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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x | Definitive Proxy Statement | |
Definitive Additional Materials | ||
Soliciting Material under §240.14a-12 |
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 2017 Annual Meeting of
Shareholders and Proxy Statement
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Record Date
Close of business on December 30, 2016
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Your vote is important. Please vote.
Apple Inc. | 2017 Proxy Statement
This summary highlights the proposals to be acted upon, as well as financial, compensation, and corporate governance information described in more detail elsewhere in this Proxy Statement. In addition, this summary provides a brief description of Apple’s values.
In this Proxy Statement, the terms “Apple,” “we,” and “our” refer to Apple Inc. The information contained onapple.com is not incorporated by reference into this Proxy Statement.
Annual Meeting Proposals
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Apple Inc. | 2017 Proxy Statement | 1
Compensation and Performance Highlights
For a detailed discussion of our executive compensation program, please see the “Compensation Discussion and Analysis” beginning on page 28.
2016 Compensation Program
Our executive compensation program is designed to be simple, effective, and link pay to performance, while reflecting the size, scope, and success of Apple’s business, as well as the responsibilities of our executive officers.
The elements of our program and highlights from 2016 are as follows:
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2016 Named Executive Officer Target Pay Mix
The chart above shows target dollar values for each element of our named executive officers’ 2016 compensation. Annual cash incentives for 2016 paid out at 89.5% of target. For more information, please see the annual cash incentive discussion beginning on page 33.
Apple Inc. | 2017 Proxy Statement | 2
2016 Financial Performance and Annual Cash Incentive Payouts
Apple delivered another year of strong financial results in 2016. However, the two financial measures used to evaluate executive performance under our annual cash incentive program, net sales and operating income, declined from ourrecord-breaking 2015 levels. These results were below the target performance goals set by the Compensation Committee. As a result, the annual cash incentive payouts to our named executive officers were below target.
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Long-Term Equity Incentives and Total Shareholder Return
Apple is focused on creating long-term value for our shareholders, and for the three-year period from September 29, 2013 through September 24, 2016, our total shareholder return was 73.6%. Our executive compensation program is weighted considerably toward long-term equity awards. This practice creates a substantial retention incentive, encourages our executive officers to focus on Apple’s long-term success, and aligns with the long-term interests of our shareholders.
2017 Compensation Program Updates
For 2017, we increased the performance-based component of our long-term equity incentives to 50% of the grant date fair value of the award, placing an even greater emphasis on performance-based compensation for our executive officers.
Apple Inc. | 2017 Proxy Statement | 3
Corporate Governance
Apple believes that effective corporate governance should include regular constructive discussions with our shareholders. We have a proactive engagement process that encourages feedback from our shareholders. This feedback helps shape our governance practices, which include:
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Board of Directors and Committees
Chair Member
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James Bell
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Tim Cook Chief Executive Officer
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Al Gore
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Bob Iger
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Andrea Jung
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Art Levinson Chairman of the Board
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Ron Sugar
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Sue Wagner
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Apple Values
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Apple Inc. | 2017 Proxy Statement | 5
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General
Why am I receiving these materials?
You are invited to attend Apple’s 20172020 Annual Meeting of Shareholders and Proxy Statement
Attending the Annual Meeting – Advance Registration Required
We are pleased to welcome shareholders to Steve Jobs Theater at Apple Park for the 2020 Annual Meeting. To 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 4, 2020. 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 Annual Meeting or 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 proposals described in this Proxy Statement because you were an Apple shareholder on December 30, 2016 (the “Record Date”). Applevoting procedures of the organization that holds your shares.
No recording is soliciting proxies for useallowed 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, including any postponements or adjournments.but we are not able to accommodate tours of the campus.
Even if you receive a valid confirmation of registration 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 attendees who are permitted to speak.
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.
These materials were first sent or made available to shareholders on January 6, 2017.3, 2020.
What is included in these proxy materials?
Apple Inc.
Notice of | ||||||
Steve Jobs Theater Apple Park Cupertino, California 95014 | February 26, 2020 9:00 a.m. Pacific Time | |||||
The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are available free of charge at investor.apple.com. |
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If you requested printed versions by mail, these printed proxy materials also include the proxy card or voting instruction form for the Annual Meeting.
Apple Inc. | 2017 Proxy Statement | 6
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?
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.
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 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
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 at the email address, physical address, or 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 the quorum requirement 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:
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Apple Inc. | 2017 Proxy Statement | 7
Broker non-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.
Who will serve as the inspector of election?
A representative from Apple’s transfer agent, Computershare Trust Company, N.A. (“Computershare”), will serve as the inspector of election.
Who is paying the costs of this proxy solicitation?
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, banks, broker-dealers, and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson a fee of approximately $15,000 plus out-of-pocket expenses. You may contact Georgeson 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 phone, or by electronic communication.
Where are Apple’s principal executive offices located and what is Apple’s main phone number?
Apple’s principal executive offices are located at 1 Infinite Loop, Cupertino, California 95014. Apple’s main phone number is (408) 996-1010.
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.
Voting
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 the Record Date are entitled to attend and vote at the Annual Meeting. As of the Record Date, there were 5,257,816,000 shares of Apple’s common stock issued and outstanding, held by 26,000 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.
Apple Inc. | 2017 Proxy Statement | 8
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 Computershare, 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 brokerage firm, bank, broker-dealer, or other similar organization, then you are the “beneficial owner of shares held in street name.” As a beneficial owner, you have the right to instruct your broker, bank, trustee, or nominee how to vote your shares. Most individual shareholders are beneficial owners of shares held in street name.
If I am a shareholder of record, how do I vote?
If you are a shareholder of record, there are four ways to vote:
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Even if you 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.
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. 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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Apple Inc. | 2017 Proxy Statement | 9
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.
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.
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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 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 organization that holds your shares with specific voting instructions, then the organization that holds your shares may generally vote your shares in their discretion on “routine” matters, but cannot vote on “non-routine” matters.
Which proposals are considered “routine” or “non-routine”?
The following proposal is considered a routine matter:
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A broker or other nominee may generally vote in their discretion on routine matters, and therefore no broker non-votes are expected in connection with Proposal No. 2.
Apple Inc. | 2017 Proxy Statement | 10
The following proposals are considered non-routine matters:
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To transact such other business as may properly come before the Annual Meeting and any postponements or adjournments thereof. |
Record Date
Close of business on January 2, 2020
Sincerely, |
Katherine Adams Senior Vice President, General Counsel and Secretary |
Cupertino, California January 3, 2020 |
Your vote is important. Please vote.
Apple Inc. | 2020 Proxy Statement
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Apple Inc. | 2020 Proxy Statement
Apple Inc. | 2020 Proxy Statement
This summary provides an overview of the organizationAnnual Meeting, the proposals that holds your shares does not receive instructions from youwill be acted 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 the matter with respect to your shares. This is generally referred to as a “broker non-vote.” Therefore, broker non-votes may exist in connection with Proposal No. 1 and Proposals No. 3 through No. 9.
