure by Apple under Item 404 of SEC Regulation S-K. None of Apple’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, an executive officer of which served as a director of Apple or member of the Compensation Committee during 2015.
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at 1 Infinite Loop, MS: 301-4GC, Cupertino, California 95014, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. However, Apple reserves the right not to forward to Board members any abusive, threatening or otherwise inappropriate materials. Information regarding the submission of comments or complaints relating to Apple’s accounting, internal accounting controls or auditing matters is available atinvestor.apple.com/corporate-governance.cfm.
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Members of the Board who are not also Apple employees (“(“Non-Employee Directors”) receive compensation for their service. Mr. Cook, our CEO, does not receive any compensation for his service as a member of the Board. The Compensation Committee annually reviews the total compensation of ourNon-Employee Directors and each element of ourNon-Employee Director compensation program. As part of this process, the Compensation Committee evaluates market data provided by its independent compensation consulting firm, Pay Governance LLC, and makes a recommendation to the Board. The Board determines the form and amount of director compensation after its review of recommendations made byreviewing the Compensation Committee.Committee’s recommendation. The Apple Inc.Non-Employee Director Stock Plan provides for an annual limit of $1.5 million for all compensation paid to aNon-Employee Director.
Cash Retainers.Non-Employee Directors receive an annual cash retainer of $100,000. In 2018, the Chairman of the Board, Dr. Levinson, received an additional cash retainer of $200,000; the Chair of the Audit Committee, Dr. Sugar, received an additional cash retainer of $35,000; the Chair of the Compensation Committee, Ms. Jung, received an additional cash retainer of $30,000; and the Chair of the Nominating Committee, Mr. Iger, received an additional cash retainer of $25,000. All retainers are paid in quarterly installments.
Equity-Based Awards.A substantial portion of eachNon-Employee Director’s annual retainer is in the form of equity. Under Apple’s 1997the Apple Inc.Non-Employee Director Stock Plan, (the “Director Plan”), Non-Employee Directors are granted restricted stock units (“RSUs”) on the date of each annual meeting of shareholders (each, an “Annual Director Award”). All Annual Director Awards vest on February 1 of the following year, subject to continued service on the Board through the vesting date. For 2015,2018, the number of RSUs subject to each Annual Director Award was determined by dividing $250,000 by the per share closing price of Apple’s common stock on the date of grant and rounding to the nearest whole share.grant.
ANon-Employee Director who is newly appointed to the Board other than in connection with an annual meeting of shareholders will receive a grant of RSUs upon appointment (an “Initial RSUDirector Award”), except that aNon-Employee Director who joins the Board on or after February 1 of a particular year and prior to the annual meeting for that year, or a director who was an employee of Apple immediately prior to first becoming aNon-Employee Director, will not receive an Initial RSUDirector Award. The number of RSUs subject to each Initial RSUDirector Award is determined in the same manner as described above for Annual Director Awards, but the grant date value of the award ispro-rated based on the portion of the year that has passed since the last annual meeting. Initial RSUDirector Awards are scheduled to vest on the next February 1 following the award.
Non-Employee Directors do not have the right to vote or dispose of the RSUs subject to these awards. If Apple pays an ordinary cash dividend on its common stock, each RSU award granted under the Apple Inc.Non-EmployeeDirector Stock Plan will be credited with an amount equal to the per share cash dividend paid by Apple, multiplied by the total number of RSUs subject to the award that are outstanding immediately prior to the record date for such dividend. The amounts that are credited to each award are referred to as “dividend equivalents.” Any dividend equivalents credited to an award granted under the Apple Inc.Non-EmployeeDirector Stock Plan will be subject to the same vesting, payment, and other terms and conditions as the unvested RSUs to which the dividend equivalents relate. The crediting of dividend equivalents is meant to treat the RSU award holders consistently with shareholders.
Cash Retainers. Non-Employee Directors receive a $100,000 annual cash retainer. In 2015, the Chairman of the Board, Dr. Levinson, received an additional cash retainer of $200,000; the Chair of the Audit Committee, Dr. Sugar, received an additional cash retainer of $25,000; the Chair of the Compensation Committee, Ms. Jung, received an additional cash retainer of $20,000; and the Chair of the Nominating Committee, Mr. Iger, received an additional cash retainer of $15,000. All retainers are paid in quarterly installments.
After the end of the fiscal year, upon recommendation of the Compensation Committee after reviewing peer company market data supplied by the Compensation Committee’s independent compensation consultant, the Board increased the additional cash retainer for the Chair of each committee. Accordingly, the Board approved the following cash retainers for 2016: $35,000 for the Chair of the Audit Committee; $30,000 for the Chair of the Compensation Committee; and $25,000 for the Chair of the Nominating Committee.
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Equipment Program.Program and Charitable Gift Matching. Apple has adopted an equipment program for ourthe Board of Directors under which eachNon-Employee Director is eligible to receive, upon request and free of charge, one of each new product introduced by Apple, and is eligible to purchase additional equipment at a discount. Additionally, eachNon-Employee Director is eligible to participate in Apple’s charitable matching gifts program to the same extent as all Apple employees. For calendar 2018, the maximum match amount was $20,000.
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Non-Employee Directors do not receive any other compensation for serving on any committee or attending Board or committee meetings.
Stock Ownership Guidelines.Apple has adopted stock ownership guidelines for Apple’sour CEO, named executive officers, andNon-Employee Directors. Under the guidelines,Non-Employee Directors are expected to own shares of AppleApple’s common stock that have a value equal to five times their annual cash retainer for serving as a director. Shares may be owned directly by the individual, or owned jointly with, or separately by, the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse or the individual’s children. EachNon-Employee Director is required to satisfy the stock ownership guideline applicable to them by November 12, 2017, or within five years after first becoming subject to the guidelines. Other than Mr. Bell, who joined the Board in October 2015, each Non-Employee Director has already satisfiedcurrently satisfies the stock ownership guidelines.
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Director Compensation—20152018
The following table shows information regarding the compensation earned or paid during 20152018 toNon-Employee Directors who served on the Board during the year. The compensation paid to Mr. Cook is shown under “Executive Compensation” in the table entitled “Summary Compensation Table—2015, 2014,2018, 2017, and 2013”2016” and the related explanatory tables. Mr. Cook does not receive any compensation for his service as a member of the Board. Mr. Bell joined the Board in October 2015, after the end of the fiscal year.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | ||||||||||||||||||||||||
Mickey Drexler(3) | 25,000 | 0 | 622 | 25,622 | ||||||||||||||||||||||||||||
James Bell | 100,000 | 249,961 | 12,704 | 362,665 | ||||||||||||||||||||||||||||
Al Gore | 100,000 | 250,016 | 3,019 | 353,035 | 100,000 | 249,961 | 8,582 | 358,543 | ||||||||||||||||||||||||
Bob Iger | 115,000 | 250,016 | 8,843 | 373,859 | 125,000 | 249,961 | 2,920 | 377,881 | ||||||||||||||||||||||||
Andrea Jung | 120,000 | 250,016 | 5,306 | 375,322 | 130,000 | 249,961 | 23,145 | 403,106 | ||||||||||||||||||||||||
Art Levinson | 300,000 | 250,016 | 9,182 | 559,198 | 300,000 | 249,961 | 17,227 | 567,188 | ||||||||||||||||||||||||
Ron Sugar | 125,000 | 250,016 | 4,645 | 379,661 | 135,000 | 249,961 | 24,500 | 409,461 | ||||||||||||||||||||||||
Sue Wagner | 100,000 | 250,016 | 1,483 | 351,499 | 100,000 | 249,961 | 3,220 | 353,181 |
(1) | In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of stock awards granted toNon-Employee Directors during |
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The following table shows the number of shares subject to outstanding and unexercised option awards and the number of shares subject to outstanding RSUs held by each of the Non-Employee Directors as of September 26, 2015.
EachNon-Employee Director received an automatic Annual Director Award of 1,521 RSUs on February 13, 2018, and the grant date fair value for each RSU was $164.34. |
Director | Number of Shares Subject to Outstanding Options as of 9/26/15 | Number of Shares Subject to Outstanding RSUs as of 9/26/15 | ||||||
Al Gore | 275,779 | 2,008 | ||||||
Bob Iger | 0 | 2,008 | ||||||
Andrea Jung | 109,590 | 2,008 | ||||||
Art Levinson | 317,394 | 2,008 | ||||||
Ron Sugar | 0 | 2,008 | ||||||
Sue Wagner | 0 | 2,008 |
Each Non-Employee Director received an automatic grant of 2,008 RSUs on March 10, 2015, and the grant date fair value for each grant was $250,016.
As of September 29, 2018, eachNon-Employee Director held 1,521 RSUs. In addition, Mr. Gore held outstanding and unexercised options to purchase 67,889 shares, Ms. Jung held outstanding and unexercised options to purchase 9,590 shares, and Dr. Levinson held outstanding and unexercised options to purchase 107,394 shares. |
(2) | The amounts shown reflect one or more products |
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Apple’s executive officers are listed below. Biographical information for Mr. Cook, who is both a director and an executive officer, can be found in the section entitled “Directors.” In this section (“Directors, Corporate Governance and Executive Officers—Executive Officers”), references to particular years refer to the calendar year.
Kate Adams Senior Vice President, General Counsel and Secretary | Kate, 54, oversees all legal matters, including corporate governance, intellectual property, litigation, compliance, global security, and privacy. Kate joined Apple as General Counsel in November 2017. Prior to joining Apple, Kate served as General Counsel of Honeywell International Inc., a diversified technology and manufacturing company, from September 2008. Prior to joining Honeywell in 2003, Kate was a partner at the law firm of Sidley Austin LLP. |
Angela Ahrendts Senior Vice President, | Angela, 58, oversees the strategy, real estate and development, and operations of Apple’s physical stores, online store, and contact centers. Angela joined Apple and assumed her current position in May 2014. Prior to joining Apple, Angela served as director and Chief Executive Officer of Burberry plc, a luxury fashion company, from July 2006. Angela also previously served as Executive Vice President at Liz Claiborne Inc., and as President of Donna Karan International. Angela has served as a director of Ralph Lauren Corporation since August 2018. |
Luca Maestri Senior Vice President, Chief Financial Officer | Luca, 55, oversees Apple’s accounting, business support, financial planning and analysis, treasury, M&A, investor relations, internal audit, and tax functions. Luca joined Apple in March 2013 and assumed his current position in May 2014, after previously serving as Apple’s Vice President and Corporate Controller. Prior to joining Apple, Luca was Executive Vice President, Chief Financial Officer of Xerox Corporation, a business services and technology company, from February 2011 to February 2013; Chief Financial Officer at Nokia Siemens Networks; and had a 20-year career with General Motors Corporation, including serving as Chief Financial Officer of GM Europe and GM Brazil. |
Jeff Williams Chief Operating Officer | Jeff, 55, oversees Apple’s entire supply chain, service and support, and social responsibility initiatives for Apple’s supply chain. He also oversees the development of Apple Watch and drives the company’s health initiatives. Jeff joined Apple in June 1998 and assumed his current position in December 2015. Jeff’s previous positions with Apple include Senior Vice President, Operations; Head of Worldwide Procurement; and Vice President of Operations. Prior to joining Apple, Jeff worked in a number of operations and engineering roles at IBM from 1985 to 1998. |
Angela Ahrendts, Senior Vice President, Retail
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This section describes the compensation program for our named executive officers and Online Stores, joined Apple and assumed her current position in May 2014. Prior to joining Apple, Ms. Ahrendts served as director and Chief Executive Officer of Burberry plc, a luxury fashion company, from July 2006. Ms. Ahrendts also previously served as Executive Vice President at Liz Claiborne Inc., and as President of Donna Karan International. Ms. Ahrendts is also a member ofincludes the United Kingdom’s Prime Minister’s Business Advisory Council.required executive compensation tables.
Eddy Cue, Senior Vice President, Internet Software and Services, joined Apple in January 1989 and assumed his current position in September 2011. Mr. Cue’s previous positions with Apple include Vice President of Internet Services and Senior Director of iTunes Operations. Mr. Cue has also served as a director of Ferrari S.p.A., a luxury sports car company, since November 2012.
Craig Federighi, Senior Vice President, Software Engineering, rejoined Apple in April 2009 and assumed his current position in August 2012. Prior to rejoining Apple, Mr. Federighi held several roles at Ariba, Inc., an enterprise software company, including Chief Technology Officer and Vice President of Internet Services. Prior to that, Mr. Federighi worked at NeXT and at Apple upon the acquisition of NeXT. Mr. Federighi’s previous positions with Apple include Vice President of Mac OS Engineering and Director of Engineering.
Luca Maestri, Senior Vice President, Chief Financial Officer, joined Apple in March 2013 and assumed his current position in May 2014. Prior to assuming his current position, Mr. Maestri served as Apple’s Vice President and Corporate Controller. Prior to joining Apple, Mr. Maestri was Executive Vice President, Chief Financial Officer of Xerox Corporation, a business services and technology company, from February 2011
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to February 2013. Prior to that, Mr. Maestri was Chief Financial Officer at Nokia Siemens Networks from October 2008 to February 2011, and he previously had a 20-year career with General Motors Corporation, where he served as Chief Financial Officer of GM Europe and GM Brazil, and held several executive positions with General Motors Corporation in Europe and Asia Pacific. Mr. Maestri served as a director of The Principal Financial Group from February 2012 to May 2015.
Dan Riccio, Senior Vice President, Hardware Engineering, joined Apple in June 1998 and assumed his current position in August 2012. Mr. Riccio’s previous positions with Apple include Vice President of Product Design and Vice President of iPad Hardware Engineering. Prior to joining Apple, Mr. Riccio worked at Compaq Computer Corporation as Senior Manager of Mechanical Engineering.
Phil Schiller, Senior Vice President, Worldwide Marketing, rejoined Apple in April 1997 and assumed his current position in February 2002. Prior to rejoining Apple, Mr. Schiller was Vice President of Product Marketing at Macromedia, Inc. from December 1995 to March 1997 and Director of Product Marketing at FirePower Systems, Inc. from 1993 to December 1995. Prior to that, Mr. Schiller spent six years at Apple in various marketing positions.
Bruce Sewell, Senior Vice President, General Counsel and Secretary, joined Apple and assumed his current position in September 2009. Prior to joining Apple, Mr. Sewell served as Senior Vice President, General Counsel of Intel Corporation from 2005. Mr. Sewell also served as Intel’s Vice President, General Counsel from 2004 to 2005 and Vice President of Legal and Government Affairs, Deputy General Counsel from 2001 to 2004. Prior to joining Intel in 1995, Mr. Sewell was a partner in the law firm of Brown and Bain PC. Mr. Sewell has also served as a director of Vail Resorts Management Company, an operator of mountain resorts, since January 2013.
Johny Srouji, Senior Vice President, Hardware Technologies, joined Apple in 2008 and assumed his current position in December 2015. Mr. Srouji’s previous positions with Apple include Vice President, Hardware Technologies, and Vice President, VLSI (Very Large Scale Integration). Prior to joining Apple, Mr. Srouji worked in various engineering roles at IBM and Intel.
Jeff Williams, Chief Operating Officer, joined Apple in June 1998 and assumed his current position in December 2015. Mr. Williams’s previous positions with Apple include Senior Vice President, Operations, Head of Worldwide Procurement, and Vice President of Operations. Prior to joining Apple, Mr. Williams worked in a number of operations and engineering roles at IBM from 1985 to 1998.
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Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the disclosures contained in the following “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting.
Members of the Compensation Committee*Committee
Andrea Jung (Chair) | Al Gore | Art LevinsonBob Iger
Compensation Discussion and Analysis
2015 wasApple delivered a year of record-breaking financial resultsextraordinary performance in 2018, as we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store, and achieved the strongest net sales in Apple’s history, among many other accomplishments and milestones. Net sales grew $36.4 billion to $265.6 billion, and operating income grew $9.6 billion to $70.9 billion, representing 16% year-over-year growth for Apple.each of these key performance measures. We also returned almost $90 billion to our investors through dividends and share repurchases.
We believe the compensation paid to our named executive officers for 2018 appropriately reflects and rewards their contribution to our performance.
This Compensation Discussion and Analysis explains the guiding principles and practices upon which our executive compensation program is based and the compensation paid to our 2018 named executive officers:
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The compensation paid to our named executive officers for 2015 appropriately reflects and rewards this performance. Our named executive officers for 2015 were:
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Kate Adams, Senior Vice President, General Counsel and Secretary |
Mr. Riccio and Mr. Sewell had the same compensation according to SEC reporting rules, and as a result we are reporting six named executive officers for 2015.
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Guiding Principles and Compensation Practices
Our executive compensation program is designed to attract, motivate, and retain a talented, entrepreneurial, and creative team of executives who will provide leadership for Apple’s success in dynamic and competitive markets.
Internal Equity. Our executive officers are expected to operate as a team, and accordingly, we apply a team-based approach to our executive compensation program, with internal pay equity as a primary consideration. This approach is intended to promote and maintain stability within a high performing executive team, which we believe is achieved by generally awarding the same base salary, annual cash incentive, and long-term equity awards to each of our executive officers, except Mr. Cook.
Performance Expectations. We have clear performance expectations of our executive team, and the design of our executive compensation program reflects these expectations. First, each executive officer must demonstrate exceptional personal performance in order to remain part of the executive team. We believe that individuals who underperform should either be removed from the executive team with their compensation adjusted accordingly, or be dismissed from Apple. Second, each executive officer must contribute to Apple’s overall success rather than focus solely on specific objectives within his or her primary area of responsibility.
Compensation Practices. We follow sound compensation practices to support our guiding principles and align Apple’s executive compensation program with the interests of our shareholders.
What we do:
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Guiding Principles
Team-Based Approach. We apply a team-based approach to the compensation of our named executive officers with internal pay equity as a primary consideration.
Performance Expectations. We establish clear, quantitative performance goals focused on Apple’s overall success rather than on objectives specific to each named executive officer’s areas of responsibility.
Emphasis on Long-Term Equity Incentives. We emphasize long-term performance, retention, and alignment between the interests of our named executive officers and shareholders by significantly weighting their compensation toward long-term equity awards.
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Compensation Practices
Executive Compensation Policies and Practices. We are committed to sound executive compensation policies and practices, as highlighted in the following table.
Independent compensation consultant |
The Compensation Committee has directly retained an independent compensation consultant that |
Annual compensation risk assessment |
The Compensation Committee conducts an annual risk assessment of our compensation program. | ||
Prohibition on hedging, pledging, and short sales | We prohibit short sales, transactions in derivatives of Apple securities, including hedging transactions, and pledging of shares by |
Stock ownership guidelines |
We have robust stock ownership guidelines for our named executive officers. | ||
Equity clawback policy | Our RSU agreements have a recoupment provision requiring repayment to Apple of any shares or other amounts that may be paid in respect of RSUs in the event of certain acts of misconduct. | ||
Vesting requirements for dividend equivalents | We apply the same vesting restrictions and performance conditions |
At-will employment |
We employ our named executive officers at |
What we don’t do:will.
No pension or other special benefits |
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No change of control payments | We do not offer change of control payments orgross-ups of related excise taxes. | ||
No retirement vesting | We do not include retirement vesting provisions in equity awards. | ||
No severance arrangements | We do not have severance arrangements with any of our named executive officers. | ||
No repricing | We do not allow repricing of stock options without shareholder approval. |
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Discretion and Judgment of the Compensation Committee
The Compensation Committee, consisting entirely of independent directors, is responsible forreviews and approves the compensation of Apple’s compensation and incentive plans and programs, approves all compensation for Apple’snamed executive officers and acts as the administrativeadministering committee for Apple’s employee equity compensation plans.
Each year, the Compensation Committee conducts an evaluation of Apple’s executive compensation program to determine if any changes would be appropriate. In making these determinations,this determination, the Compensation Committee may consult with its independent compensation consultant and management, as described below; however, the Compensation Committee uses its own judgment in making final decisions regarding the compensation paid to our named executive officers.
The Role of the Compensation Consultant. The Compensation Committee selects and retains the services of its own independent compensation consultant and annually reviews the performance of the selected consultant. As part of the review process, the Compensation Committee considers the independence of the consultant in accordance with applicable SEC and NASDAQNasdaq rules.
Since 2014, the Compensation Committee has engaged the services of Pay Governance, LLC (“Pay Governance”), an independent executive compensation consulting firm. During 2015,2018, Pay Governance did not provide any otherprovided no services to Apple other than services for the Compensation Committee, and worked with Apple’s management, as directed by the Compensation Committee, only on matters for which the Compensation Committee is responsible.