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 proxyinformation about our corporate governance 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 Proposal No. 2, Proposal No. 3, and Proposals No. 5 through No. 9 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.
A plurality of the votes cast for Proposal No. 4 will be considered the shareholders’ preferred frequency for holding an advisory vote on executive compensation.
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 (or, in the case of Proposal No. 4, votes for “1 Year,” “2 Years,” and “3 Years”). 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 (or, in the case of Proposal No. 4, whether the vote for “1 Year,” “2 Years,” or “3 Years” constitutes a plurality of the shares voted on the proposal).
In addition, for each proposal other than Proposal No. 4, the affirmative vote equal to a majority of the shares necessary to constitute a quorum is also required for approval. 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.
Is my vote confidential?
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:compensation program.
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Apple Inc. | 20172020 Proxy Statement | 111
If you write comments on your proxy card or ballot,
Apple Inc. | 2020 Proxy Statement | 2
Annual Meeting
2020 Annual Meeting of Shareholders
Steve Jobs Theater | February 26, 2020 | |||
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The Record Date for the proxy card or ballot may be forwarded to Apple’s management and the Board to review your comments.
Where can I find the voting resultsAnnual Meeting is January 2, 2020. Only shareholders of record as of the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspectorclose of election after the taking of thebusiness on this date are entitled to vote at the Annual Meeting. Apple will publish
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Election of Directors
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How to Vote
To vote online, visitproxyvote.com and enter the final voting resultscontrol number found in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) within four business days followingyour Notice of Internet Availability.
You may also vote prior to the Annual Meeting.
Director Nominations and Other Matters forMeeting by phone or by mail, or in person at the 2018 Annual Meeting if you have registered in advance and have a valid confirmation of Shareholdersregistration. For more detailed information, see Voting Procedures beginning on page 76.
WhatYour vote is the deadline to propose matters for inclusion in the proxy materials for the 2018 annual meeting of shareholders?important. Please vote.
The proposal must be received on or prior to September 8, 2017. All proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
What is the deadline to propose matters for consideration at the 2018 annual meeting of shareholders, but not for inclusion in the proxy materials?
The proposal must be received not earlier than the close of business on October 31, 2017 and not later than the close of business on November 30, 2017. 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.
What is the deadline to nominate individuals for election as directors at the 2018 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 not earlier than the close of business on August 9, 2017 and not later than the close of business on September 8, 2017.
What is the deadline to nominate individuals for election as directors at the 2018 annual meeting of shareholders, but not included in the proxy materials?
Director nominations that a shareholder intends to present at the 2018 annual meeting of shareholders, but does not intend to have included in Apple’s proxy materials, must be received not earlier than the close of business on October 31, 2017 and not later than the close of business on November 30, 2017. 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.
Where do I send proposals and director nominations for the 2018 annual meeting of shareholders?
Proposals and director nominations must be sent either by mail to Apple’s Secretary at 1 Infinite Loop, MS: 301-4GC, Cupertino, California 95014, or by email toshareholderproposal@apple.com.
Apple Inc. | 20172020 Proxy Statement | 123
Directors, Corporate Governance and Executive Officers
Apple’s Board consists of a 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 ofOur corporate governance practicesstructure fosters principled actions, informed and trends. In addition, manyeffective decision-making, and appropriate monitoring of our directors have experience as directors or trustees of significant academic, research, nonprofit,compliance and philanthropic institutions, and bring unique perspectives to the Board.
The Board and its 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 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 firm 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, ability to exercise sound judgment, diversity, age, demonstrated leadership, skills, including financial literacy, and 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 considers candidates 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, in 2015, the Board adopted amendments to our bylaws to implement proxy access. 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, 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 the bylaws. In December 2016, the Board adopted additional amendments to our bylaws to enhance our proxy access framework and make it easier for shareholders to nominate proxy access candidates. For example: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 • 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 Board committee evaluations led by the independent Chairman • All members of our Audit and Finance Committee are financial experts • Half of our Board and committee leadership positions are held by women | |
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 • 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 of Apple stock by employees, directors, and executive officers; prohibition on pledging of Apple stock by directors and executive officers • Robust stock ownership guidelines for directors and executive officers |
Board of Directors and Committees
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Sue Wagner | Chair | 2 |
* On December 18, 2019, Air Lease Corporation announced that Dr. Sugar had provided notice to the Air Lease board of directors that he would not stand for re-election at the end of his current term on that board in May 2020.
For a detailed discussion of our corporate governance and directors, please see the section entitled “Corporate Governance” beginning on page 11 and the section entitled “Directors” beginning on page 17.
Apple Inc. | 20172020 Proxy Statement | 134
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.
Consistent and Effective Program Design
We follow clear guiding principles in the design of the compensation program for our named executive officers and are committed to sound compensation policies and practices. The overall design of our compensation program and each of its three primary components have remained consistent year-over-year.
Annual Base Salary |
• No change to | |
Annual Cash Incentive | • Short-term cash incentive with variable payout opportunities based on net sales and operating income results measured against annual performance goals • No change to payout opportunities for 2019 | |
Long-Term Equity Awards | • Long-term equity incentives in the form of time-based and performance-based restricted stock units (“RSUs”) with multi-year vesting schedules • No change to equity award design for 2019 |
Aligned with Shareholder Interests and Company Performance
Say-on-Pay Approval |
• Annual cash incentives paid out at 128% of target for 2019, down from the • Performance-based RSUs generally vest based on Apple’s total shareholder return relative to companies in the S&P 500 over a three-year performance period • In 2019, performance-based RSUs vested at maximum based on Apple’s outperformance relative to S&P 500 companies, with Apple’s total shareholder return greater than 100% over each relevant three-year performance period • Shareholders have an annual opportunity to cast an advisory say-on-pay vote and have indicated strong support for our executive compensation program • 94% of votes cast on the say-on-pay proposal at the 2019 Annual Meeting were voted in favor of the |
Biographical Information for Our Director Nominees
The biographies below describeFor a detailed discussion of our executive compensation program, please see the skills, qualities, attributes,section entitled “Compensation Discussion and experience of the nominees that led the Board and the Nominating Committee to determine that it is appropriate to nominate these directors. Each of the eight nominees currently servesAnalysis” beginning on the Board. In this section (“Directors, Corporate Governance, and Executive Officers—Directors”), references to particular years refer to the calendar year.
Apple Inc. | 20172020 Proxy Statement | 145
Apple Inc. | 2020 Proxy Statement | 6
Chairman of the BoardWe believe that we lead in innovation because we lead with our values.
Audit Committee
Art Levinson 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.
Former Public Company Directorships
Within the Last Five Years
Amyris, Inc.
F. Hoffman-La Roche Ltd.
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 for the Lewis-Sigler Institute for Integrative Genomics
Advisory Council for the Princeton University Department of Molecular Biology
Tim Cook
56 years oldCEO
Director since 2011
Accessibility
apple.com/accessibility
Apple believes accessibility is a fundamental human right and technology should be accessible to everyone.