At the Compensation Committee’s request, Pay Governance regularly attends Compensation Committee meetings. Pay Governance also communicates with the Chair of the Compensation Committee outside committee meetings regarding matters related to the Compensation Committee’s responsibilities. In 2015,2018, the Compensation Committee generally sought input from Pay Governance on a range of external market factors, including evolving compensation trends, appropriate peer companies,market reference points, and market surveycompensation data. Pay Governance also provided general observations about Apple’s compensation programs and managementabout management’s recommendations regarding the amount and form of compensation for our named executive officers.
The Role of the Chief Executive Officer.At the Compensation Committee’s request, Mr. Cook provides input regarding the performance and appropriate compensation of the other named executive officers. The Compensation Committee considers Mr. Cook’s evaluation of the other executive officers because ofand his direct knowledge of each named executive officer’s performance and contributions.contributions when making compensation decisions. Mr. Cook is not present during voting or deliberations by the Compensation Committee regarding his own compensation.
The Role of Peer Companies and Benchmarking.The Compensation Committee reviews peer group composition each year. With the assistance of Pay Governance, the Compensation Committee identified a groupgroups of companies to serve as market reference as peer groupspoints for compensation comparison purposes for 2015.2018. A primary peer group was developed for reference consisting of U.S.-based, stand-alone, publicly traded companies in the technology, media, and internet services industries that, in the Compensation Committee’s view, compete with Apple for talent. The threshold revenue and market capitalization requirements for a company to be considered for the primary peer group for 2018 were $15 billion and $35 billion, respectively.
A secondary peer group of premier companies that have iconic brands or are industry or category leaders, rely on significant R&Dresearch and development and innovation for growth, and require highly skilledhighly-skilled human capital was also considereddeveloped as an additional reference set for the Compensation Committee.
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The chart below lists the companies in eachthe primary and secondary peer group are listed below. Unless otherwise specified, referencesgroups. References in this Compensation Discussion and Analysis to peer companies include both the primary and the secondary peer group companies.
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The Compensation Committee selected the following companies for the primary peer group for 2015:
Primary Peer Group |
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Alphabet | IBM |
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Amazon |
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AT&T | Microsoft |
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| Oracle |
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Cisco Systems |
| Qualcomm | General Electric | |||||
Comcast |
| Time Warner | ||||||
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The threshold revenue and market capitalization requirements for a company to be considered for the primary peer group for 2015 were $15 billion and $35 billion, respectively. In addition, although each was slightly below the revenue threshold, the Compensation Committee decided to retain Viacom and CBS in the primary peer group for consistency. Based on these criteria, Apple is significantly larger than the other companies in the primary peer group, with 2015 revenue of $233.7 billion and market capitalization of $639.9 billion as of the end of 2015.
The Compensation Committee selected the following companies for the secondary peer group for 2015:
Johnson & Johnson | ||
Disney | ||
Twenty-First Century Fox | Nike | |
Verizon | PepsiCo | |
Procter & Gamble | ||
The Compensation Committee’s executive compensation determinations are subjective and the result of the Compensation Committee’s business judgment, which is informed by the experience of the members of the Compensation Committee as well as input from, and peer group data provided by, the Compensation Committee’s independent compensation consultant. The Compensation Committee reviews compensation practices and program design at peer companies to inform its decision-making process so it can set total compensation levels that it believes are commensurate with Apple’sthe relative size, scope, and performance.performance of Apple. The Compensation Committee, however, does not set compensation components to meet specific benchmarks as compared to peer companies, such as targeting salaries at a specific market percentile. The Compensation Committee believes that over-reliance on benchmarking can result in compensation that is unrelated to the value delivered by our executive officers because compensation benchmarking does not take into account the specific performance of the executive officers or the relative size and performance of Apple. The Compensation Committee’s executive compensation determinations are subjective and the result of the Compensation Committee’s business judgment, which is informed by the experiences of the members of the Compensation Committee as well as input from, and peer group data provided by, the Compensation Committee’s independent compensation consultant.
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Consideration of Say-on-Pay Vote Results.Shareholder Feedback. We value the feedback provided by our shareholders and have discussions with many of our shareholders on an ongoing basisthem regarding various corporate governance topics, including executive compensation. In 2014, the Compensation Committee considered input from shareholders when it conducted a comprehensive review of Apple’s executive compensation program. Following this review, several significant design changes were made to align the executive compensation program more closely with market practices and place a greater emphasis on performance-based compensation. These design changes were phased in during 2014 and fully implemented for 2015.
Shareholders are also provided with the opportunity to cast an annual advisory vote on the compensation of our named executive compensation.officers. At Apple’s 20152018 annual meeting of shareholders, shareholders indicated their overwhelming support for the compensation of our named executive officers, with approximately 75% of the votes cast on the 95% supporting oursay-on-pay proposal voted for the proposal. No additional changes were made to thethird consecutive year. The Compensation Committee considered this result and shareholder feedback and approved an executive compensation program for 2015 in consideration of this result.
2019 that is similar to the 2018 program. The Compensation Committee will continue to consider shareholder feedback and the results ofsay-on-pay votes when making future compensation decisions for the named executive officers.decisions.
20152018 Named Executive Officer Compensation
Our executive compensation program is designed to be simplemotivate and reward exceptional performance in a straightforward and effective way, while appropriately reflectingalso recognizing the remarkable size, scope, and success of Apple’s business, as well as the responsibilities and performancebusiness. The compensation of our named executive officers. There areofficers has three main elements to the executive compensation program:
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Cash Compensation Elements and Awardslong-term equity awards.
Annual Base Salary. Base salary is a customary, fixed element of compensation intended to attract and retain executives. TheWhen setting the annual base salaries of our named executive officers, the Compensation Committee considers market data provided by its independent compensation consultant, internal pay equity, among the executive officers and Apple’s financial results and market capitalizationsize relative to the peer companies when settingcompanies. The annual base salaries. Consistent with salary levels set during the prior fiscal year, eachsalaries of our named executive officers other thanwere not changed for 2018. Mr. Cook, was paid aCook’s annual base salary of $1 million for 2015, and Mr. Cook was paid a base salary of $2 million for 2015.
Taking the factors listed in the preceding paragraph into consideration, and in recognition of Mr. Cook’s individual performance and remarkable leadership, the Compensation Committee approved a $1 million increase in Mr. Cook’s base salary to $3 million, effective as of the beginning of 2016.
Annual Cash Incentive.The Compensation Committee approves, on an annual basis, a performance-based cash incentive opportunity for our executive officers based on the achievement of annual financial performance goals. For 2015,and each of our other named executive officers had a thresholdofficer’s annual cash incentive opportunity of 100% of base salary a target annual incentive opportunity of 200% of base salary and a maximum annual incentive opportunity of 400% of base salary.was $1 million.
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Annual Cash Incentive. Our annual cash incentive program is a variable,at-risk component of our named executive officers’ compensation that is aligned with Apple’s annual financial results. Net sales and operating income, as determined in accordance with generally accepted accounting principles, were chosenare used as the performance measures for the 2015 annual cash incentive opportunityprogram because they reflect commonly recognized measures of overall company performance and profitability and are associated withdrivers of shareholder value creation. Goals for each
The annual cash incentive program provides payout opportunities based on the achievement of thepre-determined financial goals that require our named executive officers to meet high standards of performance measures were set at threshold, target, and maximum levels in the first quarter of 2015. The threshold, target and maximum net sales goals were set approximately 3%, 9% and 15% higher ($5.2 billion, $16.2 billion, and $27.2 billion, respectively) than actual net sales reported for 2014. The threshold operating income goal was set at approximately the same level as actual operating income for 2014, with the target and maximum goals set approximately 5% and 7% higher ($2.6 billion and $3.8 billion, respectively).
Payouts of thelevels. Actual annual cash incentive payouts are determined based on an equal weighting for the net sales and operating income measures.measures and are linearly interpolated for achievement between the applicable threshold, target, and maximum goals, as approved by the Compensation Committee. There is no payout for a particular performance measure unless the threshold performance goal is achieved with respect to that measure. Potential payouts are determined based onmeasure, and the highestmaximum total payout is capped at 400% of annual base salary if performance level achieved for eachexceeds both of the maximum performance measure for the fiscal year and are linearly interpolated for achievement between the threshold, target and maximum goals. The Compensation Committee may, in its discretion, reduce (but not increase) the actual payout of any individual’s annual cash incentive based on Apple’s performance and itsthe Compensation Committee’s subjective assessment of the named executive officer’s overall performance.
Performance Measure (Weighting) | Threshold Goal | Target Goal | Maximum Goal | Actual Performance | ||||||||||||
Net Sales (50%) | $ | 188,000 | $ | 199,000 | $ | 210,000 | $ | 233,715 | ||||||||
Operating Income (50%) | $ | 52,500 | $ | 55,130 | $ | 56,250 | $ | 71,230 | ||||||||
Maximum Potential Payout (% Base Salary) | 100% | 200% | 400% | 400% |
As shown inThe Compensation Committee established goals under the table above, our actual2018 annual cash incentive program taking into consideration Apple’s 2017 financial results and 2018 expectations, macroeconomic factors, and alignment between payout opportunities and performance levels. For both net sales and operating income, the 2018 performance goals were set higher than 2017 results, as shown below.
Net Sales ($B) | Operating Income ($B) |
At the threshold performance level, the payout opportunity was 50% of annual base salary for 2015 significantly exceededeach performance measure; at the target performance level, the payout opportunity was 100% of annual base salary for each performance measure; and at the maximum goals set byperformance level, the Compensation Committee, resultingpayout opportunity was capped at 200% of annual base salary for each performance measure.
For 2018, as shown in the maximum potential payoutchart above, we achieved net sales of $265.6 billion and operating income of $70.9 billion, each named executive officer’srepresenting a year-over-year increase of 16%, and exceeding the 2018 maximum annual cash incentive at 400%program goals for both of base salary.those performance measures. The Compensation Committee determined that no downward adjustments to the payouts would be made based on Apple’s or an individual’s2018 performance and the individual contributions of our named executive officers and approved the maximum total payout for each named executive officer for 2015.at 400% of annual base salary.
Long-Term Equity Elements and Awards
OurThe equity component of our named executive officers’ compensation program emphasizes long-term shareholder value creation through the exclusive use of equity awards in the form of RSUs to deliver long-term compensation incentives. The Compensation Committee has discretion to approve awards with different vesting conditions as it deems necessary to meet the objectives of our executive compensation program.performance- and time-based RSU awards.
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Performance-Based RSUs.The RSU awards with performance-based RSUs granted tovesting are a substantial,at-risk component of our named executive officersofficers’ compensation that is tied to Apple’s long-term performance. The number of performance-based RSUs that vest according to the applicable vesting schedules described below, dependingdepends on Apple’s total shareholder return relative to the other companies in the S&P 500 for the applicable performance period (“Relative TSR”). for the performance period. The Compensation Committee chose Relative TSR as a straightforward and objective metric for
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Apple’s shareholders to evaluate our performance against the performance of other companies and to align the interests of our named executive officers with shareholders’ interests.the interests of our shareholders in creating long-term value.
We measure Relative TSR for a specifiedthe applicable performance period of time based on the change in each company’s stock price during that period, taking into account any dividends paid during that period, which are assumed to be reinvested in the stock. AnA20-trading-day averaging period is used to determine the beginning and ending stock price values used to calculate Relative TSR for the performance period.total shareholder return of Apple and the other companies in the S&P 500. This averaging period mitigates the impact on the long-term Relative TSR results ofone-day or short-term stock price fluctuations at the beginning or end of the performance period. The beginning stock price value is calculated using each company’s average closing stock price for the 20 consecutive trading days immediately prior to the beginning of the performance period. The ending stock price value is calculated using each company’s average closing price for the 20 consecutive trading days ending on the last day of the performance period. If the ending value is lower than the beginning value, a negative TSR results, and vice versa. The change in value from the beginning to the end of the period is divided by the beginning value. That percentagevalue to determine total shareholder return. Apple’s total shareholder return is compared to the TSRtotal shareholder return of other S&P 500 companies, ranked by percentile, to determine the number of performance-based RSUs that vest for each performance period.
Time-Based RSUs.Equity RSU awards with time-based vesting align the interests of our executivesnamed executive officers with the interests of our shareholders and promoteby promoting the stability and retention of a stronghigh-performing executive team over the longer term. Vesting schedules for time-based awards generally require continuous service over multiple years, as described below.
Mr. Cook’s Long-Term Equity Award
Mr. Cook last received an equity award when he was promoted to Chief Executive OfficerCEO in 2011 (the “2011 RSU Award”). At Mr. Cook’s request, the 2011 RSU Award was significantly modified in 2013 to put more than $123 million of the original grant date fair valuea portion of the award at risk through a performance condition based on Apple’s Relative TSR performance. The performance-based vesting schedule applied to Mr. Cook’s 2011 RSU Awardperformance condition requires Apple to outperformtwo-thirds of the comparative companies that were included in the S&P 500 for the entirety of each defined performance period in order for 100% of the performance-based RSUs allocated to that period to vest. The 2011 RSU Award has only has downside risk to Mr. Cook. It does not contain anany upside vesting opportunity above 100%, and there is no interpolation for results between the Relative TSR percentile levels. For example, performance at the 65th percentile results in 50% of the performance-based RSUs vesting.levels set forth below.
Relative TSR Percentile v. S&P 500 Companies | Performance-Based RSUs Vesting | |
Top Third | 100% | |
Middle Third | 50% | |
Bottom Third | 0% |
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For the two-yearthree-year performance period offrom August 25, 20132015 through August 24, 2015,2018, 280,000 performance-based RSUs were subject to the Relative TSR performance condition. Apple’s Relative TSR for this performance period was 76.76%, which placed Apple at the 90th88th percentile of the 458 companies that were included in the S&P 500 for the entire performance period. As a result, all of the 280,000 performance-based RSUs vested on August 24, 2015. There are 4,760,000 unvested time- and performance-based RSUs remaining under the 2011 RSU Award, scheduled to vest, subject to Mr. Cook’s continued employment with Apple through the applicable vesting dates, as follows:2018. Apple’s total shareholder return during this3-year
TSR Measurement Period | Payout Based on TSR vs. S&P 500 Companies | |||||||||||||||||||||||||
Vesting Date | Time-Based RSUs Scheduled to Vest | Start | End | Bottom Third | Middle Third | Top Third | ||||||||||||||||||||
8/24/2016 | 980,000 | 8/25/2013 | 8/24/2016 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
8/24/2017 | 280,000 | 8/25/2014 | 8/24/2017 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
8/24/2018 | 280,000 | 8/25/2015 | 8/24/2018 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
8/24/2019 | 280,000 | 8/25/2016 | 8/24/2019 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
8/24/2020 | 280,000 | 8/25/2017 | 8/24/2020 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
8/24/2021 | 980,000 | 8/25/2018 | 8/24/2021 | 0 | 140,000 | 280,000 | ||||||||||||||||||||
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Total | 3,080,000 | 0 | 840,000 | 1,680,000 |
Other Named Executive Officer Long-Term Equity Awards
The Compensation Committee generally grants equity awards to our executive officers at the beginning of each fiscal year. In October 2014, the Compensation Committee awarded RSUs with a grant date value of $20 million (the “Annual RSU Awards”) to each of our named executive officers, other than Mr. Cook. The Annual RSU Awards were allocated between 60% time-based and 40% performance-based RSUs as a percentage of the grant date value reported in the Summary Compensation Table. The value and relative mix of the Annual RSU Awards performance period was a subjective determination by the Compensation Committee based on its own business judgment after taking into consideration such factors as market compensation data provided by its independent compensation consultant, its subjective assessment of the appropriate relationship between time- and performance-based awards, historical equity grants, and, with respect to the value of the awards, financial results and market capitalization compared to peer companies.
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Other Named Executive Officers’ Long-Term Equity Awards
In 2018, the Compensation Committee granted long-term equity awards to Ms. Adams, Ms. Ahrendts, Mr. Maestri, and Mr. Williams consisting of both performance- and time-based RSUs (the “2018 RSU Awards”).
Performance-Based RSUs. The performance-based RSUs awarded to Ms. Ahrendts, Mr. Maestri, and Mr. Williams were granted on October 1, 2017, the first day of the three-fiscal-year performance period applicable to the awards. The performance-based RSUs awarded to Ms. Adams were granted on November 13, 2017 in connection with her hiring.
The Annualtarget number of performance-based RSUs granted to each of these named executive officers was determined by dividing $10 million by the closing stock price on the date of grant. Using the closing price on the date of grant was a change from 2017, when the target number of performance-based RSUs was determined by dividing $10 million by the grant date fair value of one performance-based RSU. This change was implemented in 2018 to align the methodology used to determine the target number of performance-based RSUs with the methodology used to determine the number of time-based RSUs. The grant date fair value of the performance-based RSUs awarded to each of these named executive officers is approximately $11.5 million, as reported in the table entitled “Summary Compensation Table—2018, 2017, and 2016.”
The performance-based component of the 2018 RSU Awards granted asto Ms. Ahrendts, Mr. Maestri, and Mr. Williams has a three-fiscal-year performance period from the beginning of 2018 through the end of 2020. The performance-based component of the 2018 RSU Awards granted to Ms. Adams has a performance period from her first day of employment, November 13, 2017, through the end of 2020.
Between zero and 200% of the target number of RSUs have a three-year performance-period (fiscal years 2015 through 2017) andfor the performance-based component of each 2018 RSU Award will vest on October 1, 2017,2020, subject to continued employment through that date, with zero to 200% of the target number of shares vesting depending on Apple’s Relative TSR percentile ranking for the applicable performance period, as follows:
Relative TSR Percentile v. S&P 500 Companies | Performance-Based RSUs Vesting as a Percentage of Target | |
85% or above | 200% | |
55% | 100% | |
25% | 25% | |
below 25% | 0% |
Relative TSR Percentile v. S&P 500 Companies | Performance-Based RSUs Vesting as a Percentage of Target | |
85th or above | 200% | |
55th | 100% | |
25th | 25% | |
below 25th | 0% |
ThisFor each performance period, this vesting schedule requires Relative TSR performance at the 25th25th percentile to vest in the threshold number of shares,performance-based RSUs, Relative TSR performance above the median at the 55th55th percentile to vest in the target number of shares,performance-based RSUs, and Relative TSR performance that is significantlyat or above the median at the 85th85th percentile in order to vest in the maximum 200% of the target number of shares.performance-based RSUs. No performance-based RSUs vest if Apple’s Relative TSR performance is below the 25th25th percentile. In addition, if Apple’s total shareholder return for the performance period is negative, the number of performance-based RSUs that vests is capped at 100% of the target number of sharesperformance-based RSUs regardless of our percentile ranking. If Apple’s Relative TSR percentile ranking is at or above the 25th25th percentile and between the other levels shown in the table above, the portion of the performance-based RSUs that vests is linearly interpolated between the two nearest vesting percentages.
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2018 Performance-Based RSU Payout Results. During 2018, Ms. Ahrendts, Mr. Maestri, and Mr. Williams each vested in performance-based RSUs that were granted on October 17, 2014. For the three-fiscal-year performance period from the beginning of 2015 through the end of 2017, Ms. Ahrendts, Mr. Maestri, and Mr. Williams each vested in 125,494 performance-based RSUs, representing 183% of the target number of performance-based RSUs, based on Apple’s Relative TSR at the 80th percentile of the companies that were included in the S&P 500 for the period. Apple’s total shareholder return during this3-year performance period was 65.53%.
Time-Based RSUs.The Annualtime-based RSUs awarded to Ms. Ahrendts, Mr. Maestri, and Mr. Williams were granted on October 15, 2017, the same grant date as all Apple employees receiving a time-based annual RSU award for 2018. The time-based RSUs awarded to Ms. Adams were granted on November 13, 2017, in connection with her hiring. The number of time-based RSUs granted to each of these named executive officers was determined by dividing $10 million by the closing stock price on the date of grant. The grant date fair value of the time-based RSUs awarded to each of these named executive officers was approximately $10 million, as reported in the table entitled “Summary Compensation Table—2018, 2017, and 2016.”
The time-based component of the 2018 RSU Awards granted as time-based RSUs vestto Ms. Ahrendts, Mr. Maestri, and Mr. Williams vests in three equal annual installments commencing on April 1, 20172020 (approximately two andone-half years following the grant date), subject to continued employment through each applicable vesting date. This schedule means that, to receive the full benefit of the time-based RSU award,RSUs, the recipient must generally perform approximately four andone-half years of continuous service following the grant date. The April vesting dates for the time-based RSUs were selected to balance the October vesting of the performance-based RSUs and provide regular vesting intervals.