Chief Executive OfficerOur products are powerful and affordable assistive devices, withbuilt-in accessibility features such as VoiceOver, Switch Control, and support for Made for iPhone® hearing aids.
We introduced Voice Control, which allows people, particularly those with physical motor limitations, to fully control their iOS device or Mac® with their voice.
Inclusion & Diversity
apple.com/diversity
We strive to represent the customers and communities we serve—everywhere we operate around the world—because it makes us a better and more innovative company.
We are deeply committed to hiring and promoting inclusively, championing equal pay, increasing diverse representation at all levels, and fostering an inclusive culture that gives every employee the opportunity to do the best work of their lives.
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Education
apple.com/education
Apple works alongside educators to unleash the creative potential in every student.
Our products and curriculum bring creative expression into the classroom, and our free Apple Teacher professional learning program helps educators integrate technology and creativity into every lesson.
We have reimagined Everyone Can Code and expanded Everyone Can Create resources to better prepare students for a rapidly changing world.
Privacy & Security
apple.com/privacy
Apple believes privacy is a fundamental human right. Every Apple product is designed from the ground up to protect privacy and security.
Great experiences do not have to come at the expense of privacy and security. Instead, they can support them.
To give more control over personal information, we provide a set of dedicated privacy management tools on each user’s Data and Privacy page.
Environment
apple.com/environment
We prioritize the environment in everything we create, design, power, and manufacture.
All of Apple’s global facilities are powered with 100% renewable electricity, and 44 suppliers have committed to 100% renewable electricity for Apple production.
We have continued to transition to recycled and renewable materials in new products, including our most recent iPhone® devices, which use 100% recycled rare earth elements in the Taptic Engine®—a first for a smartphone.
Supplier Responsibility
apple.com/supplier-responsibility
Apple cares deeply about the people who build our products and the planet we all share. We hold ourselves and our suppliers to the highest standards, and we share our work openly.
We are on track to provide health education to over one million people in the supply chain to give people the tools to take charge of their well-being. All of our final assembly facilities for iPhone®, iPad®, Mac®, Apple Watch®, AirPods®, and HomePod™ have achieved UL Zero Waste Certification.
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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 atinvestor.apple.com/investor-relations/leadership-and-governance. The Board met five times during 2019, 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 2019, and (ii) the total number of meetings held by each committee of the Board on which such member served during 2019.
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
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 Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships. Each committee operates under a written charter adopted by the Board, which is available atinvestor.apple.com/investor-relations/leadership-and-governance.
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 nine times during 2019.
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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 and makes recommendations to the Board regarding the compensation of members of the Board and Board committees; and performs such other duties and responsibilities as 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” beginning on page 30. The Compensation Committee met four times during 2019.
Nominating Committee
The Nominating Committee’s duties and responsibilities include assisting the Board on matters relating to the identification, selection, and qualification of Board members and candidates nominated to the Board; 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 2019.
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 or another independent director. A summary of the results is presented to the Board on a“no-names” basis identifying any themes or issues that have emerged. The Board considers the results and ways in which Board processes and effectiveness may be enhanced.
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Annual Committee Self-Evaluations
Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation 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 allows our CEO to focus his time and energy on operating and managing Apple, while leveraging our Chairman’s experience and perspectives. The Board periodically reviews its leadership structure to determine whether it continues to best serve Apple and its shareholders.
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. In accordance with this responsibility, the Audit Committee monitors Apple’s significant business risks, including financial; operational; privacy; data security; business continuity; tax; legal and regulatory compliance; 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
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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.
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, titled “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 atinvestor.apple.com/leadership-and-governance. 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.
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 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, 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 (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available atinvestor.apple.com/leadership-and-governance. 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 nature and extent of the related person’s interest in the transaction; |
• | The approximate dollar value of the amount involved in the transaction; |
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• | 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; |
• | The material terms of the transaction, including 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 business 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. |
A summary of new transactions covered by standingpre-approvals established by the Audit Committee, or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.
Transactions with Related Persons
Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any such relationships during 2019.
Attendance of Directors at Annual Meetings of Shareholders
Apple expects all of its directors to attend the Annual Meeting. All directors serving at that time attended the 2019 annual meeting of shareholders.
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS:169-5GC, Cupertino, CA 95014 USA, 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 under our Policy on Reporting Questionable Accounting or Auditing Matters atinvestor.apple.com/leadership-and-governance.
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Apple’s Board consists of a diverse group of highly qualified 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 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 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 third-party search firms 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; ability to exercise sound judgment; diversity; age; demonstrated 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 evaluates candidates recommended by shareholders 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 that a shareholder, or a group of up to 20 shareholders, owning at least 3% of our outstanding shares continuously for at least three years, may nominate director nominees constituting up to 20% of Apple’s Board that would be included in our proxy statement pursuant to our proxy access provisions. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found atinvestor.apple.com/leadership-and-governance.
The following biographies 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 for election to the Board. Each of the seven nominees currently serves on the Board.
Apple Inc. | 2020 Proxy Statement | 18
Art Levinson, 69, 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
Tim Cook, 59, 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 February 2002 to October 2005. From October 2000 to February 2002, Mr. Cook served as Senior Vice President, Worldwide Operations, Sales, Service and Support. From March 1998 to October 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
Board of Directors, Robert F. Kennedy Center for Justice and Human RightsLeadership Council, Malala Fund
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James Bell,
68 years old
Director since 2015
Audit Committee
James Bell 71, is the retired Executive Vice President, Corporate President and Chief Financial Officer of The Boeing Company, an aerospace company.
Mr. Bell served as Boeing’s CFOin this role from June 2008 to April 2012, having previously served as Executive Vice President, Finance and Chief Financial Officer from November 2003 to June 2008, and as Senior Vice President of Finance and Corporate Controller from October 2000 to November 2003. From 1992 to 2000, Mr. Bell held a series of positions with increasing responsibility at Boeing.
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.
Other Current Public Company Directorships
The Dow Chemical Company
JPMorgan Chase & Co.
CDW Corporation
Dow Inc.
Selected Directorships and Memberships
Board of Trustees, Rush University Medical Center
Former Public Company Directorships Within the Last Five Years
DowDupont Inc.
Al Gore,
68 years old
Director since 2003
Compensation Committee
Nominating Committee
Al Gore 71, 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 November 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 technology policy, politics, and environmental rights, along with experience in asset management and venture capital.
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Bob Iger
66 years old
Director since 2011
Compensation Committee
Nominating Committee Chair
Bob Iger 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.
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
Vice Chairman, U.S.-China Business Council
Co-Chairman, Partnership for a New American Economy
Member, American Academy of Arts & Sciences
Member, President’s Export Council
Board of Directors, Bloomberg Philanthropies
Andrea Jung,
58 years old
Director since 2008
Compensation Committee Chair
Nominating Committee
Andrea Jung 61, 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 Board of 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 of Avon from September 2001 to April 2012. Ms. Jung served as Chief Executive Officer of Avon from November 1999 to April 2012, and served as a member of the Board of Directors of Avon from January 1998 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.
Other Current Public Company Directorships
Unilever PLC and Unilever N.V.
Wayfair Inc.
Selected Directorships and Memberships
Board of Directors, Rockefeller Capital Management
Board of Directors, JUST Capital
Former Public Company Directorships Within the Last Five Years
Daimler AG
General Electric Company
Former Public Company Directorships
Within the Last Five Years
Avon Products, Inc.
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Ron Sugar,
68 years old
Director since 2010
Audit Committee Chair
Ron Sugar 71, 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 April 2003 to June 2010 and served as President and Chief Operating Officer from 2001 to 2003. Previous to Northrop Grumman, he held executive positions at Litton Industries and TRW Inc., where he served as Chief Financial Officer.
Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management, LLC, Bain & Company, Temasek Americas Advisory Panel, the G100 Network, and the World 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, experience with government relations and public policy, and a global business perspective from his service on other boards.
Other Current Public Company DirectorshipsDirectorships*
Air Lease Corporation Amgen Inc. | Chevron Corporation Uber Technologies, Inc. |
Selected Directorships and Memberships
Member, National Academy of Engineering
Board of Trustees, University of Southern California
Board of Directors, Los Angeles Philharmonic Association
Board* On December 18, 2019, Air Lease Corporation announced that Dr. Sugar had provided notice to the Air Lease board of Trustees, Boys and Girls Clubsdirectors that he would not stand for re-election at the end of Americahis current term on that board in May 2020.
Sue Wagner
55 years old
Director since 2014
Audit Committee
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Sue Wagner, 57, is aco-founder of BlackRock, Inc., an asset management company. Ms. Wagner served as BlackRock’s Vice Chairman from January 2006 tountil her retirement in July 2012, and also served as a member of BlackRock’s Global Executive Committee and Global Operating Committee. During her tenure at BlackRock, Ms. Wagner served as BlackRock’s Chief Operating Officer and Head of Corporate Strategy, and led the alternative investments and international client businesses.
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
Board of Trustees, Hackley School
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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 a day-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, and set standards to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
Apple’s key governance documents, including our Corporate Governance Guidelines and committee charters, are available atinvestor.apple.com/corporate-governance.cfm. The governance structure is designed to foster principled actions, informed and effective decision-making, and appropriate monitoring of both compliance and performance. The Board met four times during 2016, 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 2016, and (ii) the total number of meetings held by each committee of the Board on which such person served during 2016.
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 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 SEC for committee memberships. Each Committee operates under written charters adopted by the Board that are available atinvestor.apple.com/corporate-governance.cfm.
Audit Committee
The Audit Committee assists the Board in oversight and monitoring of:
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The Audit Committee also appoints Apple’s independent registered public accounting firm and reviews the services performed by the firm. The Audit Committee met nine times during 2016.
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Compensation Committee
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 the independent compensation consultant and Apple’s executive officers in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” below. The Compensation Committee met seven times during 2016.
Nominating Committee
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 and makes recommendations regarding corporate governance matters, including implementing Apple’s Corporate Governance Guidelines. The Nominating Committee met four times during 2016.
The Nominating Committee has recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
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. In accordance with this responsibility, the Audit Committee monitors Apple’s significant business risks, including 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 reviews reports from Apple’s Vice President of Corporate Information Security, General Counsel, Chief Compliance Officer, and Vice President of Internal Audit, including updates on risk management, Apple’s privacy program, and relevant legislative, regulatory, and technical developments.
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.
While the Audit Committee has primary responsibility for overseeing enterprise risk management, 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 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 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
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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, to the Board, and to independent contractors, consultants, and others who do business with Apple. The code is available atinvestor.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 on the same website or by filing with the SEC a Current Report on Form 8-K, in each case if such disclosure is required by rules of the SEC or NASDAQ.
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 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 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 addition, the Audit Committee has delegated authority to the Chair of the Audit Committee to pre-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:
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The Audit Committee has considered and adopted the following standing pre-approvals under the policy for transactions with related persons:
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A summary of new transactions covered by the standing pre-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 Disney. In the ordinary course of business, Apple enters into commercial dealings with Disney that we consider arms-length, including sales arrangements, Internet 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 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 in 2016 attended the 2016 annual meeting of shareholders with the exception of Mr. Bell who was unable to attend for personal reasons.
Compensation Committee Interlocks and Insider Participation
Ms. Jung, Mr. Gore, Mr. Iger, and Dr. Levinson were members of the Compensation Committee during 2016. Mr. Iger was appointed to the Compensation Committee in place of Dr. Levinson in December 2015. 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 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 2016.
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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 directorNon-Employee Director compensation after reviewing the Compensation 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. No changes were made to the compensation of ourNon-Employee Directors for 2019.
Cash Retainers.Non-Employee Directors receive an annual cash retainer of $100,000. In 2016,2019, 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 former 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.equity awards. Under Apple’s 1997the Apple Inc.Non-Employee Director Stock Plan, (the “Director Plan”), Non-Employee Directors are granted restricted stock units (“RSUs”)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 2016,2019, 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 Director 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 Director Award. The number of RSUs subject to each Initial Director Award is determined in the same manner as described above for Annual Director Awards, but the grant date fair value of the award ispro-rated based on the portion of the year that has passed since the last annual meeting. Initial Director 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.
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Equipment Program.Program and Charitable Gift Matching. Apple has an equipment program for the Board 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, each Non-Employee Directors do not receive any other compensation for serving on any committee or attending Board or committee meetings.Director is eligible to participate in Apple’s charitable gift matching program to the same extent as Apple employees.
Stock Ownership Guidelines. Apple has stock ownership guidelines for our CEO, executive officers, andNon-Employee Directors. Under the guidelines, eachNon-Employee Directors are Director is expected, within five years after the individual first becomes subject to the guidelines, 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, 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
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spouse or children. Each Non-Employee Director is required to satisfy the stock ownership guideline 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 satisfied the stock ownership guidelines.
Director Compensation—2016Compensation – 2019
The following table shows information regarding the compensation earned or paid during 20162019 toNon-Employee Directors who served on the Board during the year. TheMr. Cook’s compensation paid to Mr. Cook is shown under “Executive Compensation” in the table entitled “Summary Compensation Table—2016, 2015,Table – 2019, 2018, and 2014”2017” and the related tables.tables under the section entitled “Executive Compensation.” Mr. Cook does not receive any compensation for his service as a member of the Board.