The time-based component of the 2018 RSU Awards granted to Ms. Adams vests in equal installments on May 13, 2018; November 13, 2018; November 13, 2019; and November 13, 2020, subject to her continued employment through each vesting date. The vesting schedule for the time-based component of Ms. Adams’ 2018 RSU Award was determined to approximate the expected value and timing of compensation Ms. Adams forfeited at her prior employer when she joined Apple.
Dividend Equivalents.Equivalents
At Mr. Cook’s request, none of his RSUs participate in dividend equivalents. UnvestedAll other RSUs granted to all other employees of Apple have dividend equivalents. Dividend equivalentsequivalent rights, which entitle RSU holders of RSUs to the same dividend value per share as holders of common stock.our shareholders. Dividend equivalents are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. Dividend equivalents are accumulated and paid when the underlying sharesRSUs vest.
Other Benefits
Our named executive officers are eligible to participate in our health and welfare programs, Employee Stock Purchase Plan, 401(k) Plan,plan, matching charitable gifts program, vacationcash-out program, and other benefit programs on the same basis as other employees.
Security.Deferred Compensation Plan.We adopted a nonqualified deferred compensation plan in 2018, effective for deferrals beginning in 2019. The plan allows eligible participants, including our named executive officers, to defer a portion of their base salary and annual cash incentive, subject to plan rules. The deferred compensation plan is unfunded and unsecured. We do not provide any matching contributions under the deferred compensation plan or allow for deferral of RSUs.
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Security and Private Aircraft. The personal safety and security of our employees is of the utmost importance to Apple and itsour shareholders. Accordingly, weWe provide risk-based, business-related and personal security services to our employees, including our named executive officers, as appropriate. Although not requested by Mr. Cook, given the profile of the company and his role as CEO, Apple also provides risk-based personal security services for
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him, as determined to be appropriate by our security team. TheWe do not consider the security measures provided to our named executive officers to be a personal benefit, but rather reasonable and necessary expenses for the benefit of Apple. However, in accordance with SEC disclosure rules, the aggregate incremental cost of these services is reported in the Summarytable entitled “Summary Compensation Table in accordance with SEC disclosure rules. We do not consider theseTable—2018, 2017, and 2016.”
As an additional security measures to be a personal benefitmeasure for Mr. Cook, but rather a reasonablethe Board requires that he use private aircraft for all business and necessary expense forpersonal travel. The Board implemented this policy in 2017 in the benefitinterests of Apple.
Relocation Assistance. Relocation assistance, including a gross-up for taxable relocation benefits, is provided to employees when necessarysecurity and efficiency based on business needs. Ms. Ahrendtsour global profile and the highly visible nature of Mr. Maestri were each provided relocation assistance to move closer to Apple’s headquarters in connection with their hiring. A portion of these relocation expenses were incurred in 2015 and are reported in the Summary Compensation Table.
Severance. We generally do not enter into severance arrangements with our executive officers. An exception to this practice was made in connection with hiring Ms. Ahrendts in recognition of the risk she assumed by leaving her priorCook’s role as chief executive officerCEO. Mr. Cook recognizes imputed taxable income and is not provided a tax reimbursement for personal use of Burberry. Ms. Ahrendts has a limited cash severance arrangement for the first three years of her employment and equity acceleration for a portion of her outstanding equity awards, in each case, in the event of a termination by Apple other than for “Cause” or if she resigns for “Good Reason.” Details of the arrangement with Ms. Ahrendts are described under “Executive Compensation—Executive Compensation Tables” in the section entitled “Potential Payments Upon Termination or Change in Control.”private aircraft.
Chartered Aircraft. Apple does not own a private plane. From time to time, members of the executive team, including each of theour named executive officers other than Mr. Cook may request charteredprivate aircraft services to facilitate travel that is directly and integrally related to the performance of his or hertheir job duties and wherewhen the use of a chartered planeprivate aircraft will increase efficiency and/or security associated with thata particular trip. Occasionally, spouses or other family members may accompany ana named executive officer on these flights. When this occurs, we require the named executive officer to pay the greater of the incremental cost, if any, to accommodate these guests on the flight or the imputed income amount determined using the IRS Standard Industry Fare Level (SIFL) rate. Accordingly, there is no incremental cost to Apple forwhen family accompanimentmembers accompany an executive on charteredprivate business flights.
Relocation Assistance. Relocation assistance, including agross-up for taxable relocation benefits, is provided to employees when necessary based on business needs. Ms. Adams was provided relocation assistance to move closer to Apple’s headquarters in connection with her hiring. Ms. Adams has 18 months from her date of hire to complete her relocation, and the portion of her relocation expenses incurred in 2018 is reported in the table entitled “Summary Compensation Table—2018, 2017, and 2016.”
Tax Assistance. The Compensation Committee has approved the payment of certain fees to cover personal tax services related to the tax assistance and relocation benefits Ms. Ahrendts received in 2014 and 2015. The portion of these fees paid by Apple in 2018 are reported in the table entitled “Summary Compensation Table—2018, 2017, and 2016.”
Governance and Other Considerations
Tax Deductibility of Compensation Expense. Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for compensation paid to the chiefcertain executive officer and the three most highly-compensated executive officers employed by the company at the end of the year (other than the chief financial officer). However, the $1 million deduction limit generally does not apply to compensation that is performance-based and provided under a shareholder-approved plan.officers. While the Compensation Committee considers the deductibility of awards as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by Apple for tax purposes.
In general, the 2015 annual cash incentive opportunities for executive officers have been designed in a manner intended to be exempt from the deduction limitation of Section 162(m) because they are paid based on achievement of pre-determined performance goals established by the Compensation Committee pursuant to our shareholder-approved equity incentive plan.
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As a result of the modification of Mr. Cook’s 2011 RSU Award, we intend that the tranches of the award subject to performance criteria with measurement periods that begin after the June 21, 2013 modification be exempt from the deduction limitation of Section 162(m). In addition, the performance-based RSU awards granted to our other named executive officers in 2015 are also intended to be exempt from the deduction limitation of Section 162(m).
BaseThe 2018 base salary and time-based RSU awards, with only time-based vesting requirements, which represent a portion of the equity awards granted to our named executive officers, are not exempt from Section 162(m), and therefore will not be deductible to the extent the $1 million limit of Section 162(m) is exceeded. The 2018 cash incentive opportunities and performance-based RSU awards granted to our named executive officers, as applicable, were designed in a manner intended to be exempt from the deduction limitation of Section 162(m), based on the law in effect at that time, because they are paid based on the achievement ofpre-determined performance goals established by the Compensation Committee pursuant to our shareholder-approved equity incentive plan, as was the portion of Mr. Cook’s 2011
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RSU Award subject to performance criteria with measurement periods that begin after the June 21, 2013 modification.
Despite the Compensation Committee’s efforts to structure thecertain elements of our named executive team annual cash incentivesofficers’ compensation granted in 2018 and performance-based RSUsearlier years in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, no assurance can be given that compensation otherwise intended to satisfy the requirements for exemption from Section 162(m) in fact will be exempt from its deduction limits because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation we intend to satisfyincluding uncertainties created by Federal legislation repealing the requirements forprevious exemption from Section 162(m) in fact will.’s deduction limit for performance-based compensation, generally effective for taxable years beginning after December 31, 2017. Further, the Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with Apple’s business needs.
Recoupment of RSU Awards.Equity Clawback.The named executive officers’ RSU awardsRSUs are granted pursuant to the terms of our standard RSU agreements.agreements, which contain a recoupment provision. These terms require an employee to deliver or otherwise repay to Apple any shares or other amount that may be paid in respect of an RSU awardRSUs in the event the employee commits a felony while employed by Apple, or engages in a breach of confidentiality, commits an act of theft, embezzlement or fraud, or materially breaches any agreement with Apple.Apple while employed by Apple or at any time thereafter.
Prohibition on Hedging, Pledging, and Short Sales. We prohibit transactions in derivatives of Apple stock, including hedging transactions, for all directors, officers, employees, consultants, and contractors of Apple. In addition, we prohibit pledging of Apple stock as collateral by directors and executive officers of Apple and prohibit short sales of Apple stock by directors and executive officers of Apple.officers.
Stock Ownership Guidelines. Under our stock ownership guidelines, Mr. Cook is expected to own shares of Apple stock that have a value equal to ten10 times his annual base salary. Although Mr. Cook was required to satisfy the stock ownership guidelines within five years of its implementation in 2012, he already owns shares with a value significantly in excess of the guidelines. Other namedAll other executive officers are expected to own shares that have a value equal to three times their annual base salary by the later of February 6, 2018, or within five years after anof the officer first becomesbecoming subject to the guidelines. Each executive officer is in compliance with the guidelines. Shares may be owned directly by the individual, or owned jointly with or separately by the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse, or the individual’s children.
Risk Considerations. TheIn establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers in establishing and reviewing the executive compensation program, whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. See the section entitled “Board Oversight of Risk Management” above for an additional discussion of risk considerations.
Apple Inc. | 20162019 Proxy Statement | 3437
Summary Compensation Table—2015, 2014,2018, 2017, and 20132016
The following table, showsfootnotes, and related narrative show information regarding the total compensation of each named executive officer for 2015, 20142018, 2017, and 2013,2016, except in the casescase of Ms. AhrendtsAdams and Mr. Maestri,Williams, who were not named executive officers in 2013, and Mr. Sewell, who was not a named executive officer in 20132017 or 2014.2016.
Name and Principal Position (a) | Year (b) | Salary ($)(c) | Bonus ($)(d) | Stock Awards(1) ($)(e) | Non-Equity Incentive Plan Compensation(2) ($)(f) | All Other Compen- sation ($)(g) | Total ($)(h) | |||||||||||||||||||||
Tim Cook Chief Executive Officer | 2015 | 2,000,000 | — | — | 8,000,000 | 281,327 | (3) | 10,281,327 | ||||||||||||||||||||
|
2014 |
| 1,748,462 | — | — | 6,700,000 | 774,176 | 9,222,638 | ||||||||||||||||||||
2013 | 1,400,006 | — | — | 2,800,000 | 52,721 | 4,252,727 | ||||||||||||||||||||||
Luca Maestri Senior Vice President, Chief Financial Officer | 2015 | 1,000,000 | — | 20,000,105 | 4,000,000 | 337,872 | (4) | 25,337,977 | ||||||||||||||||||||
2014 | 717,211 | — | 11,335,043 | 1,608,255 | 342,292 | 14,002,801 | ||||||||||||||||||||||
Angela Ahrendts Senior Vice President, Retail and Online Stores | 2015 | 1,000,000 | — | 20,000,105 | 4,000,000 | 779,124 | (5) | 25,779,229 | ||||||||||||||||||||
2014 | 411,538 | 500,000 | 70,001,196 | 1,648,352 | 790,038 | 73,351,124 | ||||||||||||||||||||||
Eddy Cue Senior Vice President, Internet Software and Services | 2015 | 1,000,000 | — | 20,000,105 | 4,000,000 | 52,136 | (6) | 25,052,241 | ||||||||||||||||||||
|
2014 |
| 947,596 | — | 20,000,900 | 3,437,500 | 59,743 | 24,445,739 | ||||||||||||||||||||
|
2013 |
| 866,061 | — | — | 1,750,000 | 31,044 | 2,647,105 | ||||||||||||||||||||
Dan Riccio Senior Vice President, Hardware Engineering | 2015 | 1,000,000 | — | 20,000,105 | 4,000,000 | 17,521 | (7) | 25,017,626 | ||||||||||||||||||||
|
2014 |
| 947,596 | — | 20,000,900 | 3,437,500 | 17,239 | 24,403,235 | ||||||||||||||||||||
|
2013 |
| 866,061 | — | — | 1,750,000 | 16,791 | 2,632,852 | ||||||||||||||||||||
Bruce Sewell Senior Vice President, General Counsel and Secretary | 2015 | 1,000,000 | — | 20,000,105 | 4,000,000 | 17,521 | (8) | 25,017,626 |
Name and Principal Position (a) | Year (b) | Salary(1) ($)(c) | Bonus ($)(d) | Stock Awards(2) ($)(e) | Non-Equity Incentive Plan Compensation(3) ($)(f) | All Other Compensation ($)(g) | Total ($)(h) | |||||||||||||||||||||
Tim Cook
Chief Executive Officer | 2018 | 3,000,000 | — | — | 12,000,000 | 682,219 | (4) | 15,682,219 | ||||||||||||||||||||
2017 | 3,057,692 | — | — | 9,327,000 | 440,374 | 12,825,066 | ||||||||||||||||||||||
| 2016
|
| 3,000,000 | — | — | 5,370,000 | 377,719 | 8,747,719 | ||||||||||||||||||||
Luca Maestri
Senior Vice President, | 2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 17,804 | (5) | 26,509,692 | ||||||||||||||||||||
2017 | 1,019,231 | — | 20,000,113 | 3,109,000 | 13,271 | 24,141,615 | ||||||||||||||||||||||
| 2016
|
| 1,000,000 | — | 20,000,083 | 1,790,000 | 13,486 | 22,803,569 | ||||||||||||||||||||
Kate Adams
Senior Vice President,
| 2018 | 884,615 | — | 21,509,765 | 4,000,000 | 306,280 | (6) | 26,700,660 | ||||||||||||||||||||
Angela Ahrendts
Senior Vice President, | 2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 46,942 | (7) | 26,538,830 | ||||||||||||||||||||
2017 | 1,019,231 | — | 20,000,113 | 3,109,000 | 87,728 | 24,216,072 | ||||||||||||||||||||||
| 2016
|
| 1,000,000 | — | 20,000,083 | 1,790,000 | 112,809 | 22,902,892 | ||||||||||||||||||||
Jeff Williams
Chief Operating Officer
| 2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 51,818 | (8) | 26,543,706 |
(1) | For 2018, Mr. Cook’s annual base salary was $3 million and the annual base salary for each of our other named executive officers was $1 million. The 2018 salary for Ms. Adams reflects the portion of her $1 million annual base salary that she earned from her date of hire through the end of 2018. Because 2017 was a53-week fiscal year, the 2017 salary amounts reflect an extra week of pay. |
(2) | The grant date fair value for time-based RSUs is measured based on the closing |
Apple Inc. | 2019 Proxy Statement | 38
Significant Accounting Policies found in Part II, Item 8, “Financial Statements and Supplementary Data” in the Notes to Consolidated Financial Statements in the Annual Report on Form10-K for the year ended September 29, 2018, and also see footnote 1 to the table entitled “Grants of Plan-Based Awards— |
Apple Inc. | 2016 Proxy Statement | 35
As described under “Executive Compensation—Compensation Discussion and Analysis,” the named executive officers’ annual cash incentives are based on the performance of Apple relative topre-determined financial goals for the year and the performance of the individual named executive |
This amount represents: (i) Apple’s contributions to Mr. Cook’s account under its 401(k) plan in the amount of |
This amount represents: (i) Apple’s contributions to Mr. Maestri’s account under its 401(k) plan in the amount of |
(6) | This amount represents: (i) Apple’s contributions to Ms. Adams’ account under its 401(k) plan in the amount of $8,250; (ii) term life insurance premiums paid by Apple in the amount of $1,483; (iii) relocation expenses in the amount of |
This amount represents: (i) Apple’s contributions to Ms. Ahrendts’ account under its 401(k) plan in the amount of |
This amount represents: (i) Apple’s contributions to Mr. |
|
|
Compensation of Named Executive Officers
The table entitled “Summary Compensation Table—2015, 2014,2018, 2017, and 2013” above quantifies the value of the different forms of compensation of each named executive officer for services rendered during 2015, 2014, and 2013. The primary elements of each named executive officer’s total compensation shown2016” reflect actual amounts earned in the table are base salary, an annual cash incentive, and long-term equity awards consisting of time-based and performance-based RSUs. All other compensation is reported in Column (g) ofrelevant years, while the table entitled “Summary Compensation Table—2015, 2014, and 2013,” as further describedamounts in the footnotes to the table.
The table entitled “Summary Compensation Table—2015, 2014, and 2013” should be read in conjunction with the Compensation Discussion and Analysis and the following tables and narrative descriptions. The table entitled “Grants of Plan-Based Awards—2015” and the accompanying description provide information regarding the annual incentive opportunities awarded to named executive officers in 2015.stock awards column reflect accounting values. The tables entitled “Outstanding Equity Awards at 2015 2018Year-End” and “Option Exercises and Stock“Stock Vested—2015”2018” provide further information on the named executive officers’ potential realizable value and actual value realized with respect to their equity awards.
Apple Inc. | 20162019 Proxy Statement | 3639
Grants of Plan-Based Awards—20152018
The following table shows information regarding the incentive awards granted to the named executive officers for 2015.2018.
Estimated Future Payouts
Plan Awards | Estimated Future Payouts
Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(i) | Grant Date Fair Value of Stock and Option Awards(1) ($)(j) | Grant Date (b) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(i) | Grant Date Fair Value of Stock and Option Awards(1) ($)(j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a) | Award Type | Grant Date (b) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | Award Type | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tim Cook | Cash Incentive | — | 2,000,000 | 4,000,000 | 8,000,000 | — | — | — | — | — | Cash Incentive
| — | 3,000,000 | 6,000,000 | 12,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Luca Maestri | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/17/2014 | — | — | — | — | — | — | 122,863 | 12,000,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/17/2014 | — | — | — | 17,144 | 68,576 | 137,152 | — | 8,000,076 | Performance-based RSUs | 10/1/2017 | — | — | — | 16,221 | 64,885 | 129,770 | — | 11,491,782 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Angela Ahrendts | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/17/2014 | — | — | — | — | — | — | 122,863 | 12,000,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/17/2014 | — | — | — | 17,144 | 68,576 | 137,152 | — | 8,000,076 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eddy Cue | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/17/2014 | — | — | — | — | — | — | 122,863 | 12,000,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/17/2014 | — | — | — | 17,144 | 68,576 | 137,152 | — | 8,000,076 | Time-based RSUs
| 10/15/2017 | — | — | — | — | — | — | 63,699 | 10,000,106 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dan Riccio | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kate Adams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/17/2014 | — | — | — | — | — | — | 122,863 | 12,000,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/17/2014 | — | — | — | 17,144 | 68,576 | 137,152 | — | 8,000,076 | Performance-based RSUs | 11/13/2017 | — | — | — | 14,371 | 57,482 | 114,964 | — | 11,509,621 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Sewell | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/17/2014 | — | — | — | — | — | — | 122,863 | 12,000,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/17/2014 | — | — | — | 17,144 | 68,576 | 137,152 | — | 8,000,076 | Time-based RSUs
| 11/13/2017 | — | — | — | — | — | — | 57,482 | 10,000,144 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Angela Ahrendts | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/1/2017 | — | — | — | 16,221 | 64,885 | 129,770 | — | 11,491,782 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs
| 10/15/2017 | — | — | — | — | — | — | 63,699 | 10,000,106 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeff Williams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/1/2017 | — | — | — | 16,221 | 64,885 | 129,770 | — | 11,491,782 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs
| 10/15/2017 | — | — | — | — | — | — | 63,699 | 10,000,106 |
(1) | The grant date fair value for time-based RSUs is |
Assumptions | ||||||||||||||||
Grant Date | Performance Period End Date | Expected Term (years) | Expected Volatility | Risk-Free Interest Rate | Performance Period End Date | Expected Term (years) | Expected Volatility | Risk-Free Interest Rate | ||||||||
10/17/2014 | 9/30/2017 | 2.95 | 26.99% | 0.77% | ||||||||||||
10/1/2017 | 9/26/2020 | 2.99 | 23.07% | 1.62% | ||||||||||||
11/13/2017 | 9/26/2020 | 2.87 | 23.07% | 1.80% |
Apple used its historical stock prices as the basis for the volatility assumptions. The risk-free interest rates were based on U.S. Treasury rates in effect at the time of grant. The expected term was based on the time remaining in the performance period on the grant date. See Note 1—Summary of Significant Accounting Policies found in Part II, Item 8, “Financial Statements and Supplementary Data” in the Notes to Consolidated Financial Statements in the Annual |
Apple Inc. | 20162019 Proxy Statement | 3740
Description of Plan-Based Awards
Non-Equity Incentive Plan Awards. Each of the “Non-Equity“Non-Equity Incentive Plan Awards” shown in the table entitled “Grants of Plan-Based Awards—2015”2018” was granted under Apple’s 2014 Employee Stock Plan (the “2014 Plan”), which provides flexibility to grant cash incentive awards, as well as equity awards. The material terms of the 2015 2018non-equity incentive awards are described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “Annual Cash Incentive.”