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 ($) | ||||||||||||||||||||||||
James Bell(3) | 100,000 | 360,375 | 5,176 | 465,551 | ||||||||||||||||||||||||||||
James Bell | 100,000 | 250,032 | 5,805 | 355,837 | ||||||||||||||||||||||||||||
Al Gore | 100,000 | 250,028 | 2,464 | 352,492 | 100,000 | 250,032 | 10,232 | 360,264 | ||||||||||||||||||||||||
Bob Iger | 125,000 | 250,028 | 2,261 | 377,289 | ||||||||||||||||||||||||||||
Bob Iger(3) | 125,000 | 250,032 | 23,956 | 398,988 | ||||||||||||||||||||||||||||
Andrea Jung | 130,000 | 250,028 | 2,163 | 382,191 | 130,000 | 250,032 | 5,356 | 385,388 | ||||||||||||||||||||||||
Art Levinson | 300,000 | 250,028 | 2,351 | 552,379 | 300,000 | 250,032 | 7,890 | 557,922 | ||||||||||||||||||||||||
Ron Sugar | 135,000 | 250,028 | 5,494 | 390,522 | 135,000 | 250,032 | 15,846 | 400,878 | ||||||||||||||||||||||||
Sue Wagner | 100,000 | 250,028 | 1,647 | 351,675 | 100,000 | 250,032 | 4,891 | 354,923 |
(1) | In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of stock awards granted toNon-Employee Directors during |
EachNon-Employee Director received an |
As of September |
(2) | The amounts shown reflect the value of one or more products received under Apple’s Board of Directors |
(3) | Mr. |
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Apple Inc. | 2020 Proxy Statement | 26
BiographicalThis section includes biographical information for Apple’s executive officers, other than Mr. Cook, is 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.Cook.
Angela Ahrendts, Senior Vice President, Retail, 56, 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 of the United Kingdom’s Prime Minister’s Business Advisory Council.
Eddy Cue, Senior Vice President, Internet Software and Services, 52, 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, 47, 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, 53, 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 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, 54, 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, 56, 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. Mr. Schiller has also served as a director of Illumina, Inc., a genetics company, since July 2016.
Bruce Sewell, Senior Vice President, General Counsel and Secretary, 58, 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.
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Johny Srouji, Senior Vice President, Hardware Technologies, 52,
Kate Adams Senior Vice President, General Counsel and Secretary | Ms. Adams, 55, 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. |
Luca Maestri Senior Vice President, Chief Financial Officer | Mr. Maestri, 56, oversees Apple’s accounting, business support, financial planning and analysis, treasury, real estate, 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. |
Deirdre O'Brien Senior Vice President, Retail + People | Ms. O’Brien, 53, oversees Apple’s retail and online teams, and Apple’s People team. As the leader of Apple’s retail and online teams, Deirdre supports their work to enrich the lives of millions of Apple customers every year. In her role leading the People team, Deirdre works to help Apple connect, develop, and care for its employees – and to help those employees do the best work of their lives. Deirdre originally joined Apple in July 1988 and assumed her current position in February 2019. Deirdre’s previous positions with Apple include Vice President, People and Vice President, Operations. |
Jeff Williams Chief Operating Officer | Mr. Williams, 56, 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 and Head of Worldwide Procurement. Prior to joining Apple, Jeff worked in a number of operations and engineering roles at IBM from 1985 to 1998. |
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This section describes the compensation program for our named executive officers 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.includes the required executive compensation tables.
Jeff Williams, Chief Operating Officer, 53, 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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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
Andrea Jung (Chair) | Al Gore | Bob IgerArt Levinson
Compensation Discussion and Analysis
Apple hadreported another year of strong financial resultsperformance in 2016. Net sales were $215.6 billion and operating income was $60.0 billion. Net sales2019. We believe that the compensation of our Services business grew 22% year-over-year and App Store revenue was the highest ever. The compensation paid to our named executive officers for 2016 appropriately reflects and rewards this performance.their contributions to Apple’s success and demonstrates alignment with Apple’s annual financial results and the interests of our shareholders.
In thisThis Compensation Discussion and Analysis we discuss the 2016 compensation program for our named executive officers andexplains the guiding principles and practices upon which itour executive compensation program is based. Ourbased and the compensation paid to our 2019 named executive officers:
• | Tim Cook, Chief Executive Officer |
• | Luca Maestri, Senior Vice President, Chief Financial Officer |
• | Kate Adams, Senior Vice President, General Counsel and Secretary |
• | Deirdre O’Brien, Senior Vice President, Retail + People |
• | Jeff Williams, Chief Operating Officer |
• | Angela Ahrendts, Former Senior Vice President, Retail |
Guiding Principles
Team-Based Approach. We apply a team-based approach to the compensation of our named executive officers for 2016 were: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 the named executive officers’ 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.
Prohibition on hedging, pledging, and |
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Mr. Cue, Mr. Riccio, and Mr. Sewell had the same total compensation according to SEC reporting rules, and as a result, we are reporting six named executive officers for 2016.
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. We have a pay-for-performance philosophy for executive compensation based on the following principles:
Team-Based Approach. Our executive officers are expected to operate as a high-performing team, and accordingly, we apply a team-based approach to our executive compensation program with internal pay equity as a primary consideration. We believe that generally awarding the same base salary, annual cash incentive, and long-term equity awards to each of our executive officers, other than the CEO, successfully supports this goal.
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
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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.
Emphasis on Long-Term Equity Incentives. Our executive compensation program emphasizes long-term shareholder value creation by using both time-based and performance-based RSUs to deliver long-term compensation incentives. The Compensation Committee believes that this is the most effective way to attract and retain a talented executive team and align executives’ interests with those of shareholders. As a result, our executive compensation program is weighted considerably toward long-term equity awards rather than cash compensation and our executives hold significant unvested RSUs at any particular time. This practice is intended to create a substantial retention incentive, encourage our executives to focus on Apple’s long-term success, and align with the long-term interests of our shareholders.
Compensation Practices. We follow sound compensation practices to support our guiding principles.
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Stock | We have robust stock ownership guidelines for our named executive officers.
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Compensation clawback policy | Our | |||
At-will employment | We employ our named executive officers at will. | |||
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 pension or other special benefits | We do not provide pensions or supplemental executive retirement, health, or insurance benefits. | |||
No change of control payments | We do not offer change of control payments orgross-ups of related excise taxes.
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No significant perquisites | We
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No repricing | We do not allow repricing of stock options without shareholder approval. | |||
Vesting | We apply the same vesting restrictions and performance conditions on dividend equivalents as on the underlying RSUs.
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Discretion and Judgment of the Compensation Committee
The Compensation Committee, consisting entirely of independent directors, reviews and approves the compensation of Apple’s named executive officers and acts as the administering 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 SEC and NASDAQNasdaq rules.
Since 2014,During 2019, the Compensation Committee has engaged the services of Pay Governance, anCommittee’s independent compensation consulting firm. During 2016,consultant, Pay Governance, provided 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 Compensation Committee or the Chair of the Compensation Committee outside committee meetings regarding matters related to the Compensation Committee’s responsibilities. In 2016,2019, 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 compensation 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 Shareholders. We have discussions with many of our shareholders regarding various corporate governance topics, including executive compensation, and related trends, such as environmental, social, and governance considerations. Shareholders are also provided the opportunity to cast an annual advisory vote on the compensation of our named executive officers. Shareholders have indicated their strong support for the compensation of our named executive officers, with 94% of votes cast on thesay-on-pay proposal at the 2019 Annual Meeting voted in favor of our executive compensation program. Based on this support from shareholders, our executive compensation program has not changed significantly year-over-year. The Compensation Committee will continue to consider shareholder feedback and the results ofsay-on-pay votes when making future compensation decisions.