All Other Stock Awards. Each of the time-based and performance-based RSUs shown in the table entitled “Grants of Plan-Based Awards—2015”2018” was granted under, and is subject to, the terms of the 2014 Plan. The Compensation Committee administers the 2014 Plan.
Time-Based RSUs. The time-based RSUs granted on October 17, 201415, 2017 are scheduled to vest in three annual installments commencing on April 1, 2017.2020. The time-based RSUs granted on November 13, 2017 are scheduled to vest in four equal installments on May 13, 2018; November 13, 2018; November 13, 2019; and November 13, 2020. Vesting is generally contingent on each officer’s continued employment with Apple through the applicable vesting date.
Performance-Based RSUs. The performance-based RSUs granted on October 17, 20141, 2017 are scheduled to vest on October 1, 2017,2020, subject to eachthe officer’s continued employment with Apple through the vesting date and satisfaction of the performance conditionscondition for the performance period beginning on September 28, 2014October 1, 2017 and ending on September 30, 2017.26, 2020. The performance-based RSUs granted on November 13, 2017 are scheduled to vest on October 1, 2020, subject to the officer’s continued employment with Apple through the vesting date and satisfaction of the performance condition for the performance period beginning on November 13, 2017 and ending on September 26, 2020. As described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “Other Named Executive OfficerOfficers’ Long-Term Equity Awards,” in each case, between 0% and 200% of the target number of performance-based RSUs vest depending on Apple’s Relative TSR percentile compared to the other companies in the S&P 500 over the performance period, with 100%(i) 25% of the target number of performance-based RSUs vesting if Apple’s Relative TSR performance is at the 25th percentile; (ii) 100% of the target number of performance-based RSUs vesting if Apple’s Relative TSR performance is above the median at the 55th percentile; and (iii) 200% of the target number of performance-based RSUs vesting if Apple’s Relative TSR performance is at or above the 85th percentile. If Apple’s total shareholder return for the performance period is negative, the number of performance-based RSUs that vest is capped at 100% of target. If Apple’s Relative TSR percentile ranking is above the 25th percentile and between the other levels described above, the portion of the performance-based RSUs that vests is linearly interpolated between the two nearest vesting percentages.
Dividend Equivalents. RSUs granted under the 2014 Plan have dividend equivalents, which entitle holders of RSUs to the same dividend value per share as holders of common stock. Dividend equivalents are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. Dividend equivalents are accumulated and paid when the underlying sharesRSUs vest. At Mr. Cook’s request, none of his RSUs participate in dividend equivalents.
Apple Inc. | 20162019 Proxy Statement | 3841
Outstanding Equity Awards at 2015 2018Year-End
The following table shows information regarding the outstanding equity awards held by each of the named executive officers as of September 26, 2015.29, 2018.
Name (a) | Grant Date (b) | Number of Shares (#)(c) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($)(d) | Equity Incentive (#)(e) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($)(f) | Grant Date (b) | Number of Shares or Units of Stock That Have Not Vested (#)(c) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($)(d) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(e) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($)(f) | ||||||||||||||||||||||||||||||
Tim Cook | 8/24/2011 | 3,080,000 | (2) | 353,306,800 | 1,680,000 | (2) | 192,712,800 | 8/24/2011 | 1,540,000 | (2) | 347,639,600 | 840,000 | (2) | 189,621,600 | ||||||||||||||||||||||||||
Luca Maestri | 3/4/2013 | 99,986 | (3) | 11,469,394 | — | — | 10/17/2014 | 40,954 | (3) | 9,244,956 | — | — | ||||||||||||||||||||||||||||
10/7/2013 | 62,790 | (4) | 7,202,641 | — | — | 10/5/2015 | 72,215 | (4) | 16,301,814 | 65,264 | (4)(5) | 14,732,695 | ||||||||||||||||||||||||||||
5/29/2014 | 28,651 | (5) | 3,286,556 | 15,708 | (5)(6) | 1,801,865 | 10/14/2016 | 85,013 | (6) | 19,190,835 | 64,654 | (6)(5) | 14,594,994 | |||||||||||||||||||||||||||
10/17/2014 | 122,863 | (7) | 14,093,615 | 68,576 | (7)(6) | 7,866,353 | 10/1/2017 | — | — | 64,885 | (7)(5) | 14,647,140 | ||||||||||||||||||||||||||||
Angela Ahrendts | 5/1/2014 | 91,952 | (8) | 10,547,814 | — | — | ||||||||||||||||||||||||||||||||||
10/15/2017 | 63,699 | (8) | 14,379,412 | — | — | |||||||||||||||||||||||||||||||||||
5/1/2014 | 156,221 | (9) | 17,920,111 | 80,402 | (9)(6) | 9,222,913 | ||||||||||||||||||||||||||||||||||
Kate Adams | 11/13/2017 | 43,111 | (9) | 9,731,877 | 57,482 | (9)(5) | 12,975,987 | |||||||||||||||||||||||||||||||||
10/17/2014 | 122,863 | (7) | 14,093,615 | 68,576 | (7)(6) | 7,866,353 | ||||||||||||||||||||||||||||||||||
Eddy Cue | 11/2/2011 | 525,000 | (10) | 60,222,750 | — | — | ||||||||||||||||||||||||||||||||||
3/3/2014 | 159,166 | (11) | 18,257,932 | 91,294 | (11)(6) | 10,472,335 | ||||||||||||||||||||||||||||||||||
10/17/2014 | 122,863 | (7) | 14,093,615 | 68,576 | (7)(6) | 7,866,353 | ||||||||||||||||||||||||||||||||||
Dan Riccio | 10/10/2011 | 17,500 | (12) | 2,007,425 | — | — | ||||||||||||||||||||||||||||||||||
Angela Ahrendts | 10/17/2014 | 40,954 | (3) | 9,244,956 | — | — | ||||||||||||||||||||||||||||||||||
8/23/2012 | 175,000 | (13) | 20,074,250 | — | — | 10/5/2015 | 72,215 | (4) | 16,301,814 | 65,264 | (4)(5) | 14,732,695 | ||||||||||||||||||||||||||||
3/3/2014 | 159,166 | (11) | 18,257,932 | 91,294 | (11)(6) | 10,472,335 | 10/14/2016 | 85,013 | (6) | 19,190,835 | 64,654 | (6)(5) | 14,594,994 | |||||||||||||||||||||||||||
10/17/2014 | 122,863 | (7) | 14,093,615 | 68,576 | (7)(6) | 7,866,353 | 10/1/2017 | — | — | 64,885 | (7)(5) | 14,647,140 | ||||||||||||||||||||||||||||
Bruce Sewell | 11/2/2011 | 525,000 | (14) | 60,222,750 | — | — | ||||||||||||||||||||||||||||||||||
10/15/2017 | 63,699 | (8) | 14,379,412 | — | — | |||||||||||||||||||||||||||||||||||
Jeff Williams | 10/17/2014 | 40,954 | (3) | 9,244,956 | — | — | ||||||||||||||||||||||||||||||||||
3/3/2014 | 159,166 | (11) | 18,257,932 | 91,294 | (11)(6) | 10,472,335 | 10/5/2015 | 72,215 | (4) | 16,301,814 | 65,264 | (4)(5) | 14,732,695 | |||||||||||||||||||||||||||
10/17/2014 | 122,863 | (7) | 14,093,615 | 68,576 | (7)(6) | 7,866,353 | 10/14/2016 | 85,013 | (6) | 19,190,835 | 64,654 | (6)(5) | 14,594,994 | |||||||||||||||||||||||||||
10/1/2017 | — | — | 64,885 | (7)(5) | 14,647,140 | |||||||||||||||||||||||||||||||||||
10/15/2017 | 63,699 | (8) | 14,379,412 | — | — |
(1) | The dollar amounts shown in Columns (d) and (f) are determined by multiplying |
Apple Inc. | 2016 Proxy Statement | 39
(2) | 700,000 time-based RSUs subject to this award are scheduled to vest on August 24, |
Apple Inc. | 2019 Proxy Statement | 42
(3) | The |
(4) |
|
(5) |
|
The target number of performance-based RSUs is shown. As described under “Executive Compensation—Compensation Discussion and Analysis,” in each case, between 0% and 200% of the target number of performance-based RSUs vest depending on Apple’s Relative TSR compared to the other companies in the S&P 500 over the relevant performance period. |
The time-based RSUs subject to this award are scheduled to vest in three annual installments commencing on April 1, |
(7) | The performance-based RSUs subject to this award are scheduled to vest on October 1, 2020, provided that the officer continues to be employed with Apple through the vesting date and that the applicable performance condition is satisfied. |
(8) |
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(9) | The time-based RSUs subject to this award are scheduled to vest in |
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Apple Inc. | 20162019 Proxy Statement | 4043
The following table shows information regarding the vesting during 20152018 of RSU awardsRSUs previously granted to the named executive officers. No options were exercised by theany named executive officersofficer during 2015.2018.
Name (a) | Number of Shares Acquired on Vesting (#)(b) | Value Realized on ($)(c) | ||||||
Tim Cook | 560,000 | 57,747,200 | ||||||
Luca Maestri | 91,776 | 11,076,681 | ||||||
Angela Ahrendts | 391,634 | 50,688,315 | ||||||
Eddy Cue | 350,000 | 38,121,500 | ||||||
Dan Riccio | 223,125 | 28,864,781 | ||||||
Bruce Sewell(2) | — | — |
Stock Awards | ||||||||
Name (a) | Number of Shares Acquired on Vesting (#)(b) | Value Realized on Vesting(1) ($)(c) | ||||||
Tim Cook | 560,000 | 121,049,600 | ||||||
Luca Maestri | 224,664 | 37,582,164 | ||||||
Kate Adams | 14,371 | 2,719,281 | ||||||
Angela Ahrendts | 215,688 | 36,255,178 | ||||||
Jeff Williams | 255,611 | 42,991,299 |
(1) | The dollar amounts shown in Column (c) |
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Apple Inc. | 20162019 Proxy Statement | 4144
Potential Payments Upon Termination or Change inof Control
We generally do not enter intohave any severance arrangements with our named executive officers, and none of the equity awards granted to the named executive officers under Apple’s equity incentive plans provide for acceleration in connection with a change inof control or a termination of employment, other than as noted below or in connection with death or disability.
As described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “Other Benefits,” Ms. Ahrendts was provided a limited cash severance arrangement when she joined Apple. Within the first three years of her start date, if we terminate Ms. Ahrendts’ employment other than for “Cause” or if she resigns for “Good Reason,” we will pay her as severance the amount of her final base salary for the remainder of the three-year period in a single lump sum. Under this arrangement, the severance value declines to zero by May 1, 2017. In addition, the vesting of the RSUs awarded to Ms. Ahrendts’ to compensate her for her unvested equity at Burberry, where she had previously served as chief executive officer (the “Make Whole RSUs”), is accelerated if Apple terminates her employment other than for “Cause” or if she resigns for “Good Reason.” Had Ms. Ahrendts’ employment terminated on September 25, 2015, the last business day of Apple’s fiscal year, the estimated amount that she would have been entitled to under the cash severance arrangement would have been $1,591,781, and the estimated amount she would have been entitled to under the Make Whole RSUs would have been $10,547,814. “Cause” and “Good Reason” are defined in Ms. Ahrendts’ offer letter. “Cause” generally means an act of fraud or material dishonesty; gross misconduct; failure to follow the lawful direction of the CEO or Board; failure to perform material duties for Apple; or material breach of an Apple policy. “Good Reason” generally means a material change in duties or responsibilities; a change in the reporting structure such that Ms. Ahrendts no longer reports to the CEO; a material change in primary work location; or a breach by Apple of any of its material commitments in connection with Ms. Ahrendts’ employment.
Apple Inc. | 2016 Proxy Statement | 42
Equity Acceleration upon Death or Disability
Time-Based RSUs.Time-based RSU awardsRSUs provide for partial accelerated vesting of the RSUs scheduled to vest on the next applicable vesting date following termination of employment due to disability and for full accelerated vesting upon death.
Performance-Based RSUs.Performance-based RSU awardsRSUs provide for a partial waiver of the service vesting condition upon the death or disability of the award recipient, with the number of shares that become vestedvest determined at the end of the performance period, based on actual performance results and the recipient’s dates of employment during the performance period.
The following table listsshows the estimated amounts that the named executive officers and the estimated amounts they would have become entitled to under the terms of all outstanding RSU awards granted to themRSUs had their employment terminated due to either death or disability on September 25, 2015,28, 2018, the last business day of Apple’s fiscal year. The estimated paymentsvalues for the performance-based RSUs are based on performance to date as of September 25, 2015.shown at the maximum potential payout amounts.
Name | Estimated Total Value of Equity ($) | Estimated Total Value of Equity ($) | Estimated Total Value of Equity Acceleration upon Death(1) ($) | Estimated Total Value of Equity Acceleration upon Disability(1) ($) | ||||||||||||
Tim Cook | 388,153,633 | 103,272,725 | 416,885,119 | 141,508,054 | ||||||||||||
Luca Maestri | 43,905,482 | 12,099,496 | 120,816,573 | 76,559,304 | ||||||||||||
Kate Adams | 17,812,203 | 10,491,052 | ||||||||||||||
Angela Ahrendts | 58,360,777 | 20,963,482 | 120,816,573 | 76,559,304 | ||||||||||||
Eddy Cue | 115,076,040 | 59,270,542 | ||||||||||||||
Dan Riccio | 76,949,533 | 37,049,609 | ||||||||||||||
Bruce Sewell | 115,090,608 | 78,431,242 | ||||||||||||||
Jeff Williams | 120,816,573 | 76,559,304 |
(1) | The dollar amounts are determined by (i) multiplying |
Apple Inc. | 2019 Proxy Statement | 45
The 2018 annual total compensation of our CEO was $15,682,219, the 2018 annual total compensation of our median compensated employee was $55,426, and the ratio of these amounts is 283 to 1.
We determined our median compensated employee by using base salary, bonuses, commissions, and grant date fair value of equity awards granted to employees in 2018. We applied this measure to our global employee population as of the last day of our 2018 fiscal year and annualized base salaries for permanent full-time and part-time employees that did not work the full year. Once we determined our median compensated employee using these measures, we calculated the employee’s 2018 annual total compensation using the same methodology that is used to calculate our CEO’s annual total compensation in the table entitled “Summary Compensation Table—2018, 2017, and 2016.”
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This Proxy Statement contains eightfive proposals requiring shareholder action:action.
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Apple Inc. | 2019 Proxy Statement | 47
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Each proposal is discussed in more detail in the pages that follow.
Proposal No. 1 – Election of Directors
The Board has nominated directors Bell, Cook, Gore, Iger, Jung, Levinson, Sugar, and Wagner to be elected to serve on our Board until the next annual meeting of shareholders and until their successors are duly elected and qualified.
At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the eight nominees named in this Proxy Statement. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, for the election of the Board’s eight nominees.
The term of any incumbent director who does not receive the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum, and has not earlier resigned, will end on the date that is the earlier of (a) 90 days after the date on which the voting results for the Annual Meeting are determined by the inspector of election, or (b) the date on which the Board selects a person to fill the office held by that director in accordance with Apple’s bylaws.
Each of the directors nominated by the Board has consented to serving as a nominee, being named in this Proxy Statement, and serving on the Board if elected. Each director elected at the Annual Meeting will be elected to serve aone-year term. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders may vote for any nominee designated by the present Board to fill the vacancy.
There are no family relationships among Apple’s executive officers and directors.
The Board recommends that shareholders vote FOR the election of directors Bell, Cook, Gore, Iger, Jung, Levinson, Sugar, and Wagner.
Vote Required
Apple has implemented majority voting in uncontested elections of directors. Accordingly, Apple’s bylaws provide that in an uncontested election of directors the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum is required to elect a director.
Apple Inc. | 20162019 Proxy Statement | 4448
Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee hasre-appointed Ernst & Young LLP as Apple’s independent registered public accounting firm and as auditors of Apple’s consolidated financial statements for 2016.2019. Ernst & Young LLP has served as Apple’s independent registered public accounting firm since 2009. The Audit Committee reviews the performance of the independent registered public accounting firm annually.
At the Annual Meeting, our shareholders are being asked to ratify the appointment of Ernst & Young LLP as Apple’s independent registered public accounting firm for 2016.2019. In the event of a negative vote on this proposal, the Audit Committee will reconsider its selection. Even if this appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Apple and its shareholders. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to questions.
Fees Paid to Auditors
The following table shows the fees billed by Apple’s independent registered public accounting firm for the years ended September 26, 2015,29, 2018 and September 27, 2014.30, 2017.
Ernst & Young LLP | 2015 ($) | 2014 ($) | ||||||||||||||
Ernst & Young | 2018 ($) | 2017 ($) | ||||||||||||||
Audit Fees(1) | 12,414,100 | 10,286,500 | 17,266,600 | 14,977,900 | ||||||||||||
Audit-Related Fees(2) | 636,800 | 314,400 | 1,008,700 | 678,600 | ||||||||||||
Tax Fees(3) | 2,381,100 | 1,689,000 | 2,306,000 | 1,399,600 | ||||||||||||
All Other Fees(4) | 50,000 | — | 107,500 | 84,500 | ||||||||||||
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Total | 15,482,000 | 12,289,900 | 20,688,800 | 17,140,600 |
(1) | Audit fees relate to professional services rendered in connection with the audit of Apple’s annual financial statements and internal control over financial reporting, quarterly review of financial statements, |
(2) | Audit-related fees relate to professional services that are reasonably related to the performance of the |
(3) | Tax fees relate to professional services rendered in connection with tax |
(4) | All other fees relate to professional services not included in the categories above, including services related to other regulatory reporting requirements. |
Apple Inc. | 2016 Proxy Statement | 45
Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services Performed by the Independent Registered Public Accounting Firm
Apple maintains an auditor independence policy that, among other things, prohibits Apple’s independent registered public accounting firm from performingnon-financial consulting services, such as information technology consulting and internal audit services. This policy mandates that the Audit Committee approve in
Apple Inc. | 2019 Proxy Statement | 49
advance the audit and permissiblenon-audit services to be performed by the independent registered public accounting firm and the related budget, and that the Audit Committee be provided with quarterly reporting on actual spending. This policy also mandates that Apple may not enter into engagements with Apple’s independent registered public accounting firm fornon-audit services without the expresspre-approval of the Audit Committee. In accordance with this policy, the Audit Committeepre-approved all services performed by Apple’s independent registered public accounting firm in 2015.2018.
The Board recommends a vote FOR Proposal No. 2.
Vote Required
Approval of Proposal No. 2 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
Apple Inc. | 20162019 Proxy Statement | 4650
Proposal No. 3 – Advisory Vote to Approve Executive Compensation
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our shareholders have the opportunity to cast an annual advisory vote to approve the compensation of our named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, includingwhich disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables (a “say-on-pay proposal”)“say-on-pay” vote).
Our executive compensation program is designed to be simplemotivate and effective. It reflectsreward exceptional performance in a straight-forward and effective way, while also recognizing the remarkable size, scope, and scopesuccess of Apple’s business as well as the responsibilitiesbusiness. Apple delivered a year of extraordinary performance and reached many significant milestones in 2018. Net sales grew $36.4 billion to $265.6 billion, and operating income grew $9.6 billion to $70.9 billion, representing 16% year-over-year growth for each of these key performance of our named executive officers.measures. We achieved record-breaking financial results in 2015, and we believe the compensation providedpaid to our named executive officers for 20152018 appropriately reflects and rewards this performance. their contributions to our performance and is aligned with the long-term interests of our shareholders.
We encourage shareholders to read the Compensation Discussion and Analysis, beginning on page 2428 of this Proxy Statement, which describes the details of our executive compensation program and the decisions made by the Compensation Committee in 2015.2018.
We value the feedback provided by our shareholders. At the 2018 annual meeting of shareholders, 95% of votes cast supported our executive compensation program. We have discussions with many of our shareholders on an ongoing basis regarding various corporate governance topics, including executive compensation, and take into account the views of shareholders regarding the design and effectiveness of our executive compensation program.
Shareholders are being asked to approve the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the named executive officers, as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules, (whichwhich disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables),tables, is hereby approved.
As an advisory vote, this proposal is not binding on Apple, the Board, or the Compensation Committee, and will not be construed as overruling a decision by Apple, the Board, or the Compensation Committee or creating or implying any additional fiduciary duty for Apple, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.
It is expected that the nextsay-on-pay vote will occur at the 20172020 annual meeting of shareholders.