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The Role of Peer Companies and Benchmarking.Companies. The Compensation Committee reviews peer group composition each year. With the assistance of Pay Governance, the Compensation Committee identified groups of companies to serve as market reference points for compensation comparison purposes for 2016.2019. 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 2019 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-skilled human capital was also considereddeveloped as an additional reference set for the Compensation Committee.
Based on the above criteria, Visa was added to the primary peer group and Pfizer and UnitedHealth Group were added to the secondary peer group for 2019.
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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In June 2015, the Compensation Committee selected the following companies for the 2016 primary peer group:
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The threshold revenue and market capitalization requirements for a company to be considered for the primary peer group for 2016 were $15 billion and $35 billion, respectively. In addition, although each was slightly below the thresholds, the Compensation Committee decided to retain Viacom and CBS in the primary peer group for consistency with the 2015 primary peer group. The Compensation Committee also decided to add Facebook to the primary peer group based on market capitalization, revenue similar to other companies in the primary peer group, and the fact that it competes with Apple for talent. Following the spinoff of Hewlett Packard Enterprise in November 2015, the Compensation Committee continued to include HP Inc. (formerly Hewlett-Packard) and Hewlett Packard Enterprises in the 2016 primary peer group.
Based on the revenue and market capitalization criteria described above, Apple continues to be significantly larger than the companies selected for the 2016 primary peer group, with 2016 revenue of $215.6 billion and market capitalization of $601.4 billion as of the end of 2016.
In the table above, revenue for primary peer group companies is the amount reported by each company in its most recently filed annual report as of the Record Date, and market capitalization for primary peer group companies is the amount provided by Bloomberg L.P. as of September 23, 2016, the last trading day of Apple’s fiscal year. The table includes Alphabet, HP Inc., and Hewlett Packard Enterprise. The table does not include DIRECTV, EMC, or Time Warner Cable, which either merged with or were acquired by another company before September 23, 2016.
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In June 2015, the Compensation Committee selected the following companies for the 2016 secondary peer group:
Johnson & Johnson | ||||
Disney | ||||
Twenty-First Century Fox | Nike | |||
Verizon | PepsiCo | |||
Visa | Pfizer | |||
Procter & Gamble | ||||
UnitedHealth Group |
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 and, as described above, input provided by its independent compensation consultant, our CEO (other than with respect to his own compensation), and shareholders. The Compensation Committee also considers peer group data provided by the Compensation Committee’s independent compensation consultant and 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.
Shareholder Feedback. We value the feedback provided by our shareholders and have discussions with many of them on an ongoing basis regarding various corporate governance topics, including executive compensation. Shareholders are also provided the opportunity to cast an annual advisory vote on executive compensation. At Apple’s 2016 annual meeting of shareholders, shareholders indicated their support for the compensation of our named executive officers, with approximately 95% of the votes cast on the say-on-pay proposal voted for the proposal. The design of the 2016 executive compensation program follows the same design as 2015. However, for 2017, the Compensation Committee has continued to evolve our executive compensation program by changing the allocation of equity awards to our executive officers from 60% time-based and 40% performance-based RSUs to 50% time-based and 50% performance-based RSUs, thereby placing an even greater emphasis on performance-based equity awards for our executive officers.
The Compensation Committee will continue to consider shareholder feedback and the results of say-on-pay votes when making future compensation decisions.Apple Inc. | 2020 Proxy Statement | 33
2016
2019 Named Executive Officer Compensation
Our executive compensation program is designed to be simple,motivate and reward exceptional performance in a straightforward and effective and link pay to performance,way, while reflectingalso recognizing the remarkable size, scope, and success of Apple’s business, as well as the responsibilities of our executive officers. It incorporates elements that create shareholder value by driving financial performance, retaining a high-performing and talented executive team, and aligning the interests of the executive team with the interests of shareholders.business. The main elements of the executive compensation program are:
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The chart below shows target dollar values for the main elements of our named executive officers’ 2016 compensation.
Cash Compensation Elementsofficers has three primary components: annual base salary, annual cash incentive, and Awardslong-term equity awards.
2019 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. Taking these factors into considerationsalaries for Ms. Adams, Ms. Ahrendts, Mr. Maestri, and in recognition of his individual performanceMr. Williams remained at $1 million for 2019, and remarkable leadership, Mr. Cook’sMs. O’Brien’s annual base salary was increasedset at $1 million when she was promoted to her current role. Mr. Cook’s annual base salary remained at $3 million at the beginning of 2016. The base salary for each2019.
2019 Annual Cash Incentive. Our annual cash incentive program is a variable,at-risk component of our named executive officers, other than Mr. Cook, remained unchanged at $1 million for 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 ofofficers’ compensation that is aligned with Apple’s annual financial performance goals. For 2016, each of our named executive officers had a threshold annual cash incentive opportunity of 100% of base salary, a target annual cash incentive opportunity of 200% of base salary, and a maximum annual cash incentive opportunity of 400% of base salary.
results. Net sales and operating income, as determined in accordance with generally accepted accounting principles, were chosenare used as the performance measures for the 2016 annual cash incentive opportunityprogram because they reflect commonly recognized measures of overall company performance and profitability and are drivers of shareholder value creation. Payouts of the
The annual cash incentive program provides payout opportunities based on the achievement ofpre-determined financial goals that require our named executive officers to meet high standards of performance to receive a payout. 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 threshold, target, and maximum goals, as approved by the Compensation Committee. The target payout opportunity is 200% of each named executive officer’s annual base salary. If both of the threshold performance levels are reached, the total payout opportunity is 50% of the target payout opportunity, and if both of the maximum performance levels are reached, the payout opportunity is capped at 200% of the target payout opportunity. There is no payout for a particular performance measure unless the threshold performance goal is achieved with respect to that measure. Payouts are calculated based on the performance level achieved for each performance measure for 2016 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 the Compensation Committee’s subjective assessment of the named executive officer’s overall performance.
The Compensation Committee established performance goals in the first quarter of 2016, taking into consideration Apple’s 2015 financial results, macroeconomic factors, the payout opportunities based on attainment of performance goals atestablishes threshold, target, and maximum performance goals under the annual incentive program based on factors relevant to the fiscal year. The Compensation Committee also considers prior years’ financial results as a reference point, but focuses on setting goals that reflect current business conditions and drive an appropriatepay-for-performance outcome. When setting the goals for 2019, the Compensation Committee considered many factors, including, but not limited to, the macroeconomic environment, trade conditions, foreign exchange headwinds, long-term strategic investments, alignment between appropriate payout opportunities and performance levels, and pay-for-performance alignment.
2016 Goals and Results
Apple Inc. | 20172020 Proxy Statement | 3334
As shown inFor 2019, the tableCompensation Committee established threshold goals that represented the minimum level of achievement for a named executive officer to receive an annual cash incentive payout. The target goals represented a level of performance that would be challenging to achieve based on the considerations noted above, our 2016but also representing strong financial performance commensurate with the target payout opportunity. The maximum goals represented exceptional financial performance. Accordingly, the performance goals under the 2019 annual cash incentive program were as follows:
Threshold | Target | Maximum | ||||||||||
Net Sales | $246.3B | $256.6B | $274.3B | |||||||||
Operating Income | $56.8B | $60.1B | $70.9B |
We reported net sales of $215.6$260.2 billion and operating income of $60.0$63.9 billion were 96.4%for 2019, which exceeded the target goal for each performance measure and 99.5% of the respective target goals set by the Compensation Committee. This performance resulted in a combined attainment of 128% of the target payout at 89.5%opportunity under the annual cash incentive program. The charts below illustrate the year-over-yearpay-for-performance alignment of target for each named executive officer. Overall, our 2016 performance with respectannual cash incentive program relative to our net sales and operating income was 7.7% and 15.7% below our record-breaking 2015 levels; however,results for each of the 2016 payouts to our named executive officers were significantly less than the annual cash incentive payouts for 2015, reflecting strong pay-for-performance alignment. last three years.
Net Sales Results ($B) | Operating Income Results ($B) | Annual Cash Incentive Payout as a % of Target |
The Compensation Committee determined that no downward adjustments to the payouts would be made based on Apple’s 20162019 performance and the individual contributions of our named executive officers.officers, and approved bonus payouts equal to 128% of the target payout opportunity for each of Mr. Cook, Ms. Adams, Mr. Maestri, and Mr. Williams. Ms. O’Brien’s total payout was adjusted to reflect hermid-year promotion to her current role. Ms. Ahrendts departed Apple during the fiscal year and was not eligible to receive a payout under the annual cash incentive program for 2019.
Apple Inc. | 2020 Proxy Statement | 35
Long-Term Equity Elements and Awards
OurThe equity component of our named executive officers’ compensation program emphasizes long-term shareholder value creation through the 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-based and time-based RSU awards.
Performance-Based RSUs. RSU awards with performance-based vesting are a substantial,at-risk component of our named executive officers’ compensation tied to Apple’s long-term performance. The number of performance-based RSUs granted to our named executive officers that vestvests depends on Apple’s total shareholder return relative to the other companies in the S&P 500 (“Relative TSR”) for the performance period (“Relative TSR”).period. The Compensation Committee chose Relative TSR as a straightforward and objective metric for Apple’s shareholders to evaluate our performance against the performance of other companies and to align the interests of our named executive officers with the interests of shareholders.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. A20-trading-day averaging period is used to determine the beginning and ending stock price values used to calculate the 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 change in value from the beginning to the end of the period is divided by the beginning value to determine total shareholder return. Apple’s total shareholder return is compared to the total shareholder return of other companies, ranked by percentile, to determine the number of performance-based RSUs that vest for each performance period. An averaging period is used to determine the beginning and ending stock price values used to calculate Relative TSR for the performance period. This mitigates the impact on the long-term Relative TSR results of one-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.
Time-Based RSUs. EquityRSU 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.
Apple Inc. | 2017 Proxy Statement | 34
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 a portion of the award at risk through a performance condition based on Apple’s Relative TSR performance. The performance condition requires Apple to outperformtwo-thirds of the comparative companies that were included in the S&P 500 for the entirety of each 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 set forth below.
Relative TSR Percentile v. S&P 500 Companies | Performance-Based RSUs Vesting | |
Top Third | 100% | |
Middle Third | 50% | |
Bottom Third | 0% |
Apple Inc. | 2020 Proxy Statement | 36
For the three-year performance period from August 25, 20132016 through August 24, 2016,2019, 280,000 performance-based RSUs were subject to the Relative TSR performance condition. As shown in the table below, Apple’s Relative TSR for thisthe three-year performance period was at the 78th90th percentile of the companies that were included in the S&P 500 for the entire performance period. As a result, all100% of the 280,000 performance-based RSUs vested on August 24, 2016.2019. Apple’s total shareholder return during this period was 100.20%.
Relative TSR Percentile Ranking for Three-Year Performance Period | TSR Results for Three-Year Performance Period | |||
Apple | 90th Percentile | 100.20% | ||
S&P 500 | Top Third | ≥ 52.59% | ||
Middle Third | 18.25% – 52.58% | |||
Bottom Third | <18.25% |
Other Named Executive Officers’ Long-Term Equity Awards
In October 2015,2019, the Compensation Committee granted performance-based and time-based RSUs to Ms. Adams, Ms. Ahrendts, Mr. Maestri, Ms. O’Brien, and Mr. Williams (the “2019 RSU Awards”). All unvested RSUs granted to Ms. Ahrendts, including the 2019 RSU Awards, were canceled upon her departure from Apple.
2019 Performance-Based RSU Awards. The performance-based RSUs awarded to Ms. Adams, Ms. Ahrendts, Mr. Maestri, and Mr. Williams were granted on September 30, 2018, which was the first day of Apple’s 2019 fiscal year and the first day of the performance period applicable to the awards. These awards have a three-fiscal-year performance period from the beginning of 2019 through the end of 2021. As described above, all unvested RSUs granted to Ms. Ahrendts were canceled upon her departure from Apple. The performance-based RSUs awarded to Ms. O’Brien were granted on February 5, 2019 in connection with her promotion to Senior Vice President, Retail + People, and have a performance period from that grant date through the end of 2021.
Similar to the methodology used in 2018, the target number of performance-based RSUs granted to Ms. Adams, Ms. Ahrendts, Mr. Maestri, and Mr. Williams was determined by dividing $10 million by the closing stock price on the date of grant. The target number of performance-based RSUs granted to Ms. O’Brien was determined based on her mid-year promotion date. The grant date fair 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 fair valuevalues for these awards are reported in the Summarytable entitled “Summary Compensation Table. The valueTable – 2019, 2018, and relative mix2017.”
Apple Inc. | 2020 Proxy Statement | 37
Between zero and 200% of the Annual RSU Awards was a subjective determination by the Compensation Committee based on its own business judgment after taking into consideration factors such as market compensation data provided by its independent compensation consultant, its subjective assessmenttarget number 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.
The Annual RSU Awards granted as performance-based RSUs in October 2015 have a three-year performance-period (fiscal years 2016 through 2018) and will vest on October 1, 2018,2021, 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
| |
85th Percentile or above | 200% | |
55th Percentile | 100% | |
25th Percentile | 25% | |
Below 25th | 0% |
This vesting schedule requires Relative TSR performance at the 25th percentile to vest in the threshold number of shares, Relative TSR performance at the 55th percentile to vest in the target number of shares, and Relative TSR performance that is significantly above the median at the 85th percentile in order to vest in the maximum 200% of the target number of shares.