The Board recommends a vote FOR Proposal No. 3.
Vote Required
Approval of Proposal No. 3 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
Apple Inc. | 20162019 Proxy Statement | 4751
Proposal No. 4 – ApprovalShareholder Proposal
Apple has been advised that Mr. James McRitchie, 9295 Yorkship Court, Elk Grove, CA 95758, who has indicated that he is a beneficial owner of at least $2,000 in market value of Apple’s common stock, intends to submit the following proposal at the Annual Meeting:
Proposal 4 – Shareholder Proxy Access Amendments
RESOLVED: Shareholders of Apple Inc. (the “Company” or “Apple”) ask the board of directors (the “Board”) to amend its “Proxy Access for Director Nominations” bylaw, and any other associated documents, to include the following changes for the purpose of increasing the potential number of nominees:
The number of “Shareholder Nominees” eligible to appear in proxy materials shall be 20% of the Amended and Restateddirectors then serving or 2, whichever is greater.
Supporting Statement: Current proxy access bylaws restrict Shareholder Nominees to 20% of directors rounded down to the nearest whole number.
Most S&P 500 companies have adopted proxy access. According to a report by Sidley Austin (https://www.sidley.com/-/media/update-pdfs/2018/02/20180201-corporate-governance-report.pdf), 84% allow either a minimum of 2 directors to be nominated or 25% of the board. That leaves Apple Inc. 2014 Employee Stock Planas a distinct outlier with 16% that allow only up to 20% of the board to be nominated by shareholders.
AtHowever, Apple is worse than most of the Annual Meeting,16% of laggards. The most common board size at S&P 500 companies is 11. 20% of 11, rounding down to the nearest whole number is 2. However, Apple has only 8 directors. 20% of 8, rounding down to the nearest whole number is 1.
BlackRock’s 2018 Proxy Voting Guidelines included the following: “In general, we support market-standardized proxy access proposals, which allow a shareholder (or group of up to 20 shareholders) holding three percent of a company’s outstanding shares for at least three years the right to nominate the greater of up to two directors or 20% of the board.’
Because shareholders are being askedlimited to approveone nominee at Apple, instead of two, as is the amended and restated 2014 Plan, which was adopted by the Board on November 17, 2015, subject tocase at most large companies, any shareholder approval.
The shares subject to the 2014 Plan and applicable share limits have been restated to reflect our 7-for-1 stock split in June 2014. We are not asking shareholders to increase the maximum number of shares that may be issued or transferred pursuant to awardsnominee elected under the 2014 Plan.
Summary of Proposal
The 2014 Plan was approved by shareholderscurrent bylaws at the 2014 Annual Meeting. We are asking shareholders to approve the amendedApple could be easily isolated and restated 2014 Plan to increase to $30 million per person, per fiscal year, the maximum amount payable as a cash bonus award that may qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code (the “162(m) Cash Award Limit”) and therefore may be deductible by Apple in determining its income tax liability under the Internal Revenue Code. As a result of the approval, we will alsoineffective. They might not even be able to meet new shareholder approval requirements for granting tax-qualified RSUsget a second on a motion in a board meeting to employees of our subsidiariesdiscuss important topics.
A cost-benefit analysis by CFA Institute,Proxy Access in France (“French-qualified RSUs”). We are not proposing any amendments to the 2014 Plan in order to grant French-qualified RSUs.
162(m) Cash Award Limit. Section 162(m) ofUnited States: Revisiting the Internal Revenue Code generally prevents a publicly held corporation from deducting, for federal income tax purposes, compensation paid in excess of $1 million per year to any of its chief executive officerProposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1), found proxy access would “benefit both the markets and corporate boardrooms, with little cost or three other most highly compensated executive officers, other than the chief financial officer (“Covered Persons”). If certain conditions are met, compensation that qualifies as “performance-based” under Code Section 162(m) is excluded for purposes of calculating the $1 million limit. Among these conditions is the requirement that the corporation’s shareholders approve the performance criteria that must be achieved for the compensation to be payable, and approve either a maximum amount or an objective formula that will determine the maximum amount that may be payable to the Covered Persons upon the achievement of the applicable performance criteria.
Shareholders previously approved a 162(m) Cash Award Limit of $10 million per person, per calendar year, under the 2014 Plan. Subsequent to this approval the Compensation Committee implemented several design changes to our executive compensation program after considering a number of factors, including market data provided by its independent compensation consultant, financial results,disruption,” raising US market capitalization of by up to $140.3 billion.
Apple relative to peer companies, and shareholder input. The changes applicable to Covered Persons included base salary increases and an increase to the maximum annual cash incentive compensation opportunity to 400% of base salary. As a result of these changes we are seeking shareholder approval of an increased 162(m) Cash Award Limit to continue providing competitive annual cash incentive opportunities under the 2014 Plan that are intended to be tax deductible. If shareholdershas proxy access provisions but they certainly do not approvemeet even the amended and restated 2014 Plan, the 2014 Plan will continue in effect and annual cash incentives will continue to be payable under the 2014 Plan, up to the currently effective limit applicable to cash awards, on a tax-deductible basis. In that circumstance, the Compensation Committee would need to decide whether to approve additional incentivesweakest of industry standards.
Increase shareholder value
Vote for Covered Persons outside the parameters of the 2014 Plan that would not be tax-deductible.Shareholder Proxy Access Amendments – Proposal 4
French-Qualified RSUs. In August 2015, a new French law (Loi Macron) introduced changes applicable to French-qualified RSUs that provide more favorable tax and social treatment to the local employer
Apple Inc. | 2016 Proxy Statement | 48
subsidiary and its employees than non-qualified RSUs, if the French-qualified RSUs are granted pursuant to a plan authorized by shareholders after August 7, 2015. We are not required to grant French-qualified RSUs in France and may choose, at our discretion, to grant non-qualified awards to employees of our French subsidiaries depending on the circumstances. The 2014 Plan already provides that the Compensation Committee has the full authority, in its sole discretion, to adopt such plans or sub-plans as may be deemed necessary or appropriate to comply with the law of other countries, and to allow for tax-preferred treatment of awards. However, because the 2014 Plan was authorized by shareholders before August 7, 2015, shareholder approval of the amended and restated 2014 Plan at the Annual Meeting would allow us to meet the shareholder authorization requirement for granting French-qualified RSUs with more favorable terms.
Description of the 2014 Plan
The following is a summary of the principal features of the 2014 Plan, and where indicated, the effect of the proposed amendments. This summary does not purport to be a complete description of all of the provisions of the 2014 Plan. It is qualified in its entirety by reference to the full text of the 2014 Plan, as amended and restated. A copy of the 2014 Plan, as amended and restated, is included as Annex A to this Proxy Statement. The 2014 Plan is also available on the SEC’s website atwww.sec.gov and any shareholder who desires to obtain a copy of the 2014 Plan may do so by written request to Apple’s Secretary at 1 Infinite Loop, MS: 301-4GC, Cupertino, California 95014.
Outstanding Awards and Participants
As of November 17, 2015, a total of 84 million shares of our common stock were then subject to outstanding awards granted under the 2014 Plan, and an additional 377 million shares were then available for new award grants under the 2014 Plan.
Share Reserve
Maximum Share Reserve. As of November 17, 2015, the maximum number of shares that may be issued or transferred pursuant to awards under the 2014 Plan is 625 million shares. This number is calculated using the share counting rules described in Sections 5(a) and 5(b) of the 2014 Plan and includes the number of shares available for new award grants under the 2014 Plan out of the 385 million shares authorized by shareholders upon adoption of the 2014 Plan; the number of shares available for new award grants under the 2003 Employee Stock Plan (the “2003 Plan”) on the date that shareholders approved the 2014 Plan; the number of shares subject to outstanding stock options under the 2003 Plan and 2014 Plan as of November 17, 2015; and two times the number of shares subject to outstanding RSUs under the 2003 Plan and 2014 Plan as of November 17, 2015 (all adjusted for the 7-for-1 stock split).
Shares issued with respect to awards granted under the 2014 Plan other than stock options or stock appreciation rights are counted against the 2014 Plan’s aggregate share limit as two shares for every one share actually issued in connection with the award. For example, if 100 shares are issued with respect to a RSU award granted under the 2014 Plan, 200 shares will be counted against the 2014 Plan’s aggregate share limit in connection with that award.
Apple Inc. | 2016 Proxy Statement | 49
Other Share Counting Rules. The following are other rules for counting shares against the applicable share limits of the 2014 Plan:
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Administration
The Compensation Committee administers the 2014 Plan.
Eligibility and Types of Awards Under the 2014 Plan
The 2014 Plan permits the granting by the plan administrator of stock options, stock appreciation rights, stock grants and RSUs, as well as cash bonus awards. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited.
Employees, including executive officers and directors who are also our employees, and consultants of Apple and any parent or subsidiary of Apple are eligible to participate in the 2014 Plan. Non-Employee Directors are not eligible to participate. As of the end of the fiscal year, we had approximately 110,000 full-time equivalent employees, including executive officers, who were eligible to participate in the 2014 Plan. In October 2015, the Compensation Committee approved RSU awards under the 2014 Plan to substantially all of our employees. We do not currently grant equity awards to consultants.
RSUs
The plan administrator may award RSUs under the 2014 Plan. Participants are not required to pay any consideration to Apple at the time of grant of an RSU. The plan administrator may grant RSUs with time-based vesting or vesting upon satisfaction of performance goals and/or other conditions. The plan administrator may provide for dividend equivalents on RSUs awarded under the 2014 Plan based on the amount of dividends paid on outstanding shares of our common stock; provided that, as to any dividend equivalent rights granted in connection with an award of RSUs subject to performance-based vesting requirements, such dividend equivalents will be subject to the same performance-based vesting requirements as the RSUs to which they relate. When the participant satisfies the conditions of the RSU award, we may settle the award (including any related dividend equivalent rights) in shares, cash or any combination of both, as determined by the plan administrator, in its sole discretion.
Performance-Based Awards
Awards under the 2014 Plan may be made subject to performance conditions as well as time-vesting conditions. Such performance conditions may be established and administered in accordance with the requirements of Code Section 162(m) for awards intended to qualify as “performance-based compensation” thereunder. Awards may be administered other than in accordance with the requirements of Code Section 162(m) if the plan administrator subsequently determines that they are not, or are no longer, intended to qualify as “performance-based compensation” under Code Section 162(m). Subject to shareholders approving the amended and restated 2014 Plan, the 162(m) Cash Award Limit for performance-based awards that are payable in cash (“Cash Bonus Awards”) is $30 million. Cash Bonus Awards do not include cash-settled RSU awards and cash-settled stock appreciation rights, which are subject to applicable individual limits under the 2014 Plan, as well as discretionary cash incentive payments awarded by the Board or the Compensation Committee outside of the 2014 Plan. Performance conditions under the 2014 Plan shall utilize one or more objective measurable performance goals as determined by the plan administrator based upon one or more factors, including: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market
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share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) total shareholder return; (xiv) price/earnings ratio; (xv) debt or debt-to-equity; (xvi) accounts receivable; (xvii) writeoffs; (xviii) cash; (xix) assets; (xx) liquidity; (xxi) operations; (xxii) intellectual property (e.g., patents); (xxiii) product development; (xxiv) manufacturing, production or inventory; (xxv) mergers and acquisitions or divestitures; and/or (xxvi) stock price. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time and/or against other companies or financial metrics), (c) on a per share and/or share per capita basis, (d) against the performance of Apple as a whole or against particular entities, segments, operating units or products and/or (e) on a pre-tax or after tax basis. Awards that are not intended to qualify as “performance-based compensation” under Code Section 162(m) may be granted under the 2014 Plan and determined without regard to performance goals and may involve the plan administrator’s discretion.
Stock Options
The plan administrator may grant nonstatutory stock options or incentive stock options, which are entitled to potentially favorable tax treatment, under the 2014 Plan. The plan administrator will determine the vesting schedule and number of shares covered by each stock option granted to a participant. The plan administrator may grant stock options with time-based vesting or vesting upon satisfaction of performance goals and/or other conditions. The stock option exercise price is determined at grant by the plan administrator and must be at least 100% of the fair market value of a share on the date of grant (110% for incentive stock options granted to shareholders who own more than 10% of the total outstanding shares of Apple, its parent or any of its subsidiaries). Consistent with applicable laws, regulations and rules, payment of the exercise price of stock options may be made by cashless exercise or by any other form of payment approved by the Compensation Committee. The term of a stock option shall not exceed seven years from the date of grant. Dividend equivalent rights may not be granted on stock options awarded under the 2014 Plan.
Stock Grants
The plan administrator may award stock, subject to vesting conditions, under the 2014 Plan. Participants may be required to pay cash or other legal consideration to Apple at the time of a stock grant, but the 2014 Plan does not establish a minimum purchase price for shares awarded as stock grants. The plan administrator may award stock grants with time-based vesting or vesting upon satisfaction of performance goals and/or other conditions. When the stock grant award conditions are satisfied, then the participant will be vested in the shares and will have complete ownership of the shares. Dividends paid on unvested stock grants subject to performance-based vesting requirements will be subject to forfeiture or repayment, as the case may be, if the related performance-based vesting condition is not satisfied.
Stock Appreciation Rights
The plan administrator may grant stock appreciation rights under the 2014 Plan. The vesting schedule and number of shares covered by each stock appreciation right granted to a participant will be determined by the plan administrator. The plan administrator may grant stock appreciation rights with time-based vesting or vesting upon satisfaction of performance goals and/or other conditions. The exercise price of a stock appreciation right will be established by the plan administrator and may not be less than 100% of the fair
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market value of a share on the date of grant. Upon exercise of a stock appreciation right, the participant will receive payment from Apple in an amount determined by multiplying (a) the excess of (i) the fair market value of a share on the date of exercise over (ii) the exercise price times (b) the number of shares with respect to which the stock appreciation right is exercised. Stock appreciation rights may be paid in cash, shares, or any combination of both, as determined by the plan administrator, in its sole discretion, at the time of grant. The term of a stock appreciation right shall not exceed seven years from the date of grant. Dividend equivalent rights may not be granted on stock appreciation rights awarded under the 2014 Plan.
No Repricing
In no case, except due to an adjustment to reflect a stock split or other event referred to under “Adjustments” below, and except for any repricing that may be approved by shareholders, will the plan administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award, or (4) take any other action that is treated as a repricing under U.S. generally accepted accounting principles.
Transferability of Awards
Except as described below, awards under the 2014 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution, and stock options and stock appreciation rights are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The plan administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value, other than nominal value or certain transfers to family members.
Corporate Transactions
Generally, and subject to limited exceptions set forth in the 2014 Plan, if Apple dissolves or undergoes certain corporate transactions such as a merger, business combination, or other reorganization, or a sale of substantially all of its assets, all awards then-outstanding under the 2014 Plan will terminate or be terminated in such circumstances, unless the plan administrator provides for the assumption, substitution or other continuation of the award.
Corporate Actions
The existence of the 2014 Plan does not preclude Apple, the Board or any duly authorized committee of the Board from taking any action that may otherwise be taken in accordance with applicable law or any applicable listing requirements, including, but not limited to, paying compensation outside the parameters of the 2014 Plan.
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Adjustments
As is customaryApple’s Statement in incentive plans of this nature, each share limit and the number and kind of shares available under the 2014 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subjectOpposition to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders.Proposal No. 4
Amendment and Termination
The Board may amend the 2014 Plan at any time and for any reason, provided that any such amendment will be subject to shareholder approval to the extent required by applicable laws, regulations or rules. The Board may terminate the 2014 Plan at any time and for any reason. Unless terminated earlier by the Board, the 2014 Plan will terminate on November 18, 2023, subject to any extension that may be approved by the Board and the shareholders prior to or on such date. The termination or amendment of the 2014 Plan may not adversely affect any award previously made under the 2014 Plan.
Recoupment Policy
Awards granted under the 2014 Plan will be subject to any provisions of applicable law providing for the recoupment or clawback of incentive compensation, such as provisions imposed pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; the terms of any Apple recoupment, clawback or similar policy in effect at the time of grant of the award; and any recoupment, clawback or similar provisions that may be included in the applicable award agreement.
Federal Income Tax Consequences
The following is a brief summary of the U.S. federal income tax consequences applicable to awards granted under the 2014 Plan based on the federal income tax laws in effect on the date of this Proxy Statement. This summary is not intended to be exhaustive and does not address all matters relevant to a particular participant based on his or her specific circumstances. The summary expressly does not discuss the income tax laws of any state, municipality, or non-U.S. taxing jurisdiction, or the gift, estate, excise (including the rules applicable to deferred compensation under Code Section 409A), or other tax laws other than federal income tax law. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Because individual circumstances may vary, we advise all participants to consult their own tax advisor concerning the tax implications of awards granted under the 2014 Plan.
A recipient of a stock option or stock appreciation right will not have taxable income upon the grant of the stock option or stock appreciation right. For nonstatutory stock options and stock appreciation rights, the participant will recognize ordinary income upon exercise in an amount equal to the difference between the fair market value of the shares and the exercise price on the date of exercise. Any gain or loss recognized upon any later disposition of the shares generally will be a capital gain or loss.
The acquisition of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except possibly for purposes of the alternative minimum tax. The gain or loss recognized
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by the participant on a later sale or other disposition of such shares will either be long-term capital gain or loss or ordinary income, depending upon whether the participant holds the shares for the legally-required period of two years from the date of grant and one year from the date of exercise. If the shares are not held for the legally-required period, the participant will recognize ordinary income equal to the lesser of (i) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (ii) the difference between the sales price and the exercise price.
For awards of stock grants, the participant will not have taxable income upon the receipt of the award, unless the participant elects to be taxed at the time of the stock is granted rather than when it becomes vested. The stock grants will generally be subject to tax upon vesting as ordinary income equal to the fair market value of the shares at the time of vesting less the amount paid for such shares, if any.
A participant is not deemed to receive any taxable income at the time an award of RSUs is granted. When vested RSUs (and dividend equivalents, if any) are settled and distributed, the participant will recognize ordinary income equal to the amount of cash and/or the fair market value of shares received less the amount paid for such RSUs, if any.
If the participant is an employee or former employee, the amount a participant recognizes as ordinary income in connection with any award is subject to withholding taxes (not applicable to incentive stock options) and we are allowed a tax deduction equal to the amount of ordinary income recognized by the participant. However, Code Section 162(m) can limit the federal income tax deductibility of compensation paid to Covered Persons. Under Code Section 162(m), the general rule is that annual compensation paid to any of these Covered Persons will be deductible only to the extent that it does not exceed $1 million. However, we can preserve the deductibility of certain compensation in excess of $1 million if such compensation qualifies as “performance-based compensation” by complying with certain conditions imposed by the Section 162(m) rules, including the establishment of a maximum number of shares with respect to which awards may be granted to any one employee during one fiscal year. The proposed amendment to the 162(m) Cash Award Limit is intended to allow for a higher amount of cash incentive awards to be able to be provided to the Covered Persons on a tax-deductible basis in reliance on the performance-based compensation exception.
Specific Benefits
Cash Bonus Awards under the 2014 Plan are generally granted in connection with the annual cash incentive opportunities provided to each of our named executive officers. For 2016, the Compensation Committee has established performance goals and a threshold, target and maximum annual cash incentive opportunity for each of our named executive officers of 100%, 200% and 400% of base salary, respectively, and subject in each case to the applicable 162(m) Cash Award Limit as in effect immediately following the Annual Meeting. The actual amounts to be paid under the 2014 Plan with respect to 2016 annual incentive opportunities for the Covered Persons is dependent upon Apple’s performance for the fiscal year and the Compensation Committee’s exercise of discretion, if any. Therefore, future actual Cash Bonus Awards under the 2014 Plan cannot be determined at this time.
For 2015, Cash Bonus Awards were earned by the Covered Persons at the maximum 400% of base salary, as shown in the Summary Compensation Table on page 35. Mr. Cook’s base salary was increased to $3 million at the beginning of 2016, as described in the Compensation Discussion and Analysis of this Proxy Statement beginning on page 24. Under the 2014 Plan, as in effect prior to the amendment
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increasing the 162(m) Cash Award Limit, the maximum Cash Bonus Award payable to Mr. Cook on a tax-deductible basis is limited to $10 million. The table set forth below shows the amount that would be payable to Mr. Cook and the other named executive officers under the 2014 Plan, as amended, based on current base salary levels assuming attainment of the 2016 performance goals at each of the threshold, target and maximum performance levels.
Name | Threshold ($) | Target ($) | Maximum ($) | |||||||||
Tim Cook | 3,000,000 | 6,000,000 | 12,000,000 | |||||||||
Luca Maestri | 1,000,000 | 2,000,000 | 4,000,000 | |||||||||
Angela Ahrendts | 1,000,000 | 2,000,000 | 4,000,000 | |||||||||
Eddy Cue | 1,000,000 | 2,000,000 | 4,000,000 | |||||||||
Dan Riccio | 1,000,000 | 2,000,000 | 4,000,000 | |||||||||
Bruce Sewell | 1,000,000 | 2,000,000 | 4,000,000 |
The Board recommends a vote FORAGAINST Proposal No. 4.
The proponent has submitted a proxy access proposal to Apple every year for the last five years and, in each case, has failed to receive majority support. As described below and in previous years, we continue to believe that the changes advocated by the proponent are not necessary because Apple shareholders already have an effective mechanism for proxy access. Apple has a small Board compared to many public companies, and if approved this proposal could have serious unintended consequences, putting the company and shareholder value at risk.
After careful consideration of the varying viewpoints offered by many of our shareholders, the Board amended Apple’s bylaws to adopt proxy access in December 2015. The bylaws permit a shareholder, or a group of up to 20 shareholders, owning at least 3% of Apple’s outstanding shares of common stock continuously for at least three years, to nominate and include in Apple’s annual proxy materials director nominees constituting up to 20% of the Board, provided that the shareholder(s) and nominee(s) satisfy the procedural and eligibility requirements specified in the bylaws.
After closely monitoring proxy access developments and engaging with many of our largest shareholders, governance experts, and advisors to discuss evolving market practices and the preferences of our shareholders, the Board adopted enhancements to the “secondary” elements of the proxy access provisions in our bylaws in December 2016. These enhancements made it easier for shareholders to nominate proxy access candidates by eliminating the requirement that a nominating shareholder’s loaned shares be recalled at the time the shareholder provides notice to Apple; eliminating the prohibition onre-nomination of a proxy access candidate if the candidate receives a low level of support at the annual meeting; limiting the circumstances under which the maximum number of proxy access candidates is reduced; extending the deadline by which nominating shareholders and proxy access candidates must provide certain information to Apple; narrowing the scope of a nominating shareholder’s indemnification obligations; and limiting the discretion of the Board to unilaterally interpret the proxy access provisions.
According to the study cited by the proponent, only 65% of the companies in the S&P 500 have adopted proxy access. Moreover, among the companies that have adopted proxy access, there are many different models and approaches. For example, of the companies of any size that have adopted proxy access since January 1, 2015, 22% do not require a minimum of two director nominees. Our proxy access bylaws overall are well within the mainstream of public company practices and share similar features with the proxy access bylaws of many other companies.
We strongly believe increasing the potential level of Board representation to the greater of two directors and 20% of the Board could have unintended effects that could negatively impact shareholder value, including promoting the use of proxy access to lay the groundwork for effecting a change of control, encouraging the pursuit of special interests at the expense of a holistic, long-term strategic view, or otherwise disrupting the effective functioning of the Board.
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Our Board has also shown an ongoing commitment to having highly qualified, independent voices in the boardroom through a robust director nomination and annual self-evaluation process. We are committed to ensuring effective, balanced corporate governance while also continually engaging with shareholders. The Board continues to believe that these objectives are being achieved through Apple’s current governance processes and that changing our proxy access framework again as outlined by the proposal is unnecessary, unwarranted, and possibly detrimental to shareholder value.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 4.
Vote Required
Approval of Proposal No. 4 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
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Proposal No. 5 – Shareholder Proposal
Apple has been advised that Jantz Management LLC, P.O. Box 301090, Boston, MA 02130,the National Center for Public Policy Research, 20 F Street, NW Suite 700, Washington, DC 20001, which has indicated that it is a beneficial owner of at least $2,000 in market value of Apple’s common stock, intends to submit the following proposal at the Annual Meeting:
Net-Zero Greenhouse Gas Emissions by 2030True Diversity Board Policy
Whereas:Resolved, that the shareholders of Apple Inc. (the “Company”) request the Board adopt a policy to disclose to shareholders the following:
It is widely reported that greenhouse gases from human activities are
1. | A description of the specific minimum qualifications that the Board’s nominating committee believes must be met by a nominee to be on the board of directors; and |
2. | Each nominee’s skills, ideological perspectives, and experience presented in a chart or matrix form. |
The disclosure shall be presented to the most significant driver of observed climate change sinceshareholders through the mid-20th century;
Nearly every national government has recognizedannual proxy statement and the need to address climate change and agreed (under the termsCompany’s website within six (6) months of the UN Framework Conventiondate of the annual meeting and updated on Climate Change) that “deep cuts in greenhouse gas (GHG) emissions are required…to hold the increase, in global average temperature below 2 degrees Celsius above pre-industrial levels…”an annual basis.
The Intergovernmental Panel on Climate Change (IPCC) states that to limit global warming to two degrees, carbon dioxide emissions need to fall to zero by between 2040 and 2070, falling “below zero” thereafter;Supporting Statement
In 2015, The B Team, business leaders concerned about climate change, called upon world leaders to commit to a global goal of net-zero GHG emissions and business leaders to commit to bold long-term targets. TheyWe believe that committingboards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively. By providing a meaningful disclosure about potential Board members, shareholders will be better able to net-zero GHG emissions will demonstrate that wejudge how well-suited individual board nominees are setting the world on a low-carbon trajectory. Other businesses will respond by unleashing innovation, driving investment in clean energy, scaling-up low carbons solutions, creating jobs and supporting economic growth;
Shareholders laud Apple for committing to “…power[ing] all its operations worldwide on 100 percent renewable energy,” and for joining the American Business Act on Climate Pledge. However, these goals do not include suppliers, nor has the Company set a timeframe for this goal. Shareholders believe that to secure the company’s leadership on climate issues, it should set an ambitious target date for becoming net-zero GHG emissions.
Resolved: Shareholders request that the Board of Directors issue a report to shareholders by June 30, 2016, at reasonable expense and excluding confidential information, assessing the feasibility and setting forth policy options for the Company and whether their listed skills, experience and attributes are appropriate in light of the Company’s overall business strategy.
The Company’s compliance with Item 407(c)(2)(v) of SEC RegulationS-K requires it to reachidentify the minimum skills, experience, and attributes that all board candidates are expected to possess.
True diversity comes from diversity of thought. There is ample evidence that the Company – and Silicon Valley generally – operate in ideological hegemony that eschews conservative people, thoughts, and values. This ideological echo chamber can result in groupthink that is the antithesis of diversity. This can be a net-zero greenhouse gas emission statusmajor risk factor for shareholders.
We believe a diverse board is a good indicator of sound corporate governance and a well-functioning board. Diversity in board composition is best achieved through highly qualified candidates with a wide range of skills, experience, beliefs, and board independence from management.
We are requesting comprehensive disclosures about board composition and what qualifications the Company seeks for its facilities and major suppliers by 2030.
Supporting Statement: For the purposes ofBoard, therefore we urge shareholders to vote FOR this proposal, the proponent suggests that “net-zero greenhouse gas emissions status” be defined as reduction of GHG emissions attributed to company facilities and major suppliers to a target annual level, and offsetting the remaining GHG emissions by negative emissions strategies which result in a documented reduction equal to or greater than the company and supplier GHG emissions during the same year. As explained by the IPCC, “negative emissions solutions” can range from tree-planting to technological solutions that draw carbon from the air.proposal.
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For purposes of this proposal “company facilities” include company owned or operated manufacturing, distribution, research, design or support facilities, corporate offices, and also including GHG’s from employee travel. “Major suppliers” include operations contracted to produce and/or ship microchips, circuit boards, storage, screens, cameras, power supplies, or finished consumer electronics products on behalf of the company. In calculating net zero, the GHG impacts of emissions and activities can be considered using GHG equivalencies. http://www.epa.gov/cleanenergy/energy-resources/calculator.html.
Apple’s Statement in Opposition to Proposal No. 5
The Board recommends a vote AGAINST Proposal No. 5.
Apple’s goalThe role of our Board is to make not justoversee the CEO and other senior management in the competent and ethical operation of Apple and to assure that the long-term interests of shareholders are being served. Our shareholders have elected a Board that consists of a highly qualified, diverse group of leaders in their respective fields, and the caliber of our Board members reflects the Board’s rigorous process for evaluating and recommending potential nominees for election to the Board.
The “Directors” section of this Proxy Statement includes a discussion of the specific skills, qualities, attributes, and experience that led the Board and the Nominating Committee to determine that it is appropriate to nominate each director for election to the Board. The skills, qualities, attributes, and experience of each nominee, and all nominees collectively, are important to the oversight function of the Board because they provide a diverse range of backgrounds and perspectives that enable the directors to engage each other and management to effectively address Apple’s evolving needs and represent the best productsinterests of Apple’s shareholders.
The Board regularly monitors the mix of skills and experience of its directors in order to assure that the Board has the necessary tools to perform its oversight function effectively. The Board also undertakes an annual self-evaluation process led by the independent Chairman of the Board. These processes facilitate open dialogue, fresh perspectives, and the ability to share diverse points of view. In evaluating potential nominees for election to the Board, the Nominating Committee doesn’t look for a set of minimum qualifications. Instead, the Nominating Committee evaluates a variety of attributes, including independence; character; ability to exercise sound judgment; diversity; gender; age; demonstrated leadership; and relevant skills and experience, including financial literacy and other experience in the world, but the best products for the world. It takes an enormous amount of energy to design, assemble and ship hundreds of millions of products all over the world. That energy makes up our carbon footprint and, in turn, Apple’s sharecontext of the climate change problem. We have made significant progress in reducing the impactneeds of the things Apple controls directly. Board. The breadth of this evaluation ensures not only that the Board is highly qualified, but also that its members are able to elicit a range of ideas and engage in robust discussion in the course of performing their oversight function.
The skills, qualities, attributes, and experience that the Board evaluates when considering a potential nominee do not include “ideological perspectives.” The Board does not seek to determine any nominee’s ideological perspectives because the Board does not consider a nominee’s ideological perspectives to be relevant to the Board’s oversight role or the nominee’s ability to serve as an effective director. The Board considers a wide range of factors in assessing whether each nominee, and all nominees as a group, provides the background, experiences, and attributes necessary to effectively perform the Board’s oversight function. The Board believes that the additional disclosure requested by this proposal would not be relevant to the Board’s process for identifying director candidates or be useful to shareholders in assessing the diversity of backgrounds, experiences, and attributes that should be, and are, represented on the Board.
For example,these reasons, the ratio of carbon emissions to Apple’s revenue – referred to as carbon efficiency – has dropped steadily every year since 2008.Board believes that this proposal is unnecessary. In 2014, we reached a major milestone: 100%view of the energy usedfactors the Nominating Committee and the Board consider when selecting nominees for election, the additional disclosures requested by Apple’s U.S. operations — all corporate offices, retail stores, and data centers — was renewable energy. Globally, 87% of our operations are powered by renewable energy, and as we drive toward 100%, we are investing in innovative renewable energy projects in China and Singapore to cover our operations in those countries. The results so far are clear. From 2011 to 2014, we cut carbon emissions from our facilities in half even as our business has grown dramatically.
We acknowledge that, despite making significant strides in the areas under our direct control, there is work to be done to reduce the carbon footprint of our supply chain – and Apple has accepted its responsibility to lead that effort. In 2015, we announced an initiative to drive our manufacturing partners to become more energy efficient and to use clean energy for their manufacturing operations. We announced that we will partner with suppliers in China to install more than two gigawatts of new clean energy in the coming years – enough to power 2.6 million Chinese homes. We have also committed to share best practices in procuring clean energy and building high-quality renewable energy projects, and provide hands-on assistance to some suppliers in areas such as energy efficiency audits, regulatory guidance and building strong partnerships. As a result, Foxconn, one of Apple’s major suppliers, has committed to construct 400 megawatts of solar energy by 2018.
This proposal would result in the production of a report that would be largely duplicative of Apple’s existing public disclosures. In effect, the proponent is asking Applenot provide meaningful information to spend valuable time and resources creating a report that provides no meaningful value to shareholders. We would rather allocate time and resources towards continuing to reduce carbon emissions in our worldwide operations and helping our suppliers adopt clean energy.
Apple already provides detailed information about our greenhouse gas emissions and energy use atapple.com/environment/, including an overview of our approach towards climate change, increasing our use of renewable resources, making our use of finite resources more efficient, and reducing toxins in our products, and in a shareholder-requested industry-recognized reporting tool, the CDP questionnaire. In 2015, the CDP awarded Apple a top score of “A” for climate performance and 100% for disclosure. In
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addition, we explain our overall position and actions regarding climate change on our website atapple.com/environment/climate-change/ and provide detailed information on our renewable energy and sustainability efforts in our annual Environmental Responsibility Report, available online atapple.com/environment/reports. The requested report would therefore provide minimal additional disclosure. In fact, the only additional disclosure would be to tie our policies and strategies to an arbitrary timeline of 2030.
We state on our website, “We don’t want to debate climate change. We want to stop it.” Apple has set a goal – to run 100% of our worldwide operations on renewable energy and lead the way toward reducing carbon emissions from manufacturing – and we will do all we can to reach that goal as quickly as possible.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 5.
Vote Required
Approval of Proposal No. 5 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
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Proposal No. 6 – Shareholder Proposal
Apple has been advised that Mr. Antonio Avian Maldonado, II, who has indicated he is a beneficial owner of at least $2,000 in market value of Apple’s common stock, intends to submit the following proposal at the Annual Meeting:
RESOLVED:
Shareholders request that the Board of Directors adopt an accelerated recruitment policy requiring Apple Inc. (the “Company”) to increase the diversity of senior management and its board of directors, two bodies that presently fails to adequately represent diversity (particularly Hispanic, African-American, Native-American and other people of colour).
Stockholder Supporting Statement
The tech industry, of which the Company is a part, is characterized by the persistent and pervasive underrepresentation of minorities and women in senior positions. The Company is at an advantageous position to be a leader in promoting diversity in senior management and its board of directors, based on its size, breadth and position as the largest company in the world.
Shareholders’ view of diversity – that everyone matters (irrespective of colour, race, sex, creed or religion) – recognizes the Company’s commitment to diversity and the uniqueness of experience, strength, culture, thought and commitment contributed by each employee; however, it does not ignore the Company’s senior management and board of directors diminutive level of diversity and its painstakingly slow implementation.
Overall, by its own public disclosure, the number of minorities holding senior management-level positions or board of directorship within the Company does not reflect the Company’s demographic data. According to the Company’s website, “Diversity is critical to innovation and it is essential to Apple’s future. …We also aspire to make a difference beyond Apple.”1 Further, in January 10, 2014, the Company stated in its SEC Definitive Proxy Statement that it is “committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which board nominees are chosen.”2
Shareholders opined that companies with holistic comprehensive diversity policies and programs, and strong leadership commitment to implementation, enhance their long-term value; reducing the Company’s potential legal and reputational risks associated with workplace discrimination and build reputations as a fair employer. Equally, shareholders opined that the varied perspectives of a diverse senior management and board of directors would provide a competitive advantage in terms of creativity, innovation, productivity and morale, while eliminating the limitations of “groupthink”, as it would recognize the uniqueness of experience, strength, culture and thought contributed by each; strengthening its reputation and accountability to shareholders.
Therefore, shareholders ask the Company to assist investors in evaluating the company’s effectiveness in meeting its commitment to equal opportunity and diversity in senior management and board of directors, in any meaningful way that would not cause the company to breach the assurances of confidentiality and privacy that it has made to its employees.
We urge shareholders to vote FOR the proposal.
1https://www.apple.com/diversity/
2http://investor.apple.com/secfiling.cfm?filingid=1193125-14-8074&cik=320193
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Apple’s Statement in Opposition to Proposal No. 6
The Board recommends a vote AGAINST Proposal No. 6.
At Apple, we believe that diversity is critical to innovation and that it is essential to Apple’s future. We are promoting diversity within our company and in the communities we’re a part of. We’re proud of the progress we’re making and we publish detailed information on our efforts atapple.com/diversity.
Our efforts are much broader than the “accelerated recruitment policy” requested by this proposal, which would be focused only on Apple’s senior management and Board of Directors. Instead, our approach fosters diversity across Apple today and invests in initiatives for the future. That’s why we’re working with the Thurgood Marshall College Fund, which provides scholarships to students at Historically Black Colleges and Universities, and why we’ve joined President Obama’s ConnectED initiative to provide Apple technology, experience and support to 114 underserved schools across the United States. Through the ConnectED initiative, Apple provides each student an iPad, each teacher an iPad and a MacBook, and each classroom an Apple TV. 92% of the students we reach through ConnectED are of Hispanic, Black, Native American, Alaskan Native, or Asian heritage.
Apple was also a sponsor of the 2015 Grace Hopper Celebration of Women in Computing, and we’re working with a variety of other organizations in the fields of science, technology, engineering and math (STEM), including the National Society of Black Engineers (NSBE). Within Apple, we believe that inclusion and diversity are fundamental to innovation, therefore also to the need to attract and retain the best talent. Apple leaders and managers are encouraged and supported in inclusively leading globally diverse teams. We also encourage our employees to share their cultures with each other by joining Diversity Network Associations, which are Apple employee groups representing different ethnicities, religions, orientations, and interests.
Our Board of Directors shares this commitment. Pursuant to its charter, the Nominating Committee of our Board of Directors actively seeks out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen, and this has been reflected in our most recent appointments to the Board.
This proposal would require the Board to adopt an accelerated recruitment policy for increasing diversity among senior management and the Board. We believe that the proposal is unduly burdensome and not necessary because Apple has demonstrated to shareholders its commitment to inclusion and diversity, which are core values for our company.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 6.
Vote Required
Approval of Proposal No. 6 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
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Proposal No. 7 – Shareholder Proposal
Apple has been advised that the National Center for Public Policy Research, which has indicated it is a beneficial owner of at least $2,000 in market value of Apple’s common stock, intends to submit the following proposal at the Annual Meeting:
Human Rights Review – High-Risk Regions
Whereas, the Securities and Exchange Commission has consistently recognized that human rights constitute a significant policy issue.
Company operations in high-risk regions with poor human rights records risk damage to Apple’s reputation and shareholder value.
Apple has recently shown interest in opening business relations with Iran – a state sponsor of terrorism with an abysmal human rights record.
The Company also has a presence (or is expecting to have a presence) in areas such as Saudi Arabia, Qatar, Nigeria and the United Arab Emirates – all nations that have questionable human rights records as it relates to suffrage, women’s rights and gay rights.
Resolved: The proponent requests the Board review the Company’s guidelines for selecting countries / regions for its operations and issue a report, at reasonable expense excluding any proprietary information, to shareholders by December 2016. The report should identify Apple’s criteria for investing in, operating in and withdrawing from high-risk regions.
Supporting Statement: If the Company chooses, the review may consider developing guidelines on investing or withdrawing from areas where the government has engaged in systematic human rights violations.
In its review and report, the Company might also consider a congruency analysis between its stated corporate values and Company operations in certain regions, which raises an issue of misalignment with those corporate values, and stating the justification for such exceptions.
For example our CEO bashed state-level religious freedom laws as anti-homosexual bigotry saying, “Apple is open. Open to everyone, regardless of where they come from, what they look like, how they worship or who they love. Regardless of what the law might allow in Indiana or Arkansas, we will never tolerate discrimination.” Yet, according to theWashington Post, Apple has a presence in 17 countries where homosexual acts are illegal. In four of those nations, homosexual acts are punishable by death. These company operations are inconsistent with Apple’s values as extolled by our CEO.
Additionally, Apple’s stated policies call for massive reductions in CO2 emissions. However, Apple has manufacturing operations in China – the world’s largest emitter of CO2 with a questionable record on human rights and religious freedom. Again, operations in this region appear to conflict with Apple’s stated values and policies.
The proponent believes that Apple’s record to date demonstrates a gap between its lofty rhetoric / aspirations and its performance. The requested report would play a role in illuminating and addressing the factors accounting for this gap.
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Apple’s Statement in Opposition to Proposal No. 7
The Board recommends a vote AGAINST Proposal No. 7.
Apple’s products are loved by users all over the world. We believe we are fortunate to serve our customers, and we have operations in many countries to reach them and support our business, including research and development, sales and marketing, and retail stores. For example, in 2015, Apple opened its first retail stores in the Middle East: Apple Store Mall of the Emirates in Dubai and Apple Store Yas Mall in Abu Dhabi, both in the United Arab Emirates.
Our selection of the countries in which we operate is based on a wide range of factors relating to our business strategy. But our values and our principles of business conduct apply everywhere we do business.
We believe in equality for everyone, regardless of race, age, gender, gender identity, ethnicity, religion, or sexual orientation. That applies throughout our company, around the world, with no exceptions.
We have also adopted a Supplier Code of Conduct to promote our standards of social and environmental responsibility and ethical conduct throughout our supply chain. Often, these standards exceed what local laws require. In 2014, Apple conducted 633 supply chain audits on labor and human rights, health and safety, and environment, covering over 1.5 million workers in 19 countries. Since 2007, Apple has trained more than 8 million workers on their rights. We do this because we believe that it drives accountability and improvement throughout our supply chain and ultimately has a positive impact on the communities we’re a part of. More information is available about our work atapple.com/supplier-responsibility/.
This proposal requests a report on Apple’s guidelines for selecting countries for our operations. We do not believe that this would be a productive use of company resources. For example, such a report would necessarily have to omit proprietary information and would therefore be an incomplete picture of our approach. Moreover, we believe that Apple’s commitment to protecting and promoting human rights has already been demonstrated by both effective action and transparency about our work. Accordingly, the requested report is unnecessary and would not provide meaningful information to shareholders.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 7.
Vote Required
Approval of Proposal No. 7 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
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Proposal No. 8 – Shareholder Proposal
Apple has been advised that Mr. James McRitchie, 9295 Yorkship Court, Elk Grove, CA 95758, who has indicated he is a beneficial owner of at least $2,000 in market value of Apple’s common stock, intends to submit the following proposal at the Annual Meeting:
Proposal 8 – Shareholder Proxy Access
RESOLVED: Shareholders of Apple Inc. (the “Company”) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or an unrestricted number of shareholders forming a group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.
The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving or two, whichever is greater. This bylaw shall supplement existing rights under Company bylaws, providing that a Nominator must:
a) have beneficially owned 3% or more of the Company’s outstanding common stock, including recallable loaned stock, continuously for at least three years before submitting the nomination;
b) give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission (SEC) rules about (i) the nominee, including consent to being named in proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and
c) certifying that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business, not to change or influence control at the Company.
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority given to multiple nominations exceeding the one-quarter limit. No additional restrictions shall be placed on re-nominations.
Supporting Statement: The SEC’s universal proxy access Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf) was vacated after a court decision regarding the SEC’s cost-benefit analysis. Therefore, proxy access rights must be established on a company-by-company basis. Subsequently,Proxy Access in the United States: Revisiting the Proposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1) a cost-benefit analysis by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140.3 billion.Public Versus Private Provision
Apple Inc. | 2016 Proxy Statement | 64
of Governance: The Case of Proxy Access (http://ssrn.com/abstract=2635695) found a 0.5 percent average increase in shareholder value for proxy access targeted firms.
Enhance shareholder value. Vote for Shareholder Proxy Access – Proposal 8
Apple’s Statement in Opposition to Proposal No. 8
The Board recommends a vote AGAINST Proposal No. 8.
Apple has adopted proxy access for director nominations by our shareholders. Adoption of this proposal would therefore be moot and unnecessary.
On December 21, 2015, the Board amended Apple’s bylaws to adopt proxy access provisions consistent with market practice and other Fortune 500 companies. In particular, Apple adopted provisions that permit a shareholder, or a group of up to twenty shareholders, owning at least three percent of Apple’s outstanding shares of common stock continuously for at least three years to nominate and include in Apple’s annual meeting proxy materials director nominees constituting up to twenty percent of the Board, provided that the shareholder(s) and nominee(s) satisfy the requirements specified in the bylaws, which are available atinvestor.apple.com/corporate-governance.cfm.
Prior to amending the bylaws, Apple closely monitored proxy access developments and reached out to many of our shareholders on this issue. These discussions provided valuable feedback, including the particular proxy access parameters that Apple’s shareholders view as appropriate for Apple. Based on these discussions, Apple adopted proxy access provisions that protect Apple, best serve the interests of our shareholders, and are consistent with market practice and other Fortune 500 companies.
Apple is proud to continue its leadership in corporate governance matters. As reported by the Financial Times (Stephen Foley,Campaigners Hail Apple Shareholder Move, The Financial Times,December 23, 2015), Patrick McGurn, special counsel at ISS, the shareholder advisory group, responded to Apple’s adoption of proxy access by stating that “other boards are likely to look to such respected companies and are likely to examine this issue now.”
Beyond mere proxy access, Apple’s bylaws also keep directors accountable to shareholders by providing for an automatic end to the term for any director that fails to be elected by an affirmative vote of a majority of the shares represented and voting in an uncontested election. Under similar circumstances, other companies may require that a director submit a resignation letter but the board of directors usually has discretion as to whether to accept such resignation letter – potentially leaving a director that is not supported by a majority of the shareholders on the board indefinitely. Under Apple’s bylaws, Apple does not require a resignation letter as the term of a director that is not supported by a majority of the shares represented and voting in an uncontested election ends automatically. Apple believes this process fosters accountability and responsiveness to shareholders.
Accordingly, after thorough consideration of appropriate proxy access parameters and extensive engagement with many of our shareholders, Apple proactively adopted proxy access provisions consistent with market practice and other Fortune 500 companies, thereby making this proposal moot and unnecessary.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 8.
Apple Inc. | 2016 Proxy Statement | 65
Vote Required
Approval of Proposal No. 8 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
Apple Inc. | 2016 Proxy Statement | 66
Apple knows of no other matters to be submitted to the shareholders at the Annual Meeting, other than the proposals referred to in this Proxy Statement. If any other matters properly come before the shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.
Apple Inc. | 2019 Proxy Statement | 57
Apple Inc. | 2019 Proxy Statement | 58
AUDIT AND FINANCE COMMITTEE REPORTAudit and Finance Committee Report
The Audit and Finance Committee consists of four members: Ron Sugar, who serves as the Chair of the Committee, Bob Iger,James Bell, Art Levinson, and Sue Wagner.* Each member is an independent director under NASDAQ,Nasdaq, NYSE, and SEC audit committee structure and membership requirements.rules. The Audit and Finance Committee has certainthe duties and powers as described in its written charter adopted by the Board. A copy of the charter is available on Apple’s website atinvestor.apple.com/corporate-governance.cfm.
The Audit and Finance Committee assists the Board in theBoard’s oversight and monitoring of Apple’s financial statements and other financial information provided by Apple to our shareholders and others, as well as oversight and monitoring of Apple’s independent registered public accounting firm, Apple’s internal audit department, Apple’s accounting policies and the system of internal controls established by management and the Board, significant financial transactions, and enterprise risk management. of:
• | Apple’s financial statements and other financial information provided by Apple to its shareholders and others; |
• | compliance with legal, regulatory, and public disclosure requirements; |
• | the independent auditors, including their qualifications and independence; |
• | Apple’s system of internal controls, including the internal audit function; |
• | treasury and finance matters; |
• | enterprise risk management, privacy, and data security; and |
• | the auditing, accounting, and financial reporting process generally. |
The Audit and Finance Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of Apple’s financial statements.
In fulfilling itsThe Audit and Finance Committee is responsible for the appointment, compensation, retention, and oversight responsibility of appointing and reviewing the serviceswork performed by Apple’s independent registered public accounting firm, Ernst & Young LLP. In fulfilling its oversight responsibility, the Audit and Finance Committee carefully reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the scope of the audit, audit fees, auditor independence matters, performance of the independent auditors, and the extent to which the independent registered public accounting firm may be retained to performnon-audit services.
Apple maintains an auditor independence policy that, among other things, prohibits Apple’s independent registered public accounting firm from performingnon-financial consulting services, such as information technology consulting and internal audit services. This policy mandates that the Audit and Finance Committee approve in advance the audit and permissiblenon-audit services to be performed by the independent registered public accounting firm and the related budget, and that the Audit and Finance Committee be provided with quarterly reporting on actual spending. This policy also mandates that Apple may not enter into engagements with Apple’s independent registered public accounting firm fornon-audit services without the expresspre-approval of the Audit and Finance Committee.
The Audit and Finance Committee has reviewed and discussed the audited financial statements for the year ended September 26, 201529, 2018 with Apple’s management and Ernst & Young LLP, Apple’s independent registered public accounting firm.Young. The Audit and Finance Committee has also discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 16,1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board (PCAOB)(“PCAOB”).
The Audit and Finance Committee also has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding Ernst & Young’s communications with the Audit and Finance Committee concerning independence, and has discussed with Ernst & Young its independence from Apple.independence.
Based on the reviews and discussions referred to above, the Audit and Finance Committee recommended to the Board that the financial statements referred to above be included in Apple’s Annual Report on FormForm 10-K for the year ended September 26, 2015.29, 2018 for filing with the SEC.
Members of the Audit and Finance Committee
Ron Sugar (Chair) | Bob IgerJames Bell | Art Levinson | Sue Wagner
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Apple Inc. | 20162019 Proxy Statement | 6860
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSecurity Ownership of Certain Beneficial Owners and Management
The following table shows certain information as of December 28, 2015January 2, 2019 (the “Table Date”), unless otherwise indicated, with respect toregarding the beneficial ownership of Apple’s common stock by: (i) each person that Apple believes beneficially holds more than 5% of the outstanding shares of Apple’s common stock based solely on Apple’s review of filings with the SEC filings;pursuant to Section 13(d) or 13(g) of the Exchange Act; (ii) each director and nominee; (iii) each named executive officer listed in the table entitled “Summary Compensation Table—2015, 2014,2018, 2017, and 2013”2016” under the section entitled “Executive Compensation”; and (iv) all directors and executive officers as a group. As of the Table Date, 5,544,487,0004,729,803,000 shares of Apple’s common stock were issued and outstanding. Unless otherwise indicated, all persons named as beneficial owners of Apple’s common stock have sole voting power and sole investment power with respect to the shares indicated as beneficially owned. In addition, unless otherwise indicated, the address for each person named below is c/o Apple Inc., 1 Infinite Loop,One Apple Park Way, Cupertino, California 95014.
Name of Beneficial Owner | Shares of Common Stock Beneficially Owned(1) | Percent of Common Stock Outstanding | ||||||
The Vanguard Group | 348,468,032 | (2) | 7.37 | % | ||||
BlackRock, Inc. | 319,715,586 | (3) | 6.76 | % | ||||
Kate Adams | 15,516 | (4) | * | |||||
Angela Ahrendts | 50,848 | (5) | * | |||||
James Bell | 7,464 | (6) | * | |||||
Tim Cook | 878,425 | (7) | * | |||||
Al Gore | 113,585 | (8) | * | |||||
Bob Iger | 50,571 | (9) | * | |||||
Andrea Jung | 32,119 | (10) | * | |||||
Art Levinson | 1,256,198 | (11) | * | |||||
Luca Maestri | 27,324 | (12) | * | |||||
Ron Sugar | 23,285 | (13) | * | |||||
Sue Wagner | 13,380 | (14) | * | |||||
Jeff Williams | 108,085 | (15) | * | |||||
All current executive officers and directors as a group (12 persons) | 2,576,800 | (16) | * |
Apple Inc. | 20162019 Proxy Statement | 6961
(1) | Represents shares of Apple’s common stock held, options held that were exercisable at the Table Date or within 60 days thereafter, and RSUs held that will vest within 60 days after the Table Date. Does not include RSUs that vest more than 60 days after the Table Date. RSUs are awards granted by Apple and payable, subject to vesting requirements, in shares of Apple’s common stock. |
(2) | Represents shares of Apple’s common stock beneficially owned as of December 31, |
(3) | Represents shares of Apple’s common stock beneficially owned as of December 31, |
(4) | Excludes |
(5) | Excludes 480,018 RSUs held by Ms. Ahrendts that are not scheduled to vest within 60 days after the Table Date. |
Includes |
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(8) | Includes |
(9) | Includes 525 shares of Apple’s common stock held by Mr. Iger’s spouse and |
(10) | Includes |
(11) | Includes 14,000 shares of Apple’s common stock held by Dr. Levinson’s spouse, |
(12) | Excludes |
(13) | Includes 1,521 RSUs held by Dr. Sugar that are scheduled to vest on February 1, 2019. |
(14) | Includes 1,800 shares of Apple’s common stock held by Ms. Wagner’s spouse and 1,521 RSUs held by Ms. Wagner that are scheduled to vest on February 1, 2019. |
(15) | Excludes |
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(16) | Includes |
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* | Represents less than 1% of the issued and outstanding shares of Apple’s common stock as of the Table Date. |
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Apple’s officers and directors, and persons who own more than ten percent10% of a registered class of Apple’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors, and greater than ten percent10% shareholders also are required by SEC rules to furnish Apple with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to Apple, and on written representations from the reporting persons, Apple believes that all Section 16(a) filing requirements applicable to Apple’s directors and officers were timely met during 2015.
Apple Inc. | 20162019 Proxy Statement | 7163
EQUITY COMPENSATION PLAN INFORMATIONEquity Compensation Plan Information
The following table shows information, as of September 26, 2015, concerning29, 2018, regarding shares of Apple’s common stock authorized for issuance under Apple’s equity compensation plans. As of September 26, 2015,29, 2018, other than as described below, no equity securities were authorized for issuance under equity compensation plans not approved by shareholders.
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Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(1) ($)(b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | ||||||||||
Equity compensation plans approved by shareholders(2) | 92,557,635 | (3) | 17.38 | 317,816,244 | (4) |
(1) | The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding stock options and does not reflect the shares that will be issued upon the vesting of outstanding awards of RSUs, which have no exercise price. |
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This table does not include equity awards that have been assumed by Apple in connection with the acquisition of other companies. As of September |
This number includes the following: |
This number includes |
Dated: January 6, 2016
Apple Inc. | 20162019 Proxy Statement | 7264
APPLE INC. 2014 EMPLOYEE STOCK PLAN
(As Amended and Restated as of , 2016)
SECTION 1. INTRODUCTION.
This 2014 Employee Stock Plan was approved by the Company’s shareholders on February 28, 2014 (the “Approval Date”). The Plan was subsequently amended and restated by the Board as set forth herein on November 17, 2015, subject to approval by the Company’s shareholders at the Annual Meeting on February 26, 2016.
The purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Participants the opportunity to share in such long-term success by acquiring a proprietary interest in the Company.
The Plan seeks to achieve this purpose by providing for discretionary long-term incentive Awards in the form of Options (which may be Incentive Stock Options or Nonstatutory Stock Options), Stock Appreciation Rights, Stock Grants, Restricted Stock Units and Cash Bonus Awards.
Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any related Award Agreement.
SECTION 2. DEFINITIONS.
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Apple Inc. | 2016 Proxy Statement | A-1
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Apple Inc. | 2016 Proxy Statement | A-2
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Apple Inc. | 2016 Proxy Statement | A-3
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Apple Inc. | 2016 Proxy Statement | A-4
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SECTION 3. ADMINISTRATION.
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Apple Inc. | 2016 Proxy Statement | A-5
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Apple Inc. | 2016 Proxy Statement | A-6
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SECTION 4. GENERAL.
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Apple Inc. | 2016 Proxy Statement | A-7
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Apple Inc. | 2016 Proxy Statement | A-8
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SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
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Apple Inc. | 2016 Proxy Statement | A-9
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SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
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Apple Inc. | 2016 Proxy Statement | A-10
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SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
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Apple Inc. | 2016 Proxy Statement | A-11
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SECTION 8. TERMS AND CONDITIONS FOR STOCK GRANTS.
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Apple Inc. | 2016 Proxy Statement | A-12
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SECTION 9. TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.
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Apple Inc. | 2016 Proxy Statement | A-13
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SECTION 10. PERFORMANCE-BASED AWARDS; CASH BONUS AWARDS.
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Apple Inc. | 2016 Proxy Statement | A-14
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SECTION 11. PROTECTION AGAINST DILUTION.
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Apple Inc. | 2016 Proxy Statement | A-15
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SECTION 12. CORPORATE TRANSACTIONS.
Upon the occurrence of any of the following: any merger, combination, consolidation, or other reorganization in which the Company does not survive (or does not survive as a public company in respect of its Common Stock); any exchange of Common Stock or other securities of the Company in which the Company does not survive (or does not survive as a public company in respect of its Common Stock); a sale of all or substantially all the business, stock or assets of the Company; a dissolution of the Company; or any other event in which the Company does not survive (or does not survive as a public company in respect of its Common Stock); then the Committee may make provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all outstanding Share-based Awards or the cash, securities or property deliverable to the holder of any or all outstanding Share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect of such event. Upon the occurrence of any event described in the preceding sentence, then, unless the Committee has made a provision for the substitution, assumption, exchange or other continuation or settlement of the Award or the Award would otherwise continue in accordance with its terms in the circumstances, each Award shall terminate upon the related event; provided that the holder of an Option or SAR shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding vested Options and SARs in accordance with their terms before the termination of such Awards (except that in no case shall more than ten days’ notice of the impending termination be required).
The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash or property settlement and, in the case of Options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such event over the Exercise Price of the Award.
In any of the events referred to in this Section 12, the Committee may take such action contemplated by this Section 12 prior to such event (as opposed to on the occurrence of such event) to the extent that the Committee deems the action necessary to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying Shares.
Without limiting the generality of Section 3, any good faith determination by the Committee pursuant to its authority under this Section 12 shall be conclusive and binding on all persons.
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SECTION 13. LIMITATIONS ON RIGHTS.
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SECTION 14. WITHHOLDING TAXES; SECTION 409A.
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Apple Inc. | 2016 Proxy Statement | A-17
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SECTION 15. DURATION AND AMENDMENTS; MISCELLANEOUS.
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Apple Inc. | 2016 Proxy Statement | A-18
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Apple Inc. | 2016 Proxy Statement | A-19
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Apple Inc. | 2016 Proxy Statement | A-20
DIRECTIONS TO THE 2016 ANNUAL MEETING OF SHAREHOLDERSGeneral Information
2019 Annual Meeting of Shareholders | ||||||
When: | March 1, 2019
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Where: | Steve Jobs Theater Apple Park Cupertino, California 95014 | |||||
Record Date: | January 2, 2019
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About the Meeting and These Materials
AttendanceYou are invited to attend Apple’s 2019 Annual Meeting of Shareholders and vote on the proposals described in this Proxy Statement because you were an Apple shareholder on the Record Date, January 2, 2019.
Apple is soliciting proxies for use at the Annual Meeting, is limited to shareholders. Admission to the Annual Meeting will be on a first-come, first-served basis. including any postponements or adjournments.
In the interest of saving time and money, Apple has opted to provide the Annual Report on Form10-K for the year ended September 26, 201529, 2018 (the “Annual Report”) in lieu of producing a glossy annual report.
Attending the Annual Meeting – Advance Registration Required
We are pleased to welcome shareholders to Steve Jobs Theater at Apple Park for the 2019 Annual Meeting. To make sure we can accommodate as many attendees as possible, we have established a registration process. Shareholders will need to register in advance atproxyvote.com beginning at 8:00 a.m. Pacific Time on February 6, 2019 and registration will be on a first-come, first-served basis. Only shareholders as of the Record Date who have registered in advance and have a valid confirmation of registration will be admitted to the meeting. Please note that due to space constraints and security concerns, we will not be able to provide access to the Apple campus to any shareholders who have not registered in advance.
Your proxy materials will include a unique control number to be used atproxyvote.com to vote your shares and register to attend the meeting. If you have any questions aboutproxyvote.com or your control number, please contact the bank, broker, or other organization that holds your shares. The availability of online voting may depend on the voting procedures of the organization that holds your shares.
No recording is allowed at the Annual Meeting. This includes photography, audio recording, and video recording. In addition, the use of mobile phones, tablets, or computers is strictly prohibited. Attendees are welcome to visit the Apple Park Visitor Center after the Annual Meeting, but we are not able to accommodate tours of the campus.
Even if you successfully register and plan on attending the Annual Meeting in person, we encourage you to vote your shares in advance using one of the methods described in this Proxy Statement to ensure that your vote will be represented at the Annual Meeting. We reserve the right to revoke admission privileges or to eject an attendee for behavior likely to cause damage, injury, disruption, or annoyance or for failure to comply with reasonable requests or the rules of conduct for the meeting, including time limits applicable to those in attendance who are permitted to speak.
Apple Inc. | 2019 Proxy Statement | 65
Proxy Materials
These materials were first sent or made available to shareholders on January 8, 2019, and include:
• | The Notice of 2019 Annual Meeting of Shareholders |
• | This Proxy Statement for the Annual Meeting |
• | Apple’s Annual Report on Form10-K for the year ended September 29, 2018 |
If you requested printed versions by mail, these printed proxy materials also include the proxy card or voting instruction form for the Annual Meeting.
Proxy Materials are Available on the Internet
Apple uses the internet as the primary means of furnishing proxy materials to shareholders. We are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to our shareholders with instructions on how to access the proxy materials online or request a printed copy of the materials.
Shareholders may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials in print by mail or electronically by email. We encourage shareholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of our annual meetings and reduce Apple’s printing and mailing costs.
Apple’s proxy materials are also available atinvestor.apple.com.
Eliminating Duplicate Mailings
Apple has adopted a procedure called “householding.” Under this procedure, Apple may deliver a single copy of the Notice of Internet Availability and, if you requested printed versions by mail, this Proxy Statement and the Annual Report to multiple shareholders who share the same address, unless Apple has received contrary instructions from one or more of the shareholders. This procedure reduces the environmental impact of our annual meetings and reduces Apple’s printing and mailing costs. Shareholders who participate in householding will continue to receive separate proxy cards. Upon written or oral request, Apple will deliver promptly a separate copy of the Notice of Internet Availability and, if you requested printed versions by mail, this Proxy Statement and the Annual Report to any shareholder that elects not to participate in householding.
To receive, free of charge, a separate copy of the Notice of Internet Availability and, if you requested printed versions by mail, this Proxy Statement or the Annual Report, or separate copies of any future notice, proxy statement, or annual report, you may write or call Apple at the following email address, physical address, or phone number:
investor_relations@apple.com
Apple Investor Relations
One Apple Park Way, MS927-4INV
Cupertino, California 95014
(408)974-3123
If you are receiving more than one copy of the proxy materials at a single address and would like to participate in householding, please contact the bank, broker, or other organization that holds your shares to request information about eliminating duplicate mailings.
Apple Inc. | 2019 Proxy Statement | 66
Quorum for the Annual Meeting
Holders of a majority of the shares entitled to vote at the Annual Meeting must be present at the Annual Meeting in person or by proxy for the transaction of business. This is called a quorum. Your shares will be counted for purposes of determining if there is a quorum if:
• | You are entitled to vote and you are present in person at the Annual Meeting; or |
• | You have properly voted by proxy online, by phone, or by submitting a proxy card or voting instruction form by mail. |
Brokernon-votes and abstentions are counted for purposes of determining whether a quorum is present. If a quorum is not present, we may propose to adjourn the Annual Meeting to solicit additional proxies and reconvene the Annual Meeting at a later date.
Inspector of Election
A representative of Broadridge Investor Communication Solutions, Inc. will serve as the inspector of election.
Proxy Solicitation Costs
Apple is paying the costs of the solicitation of proxies. Apple has retained Georgeson LLC to assist in the distribution of proxy materials and the solicitation of proxies from brokerage firms, fiduciaries, custodians, and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson a fee of approximately $15,500 plusout-of-pocket expenses. You may contact Georgeson at(866) 828-4304.
Apple must also pay brokerage firms, fiduciaries, custodians, and other similar organizations representing beneficial owners certain fees associated with:
• | Forwarding the Notice of Internet Availability to beneficial owners; |
• | Forwarding printed proxy materials by mail to beneficial owners who specifically request them; and |
• | Obtaining beneficial owners’ voting instructions. |
In addition to solicitations by mail, the proxy solicitor and Apple’s directors, officers, and employees, without additional compensation, may solicit proxies on Apple’s behalf in person, by phone, or by electronic communication.
Apple’s Fiscal Year
Apple’s fiscal year is the52- or53-week period that ends on the last Saturday of September. Apple’s 2018 fiscal year included 52 weeks and ended on September 29, 2018. Information presented in this Proxy Statement is based on Apple’s fiscal calendar, other than references to particular years in the biographies of our directors and executive officers, which refer to the calendar years.
Apple Inc. | 2019 Proxy Statement | 67
Voting
Each share of Apple’s common stock has one vote on each matter. Only “shareholders of record” as of the close of business on the Record Date are entitled to vote at the Annual Meeting. As of the Record Date, there were 4,729,803,000 shares of Apple’s common stock issued and outstanding, held by 24,000 shareholders of record. In addition to shareholders of record of Apple’s common stock, “beneficial owners of shares held in street name” as of the Record Date can vote using the methods described below.
Shareholder of Record. If your shares are registered directly in your name with Apple’s transfer agent, Computershare Trust Company, N.A., you are the shareholder of record with respect to those shares.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a bank, broker, or other organization, then you are the “beneficial owner of shares held in street name.” As a beneficial owner, you have the right to instruct the person or organization holding your shares how to vote your shares. Most individual shareholders are beneficial owners of shares held in street name.
Voting Procedures
There are four ways to vote:
• | Online.You may vote by proxy by visitingproxyvote.com and entering the control number found in your Notice of Internet Availability. The availability of online voting may depend on the voting procedures of the organization that holds your shares. |
• | In Person. You may vote in person at the Annual Meeting by requesting a ballot from an usher. Only eligible shareholders who have registered in advance and have a valid confirmation of registration will be admitted to the Annual Meeting. |
If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, in addition to registering to attend the meeting in person, you must also obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that authorizes you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting. In order for your vote to be counted, you must hand both the copy of the legal proxy and your completed ballot to an usher to be provided to the inspector of election.
• | Phone. If you request printed copies of the proxy materials by mail, you will receive a proxy card or voting instruction form and you may vote by proxy by calling the toll free number found on the card or form. The availability of phone voting may depend on the voting procedures of the organization that holds your shares. |
• | Mail. If you request printed copies of the proxy materials by mail, you will receive a proxy card or voting instruction form and you may vote by proxy by filling out the card or form and returning it in the envelope provided. |
All shares represented by valid proxies received prior to the taking of the vote at the Annual Meeting will be voted and, where a shareholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder’s instructions. Even if you successfully register and plan on attending the Annual Meeting in person, we encourage you to vote your shares in advance online, by phone, or by mail to ensure that your vote will be represented at the Annual Meeting.
Apple Inc. | 2019 Proxy Statement | 68
Changing your Vote
You may revoke your proxy and change your vote at any time before the taking of the vote at the Annual Meeting.
• | Online.You may change your vote using the online voting method described above, in which case only your latest internet proxy submitted prior to the Annual Meeting will be counted. |
• | In Person.You may revoke your proxy and change your vote by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you properly vote at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation prior to the Annual Meeting to Apple’s Secretary at One Apple Park Way,MS: 169-5GC, Cupertino, California 95014. Only eligible shareholders who have registered in advance and have a valid confirmation of registration will be admitted to the Annual Meeting. |
• | Phone. You may change your vote using the phone voting method described above, in which case only your latest telephone proxy submitted prior to the Annual Meeting will be counted. |
• | Mail.You may revoke your proxy and change your vote by signing and returning a new proxy card or voting instruction form dated as of a later date, in which case only your latest proxy card or voting instruction form received prior to the Annual Meeting will be counted. |
Uninstructed Shares
Shareholders of Record. If you are a shareholder of record and you:
• | Indicate when voting online or by phone that you wish to vote as recommended by the Board; or |
• | Sign and return a proxy card without giving specific voting instructions, |
then the persons named as proxy holders, Kate Adams and Luca Maestri, will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as they may determine in their best judgment with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the broker that holds your shares with specific voting instructions, then such broker may generally vote your shares in their discretion on “routine” matters, but cannot vote on“non-routine” matters.
Routine andNon-Routine Proposals
The following proposal is considered a routine matter:
• | The ratification of the appointment of Ernst & Young LLP as Apple’s independent registered public accounting firm for 2019 (Proposal No. 2). |
A broker or other nominee may generally vote in their discretion on routine matters, and therefore no brokernon-votes are expected in connection with Proposal No. 2.
The following proposals are considerednon-routine matters:
• | Election of directors (Proposal No. 1); |
• | Advisory vote to approve executive compensation (Proposal No. 3); and |
• | Each of shareholder proposals No. 4 and No. 5. |
Apple Inc. | 2019 Proxy Statement | 69
If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on the matter with respect to your shares. This is generally referred to as a “brokernon-vote.” Therefore, brokernon-votes may exist in connection with Proposal No. 1 and Proposals No. 3 through No. 5.
Vote Required to Approve a Proposal
With respect to the election of directors (Proposal No. 1), Apple’s bylaws provide that, in an uncontested election of directors, the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum is required to elect a director. An “uncontested election of directors” means an election of directors in which the number of candidates for election does not exceed the number of directors to be elected by the shareholders at that election.
Approval of Proposals No. 2 through No. 5 requires, in each case, the affirmative vote of both (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum.
BrokerNon-Votes and Abstentions
Brokernon-votes and abstentions are counted for purposes of determining whether a quorum is present. Only “FOR” and “AGAINST” votes are counted for purposes of determining the votes received in connection with each proposal. Brokernon-votes and abstentions will have no effect on determining whether the affirmative vote constitutes a majority of the shares present or represented by proxy and voting at the Annual Meeting.
In addition, for each proposal, the affirmative vote equal to a majority of the shares necessary to constitute a quorum is also required for approval. Therefore, brokernon-votes and abstentions could prevent the election of a director or the approval of a proposal because they do not count as affirmative votes.
Confidentiality of Votes
Proxy instructions, ballots, and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Apple will not disclose the proxy instructions or ballots of individual shareholders, except:
• | To allow for the tabulation and certification of votes; |
• | To facilitate a successful proxy solicitation; |
• | To assert claims for Apple; |
• | To defend claims against Apple; and |
• | As necessary to meet applicable legal requirements. |
If you write comments on your proxy card or ballot, the proxy card or ballot may be forwarded to Apple’s management and the Board to review your comments.
Tabulation and Reporting of Voting Results
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote at the Annual Meeting. Apple will publish the final voting results in a Current Report on Form8-K filed with the SEC within four business days following the Annual Meeting.
Apple Inc. | 2019 Proxy Statement | 70
Director Nominations and Other Matters for the 2020 Annual Meeting of Shareholders
Proposals and director nominations must be sent either by mail to Apple’s Secretary at One Apple Park Way, MS:169-5GC, Cupertino, California 95014, or by email toshareholderproposal@apple.com.
Matters for Inclusion in the Proxy Materials for the 2020 Annual Meeting of Shareholders
Matters for inclusion in the proxy materials for the 2020 annual meeting of shareholders, other than nominations of directors, must be received on or before September 10, 2019. All proposals must comply with Rule14a-8 under the Exchange Act.
Matters for Consideration at the 2020 Annual Meeting of Shareholders, but not for Inclusion in the Proxy Materials
Matters for consideration at the 2020 annual meeting of shareholders, but not for inclusion in the proxy materials, must be received no earlier than the close of business on November 2, 2019 and no later than the close of business on December 2, 2019. The proposal must be submitted by a shareholder of record and must set forth the information required by Apple’s bylaws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
Nominations of Individuals for Election as Directors at the 2020 Annual Meeting of Shareholders Using Proxy Access
A shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years shares of Apple stock representing an aggregate of at least 3% of our outstanding shares, may nominate and include in Apple’s proxy materials director nominees constituting up to 20% of Apple’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in Apple’s bylaws. Notice of proxy access director nominees must be received no earlier than the close of business on August 11, 2019 and no later than the close of business on September 10, 2019.
Nominations of Individuals for Election as Directors at the 2020 Annual Meeting of Shareholders, but not Included in the Proxy Materials
Director nominations that a shareholder intends to present at the 2020 annual meeting of shareholders, but does not intend to have included in Apple’s proxy materials, must be received no earlier than the close of business on November 2, 2019 and no later than the close of business on December 2, 2019. Notice of director nominations must be submitted by a shareholder of record and must set forth the information required by Apple’s bylaws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
Apple Inc.
One Apple Park Way
Cupertino, CA 95014 USA
Phone: (408)996-1010
Dated: January 8, 2019
Apple Inc. | 2019 Proxy Statement | 71
Apple Inc. IMPORTANT ANNUAL MEETING INFORMATION 000004 ENDORSEMENT_LINE SACKPACK MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Electronic Voting Instructions YouAPPLE INC. C/O PROXY SERVICES P.O. BOX 9163 FARMINGDALE, NY 11735 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 8:59 p.m. PT the day before the meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can vote by Internetconsent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined belowInternet. To sign up for electronic delivery, please follow the instructions above to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on February 26, 2016. Vote by Internet Log on tousing the Internet and, gowhen prompted, indicate that you agree to www.investorvote.com/AAPL Followreceive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 8:59 p.m. PT the steps outlined onday before the secured website.meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and either return it in the postage-paid envelope we have provided or return it to Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. Follow the instructions provided by the recorded message. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X Apple Inc. Annual Shareholder Meeting Proxy Card 1234 5678 9012 345 IF YOU HAVE NOT VOTED VIA THE INTERNETProcessing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR TELEPHONE, FOLD ALONG THE PERFORATION,BLACK INK AS FOLLOWS: E54471-P14435 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THE BOTTOMTHIS PORTION IN THE ENCLOSED ENVELOPE. A Proposals —ONLY APPLE INC. The Board of Directors recommends a vote FOR all the listed nominees. 1. The election to Apple’s Board of Directors of the eight nominees and FOR Proposals 2, 3 and 4. 1. Election of Directors:named in the Proxy Statement For Against Abstain Nominees: 1a. James Bell 1b. Tim Cook 1c. Al Gore 1d. Bob Iger 1e. Andrea Jung 1f. Art Levinson 1g. Ron Sugar 1h. Sue Wagner The Board of Directors recommends a vote FOR For Against Abstain For Against Abstain01 - JAMES BELL 02 - TIM COOK 03 - AL GORE 04 - BOB IGER 05 - ANDREA JUNG 06 - ART LEVINSON 07 - RON SUGAR 08 - SUE WAGNER For Against Abstain For Against AbstainProposals 2 and 3. 2. Ratification of the appointment of Ernst & Young LLP as3. An advisory resolution to approve executive compensation Apple’s independent registered public accounting firm for 20164. Approval of the amended and restated Apple Inc. 2014 Employee Stock Plan B Shareholder Proposals —2019 3. Advisory vote to approve executive compensation The Board of Directors recommends a vote AGAINST Proposals 5, 6, 7 and 8. For Against Abstain For Against Abstain
Proposals 4 and 5. A shareholder proposal entitled “Net-Zero Greenhouse Gas Emissions by 2030” 6. A shareholder proposal regarding diversity among our senior management and board of directors 7. A shareholder proposal entitled “Human Rights Review – High Risk Regions” 8.4. A shareholder proposal entitled “Shareholder Proxy Access” IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONSAccess Amendments” 5. A - D ON BOTH SIDES OF THIS CARD. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1 UP X 2575841 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 028HFBshareholder proposal entitled “True Diversity Board Policy” For address changes and/or comments, please check this box and write them on the back where indicated. NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Apple Inc. 20162019 Annual Meeting of Shareholders February 26, 2016March 1, 2019 9:00 a.m. Pacific Time 1 Infinite Loop, Building 4 (Town Hall),Steve Jobs Theater Apple Park Cupertino, California 95014 Upon arrival, please present your photo identification atAttending the registration desk. Directions to the 2016 Annual Meeting of– Advance Registration Required We are pleased to welcome shareholders to Steve Jobs Theater at Apple Park for the 2019 Annual Meeting. To make sure we can accommodate as many attendees as possible, we have established a registration process. Shareholders Take Interstate 280 (south from San Francisco, north from San Jose) Exitwill need to register in advance at De Anza Boulevard Turn south onto De Anza Boulevard toward Cupertino Turn left onto Mariani Avenue Continueproxyvote.com beginning at 8:00 a.m. Pacific Time on Mariani, which leads into the Apple parking lot Proceed to Building 3 for meetingFebruary 6, 2019 and registration Attendance at the 2016 Annual Meeting of Shareholders is limited to shareholders. Admission to the meeting will be on a first-come, first-served basis. InOnly shareholders as of the interestRecord Date who have registered in advance and have a valid confirmation of saving timeregistration will be admitted to the meeting. Please note that due to space constraints and money, Apple has optedsecurity concerns, we will not be able to provide access to the Apple campus to any shareholders who have not registered in advance. Your proxy materials include a unique control number to be used at proxyvote.com to vote the shares and register to attend the meeting. If you have any questions about proxyvote.com or the control number, please contact the bank, broker, or other organization that holds the shares. The availability of online voting may depend on the voting procedures of the organization that holds the shares. No recording is allowed at the Annual ReportMeeting. This includes photography, audio recording, and video recording. In addition, the use of mobile phones, tablets, or computers is strictly prohibited. Attendees are welcome to visit the Apple Park Visitor Center after the Annual Meeting, but we are not able to accommodate tours of the campus. Even if you successfully register and plan on Form 10-Kattending the Annual Meeting in person, we encourage you to vote the shares in advance using one of the methods described in these proxy materials to ensure that your vote will be represented at the Annual Meeting. We reserve the right to revoke admission privileges or to eject an attendee for behavior likely to cause damage, injury, disruption, or annoyance or for failure to comply with reasonable requests or the rules of conduct for the year ended September 26, 2015,meeting, including time limits applicable to those in lieu of producing a glossy annual report. I-280 Infinite loop Registration Building 3 De Anza Blvd. Mariani Ave. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.attendance who are permitted to speak. E54472-P14435 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF APPLE INC. FOR THE 20162019 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 26, 2016MARCH 1, 2019 The undersigned shareholder of Apple Inc., a California corporation, hereby acknowledges receipt of the Notice of 20162019 Annual Meeting of Shareholders and Proxy Statement with respect to the 20162019 Annual Meeting of Shareholders of Apple Inc. to be held at 1 Infinite Loop, Building 4 (Town Hall),Steve Jobs Theater at Apple Park, Cupertino, California 95014 on Friday, February 26, 2016March 1, 2019 at 9:00 a.m. Pacific Time, and hereby appoints Kate Adams and Luca Maestri, and Bruce Sewell, and each of them, proxies and attorneys-in-fact, each with power of substitution and revocation, and each with all powers that the undersigned would possess if personally present, to vote the Apple Inc. common stock of the undersigned at such meeting and any postponement(s) or adjournment(s) of such meeting, as set forth on the reverse side, and in their discretion upon any other business that may properly come before the meeting (and any such postponement(s) or adjournment(s)).
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE ELECTION OF THE NOMINEES, FOR PROPOSALS 2 AND 3, ANDAGAINST PROPOSALS 4 AND AGAINST PROPOSALS 5 6, 7 AND 8, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY POSTPONEMENT(S) OR ADJOURNMENT(S) THEREOF. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark the corresponding box on the reverse side.) PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR THE INTERNET. If you vote by telephone or the Internet, please DO NOT mail back this proxy card. THANK YOU FOR YOUR VOTE. C Non-Voting Items Change of Address — Please print new address below. I ConsentUntil contrary notice to Apple Inc., I consent to access all future notices of annual meetings, proxy statements and annual reports issued by Apple Inc. over the Internet. D Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - D ON BOTH SIDES OF THIS CARD.
January 6, 2016
VIA EDGAR
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Ladies and Gentlemen:
Accompanying this letter for filing is a copy of the notice of annual meeting, definitive Proxy Statement, and form of proxy for the 2016 annual meeting of shareholders of Apple Inc. (“Apple”). In accordance with Rule 14a-3(d), Apple’s annual report on Form 10-K for the year ended September 26, 2015, as filed with the Commission on October 28, 2015, will also be made available to Apple’s shareholders with the proxy materials.
As described in the definitive Proxy Statement, Apple’s shareholders are being asked to approve the amended and restated Apple Inc. 2014 Employee Stock Plan (the “Plan”) at the annual meeting. In accordance with Instruction 3 to Item 10 of Schedule 14A, the Plan is included as Annex A to the Proxy Statement.
With respect to the information requested by Instruction 5 to Item 10 of Schedule 14A, the Plan does not request any increase in the maximum number of shares that may be issued or transferred pursuant to awards under the Plan.
We note that, in accordance with Rule 14(a)-6(a), Apple was not required to file preliminary proxy materials with the Commission because the matters to be acted on at the meeting are limited to (1) the election of directors, (2) the ratification of accountants, (3) a vote on an advisory resolution to approve executive compensation, (4) the approval of the Plan described above, which is a “plan” as defined in paragraph (a)(6)(ii) of Item 402 of Regulation S-K, and (5) shareholder proposals pursuant to Rule 14a-8.
Should you have questions regarding the foregoing or require additional information, please contact me at408-974-6931 or glevoff@apple.com.
Very truly yours,
/s/ Gene D. Levoff
Gene D. Levoff
Associate General Counsel, Corporate Law
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