Apple Inc. | 2017 Proxy Statement | 35
No RSUs vest if Apple’s Relative TSR performance is below the 25th percentile. In addition, ifIf Apple’s total shareholder return for the performance period is negative, the number of performance-based RSUs that vestswill vest 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 above the 25th percentile and between the other levels shown in the table above, the portion of the performance-based RSUs that vestswill vest is linearly interpolated between the two nearest vesting percentages.
2019 Performance-Based RSU Payout Results.During 2016,2019, Ms. Ahrendts, Mr. Maestri, and Mr. Williams each vested in performance-based RSUs that were granted on May 29, 2014 in connectionOctober 5, 2015. Similar to the design of the 2019 RSU Awards described above, between zero and 200% of the target number of these performance-based RSUs were scheduled to vest based on Apple’s Relative TSR percentile ranking for the applicable performance period, with his promotion to Chief Financial Officer.a maximum 200% vesting for performance at or above the 85th percentile. For the 16-monththree-year performance period from May 29, 2014the beginning of 2016 through the end of 2015,2018, Ms. Ahrendts, Mr. Maestri, and Mr. Williams each vested in 130,528 performance-based RSUs, representing 200% of the target number of performance-based RSUs. As shown in the table below, Apple’s Relative TSR was at the 85th89th percentile of the companies that were included in the S&P 500 for the period. As a result,three-year performance period, and Apple’s total shareholder return during this period was 107.36%.
Relative TSR Percentile Ranking for Three-Year Performance Period | TSR Results for Three-Year Performance Period | |||
Apple | 89th Percentile | 107.36% | ||
S&P 500 Companies | 85th Percentile | 99.31% | ||
55th Percentile | 47.86% | |||
25th Percentile | 13.81% | |||
Below 25th | <13.81% |
Apple Inc. | 2020 Proxy Statement | 38
2019 Time-Based RSU Awards. The time-based RSUs awarded to Ms. Adams, Ms. Ahrendts, Mr. Maestri, vested in 15,918 performance-based RSUs on October 1, 2015. At the beginning of 2017, for the 28-month period from May 29, 2014 through the end of 2016,and Mr. Maestri vested in 10,694 performance-based RSUs based on Apple’s Relative TSR at the 67th percentile of the companies that were included in the S&P 500 for the period.
During 2016, Ms. Ahrendts vested in performance-based RSUs thatWilliams were granted on May 1, 2014 in connection withSeptember 30, 2018, which was the first day of Apple’s 2019 fiscal year. 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 number of time-based RSUs granted to Ms. O’Brien was determined based on her hiring. For the two-year performance period from May 1, 2014 through April 30, 2016, Apple’s Relative TSR was at the 81st percentile of the companies that were includedmid-year promotion date. The grant date fair values for these awards are reported in the S&P 500 for the period. As a result,table entitled “Summary Compensation Table – 2019, 2018, and 2017.”
The time-based RSUs granted to Ms. Adams, Ms. Ahrendts, vested in 75,124 performance-based RSUs on May 1, 2016.
During 2016, Mr. Cue, Mr. Riccio,Maestri, and Mr. Sewell vested in annual performance-based RSUs that were granted on March 3, 2014. For the two-year performance period from the beginning of 2014 through the end of 2015, Apple’s Relative TSR was at the 92nd percentile of the companies that were included in the S&P 500 for the period. As a result, each of Mr. Cue, Mr. Riccio,Williams vest over approximately four and Mr. Sewell vested in 92,764 performance-based RSUs on October 1, 2015. At the beginning of 2017, for the three-year period from the beginning of 2014 through the end of 2016, each of Mr. Cue, Mr. Riccio, and Mr. Sewell vested in 87,578 performance-based RSUs based on Apple’s Relative TSR at the 83rd percentile of the companies that were included in the S&P 500 for the period.
The Annual RSU Awards granted as time-based RSUs in October 2015 vest inone-half years, with three equal annual installments vesting annually commencing on April 1, 20182021 (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, the recipient must generally perform four and one-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.
In October 2016, As described above, all unvested RSUs granted to Ms. Ahrendts were canceled upon her departure from Apple. The time-based RSUs granted to Ms. O’Brien on February 5, 2019, the Compensation Committee took into consideration a number of factors, including shareholder feedback,date she was promoted to her current role, vest over four and increased the performance-based component of the 2017 Annual RSU Awardsone-half years, with three equal installments vesting annually commencing on August 5, 2021, subject to 50% of the grant date fair value, placing an even greater emphasis on performance-based compensation for our executive officers.continued employment through each vesting date.
Dividend Equivalents
At Mr. Cook’s request, none of his RSUs participate in dividend equivalents. All other unvested RSUs granted to Apple employees 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 RSUs 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, charitable gift matching gifts program, vacationcash-out program, and other benefit programs on the same basis as other employees.
Apple Inc. | 2017 Proxy Statement | 36
Security.Security and Private Aircraft. The personal safety and security of our employees is of the utmost importance to Apple and its 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 Mr. Cook’s role as CEO, Apple also provides risk-based personal security services for him, as determined to be appropriate by our security team. We do not consider thesethe security measures provided to our named executive officers to be a personal benefit for Mr. Cook, but rather a reasonable and necessary expenseexpenses for the benefit of Apple. We also offer risk-basedApple and not a personal security assistance to members of our executive team based onbenefit. However, in accordance with SEC disclosure rules, the highly visible nature of their roles. The aggregate incremental cost of these services is reported in the Summarytable entitled “Summary Compensation Table in accordance with SEC disclosure rules.– 2019, 2018, and 2017.”
In the interests of security and efficiency based on our global profile and the highly visible nature of Mr. Cook’s role as CEO, the Board requires that Mr. Cook use private aircraft for all business and personal travel. Mr. Cook recognizes imputed taxable income and is not provided a tax reimbursement for personal use of private aircraft.
Relocation Assistance. Relocation assistance, including agross-up for taxable relocation benefits, is provided to employees when necessary based on business needs. Ms. AhrendtsAdams was provided relocation assistance to move closer to Apple’s headquarters in connection with her hiring. SomeMs. Adams had 18 months from her date of thesehire to complete her relocation, and the portion of her relocation expenses were incurred in 2016 and are2019 is reported in the Summarytable entitled “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 May 2014 in recognition of the risk she assumed by leaving her prior role as Chief Executive Officer of Burberry. Ms. Ahrendts has a limited cash severance arrangement until May 2017Table – 2019, 2018, 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.2017.”
Chartered Aircraft. From time to time, members of the executive team, including each of the named executive officers, may request chartered aircraft services to facilitate travel that is directly and integrally related to the performance of their job duties and when the use of a chartered plane will increase efficiency or security associated with a particular trip. Occasionally, spouses or other family members may accompany an executive on these flights. When this occurs, we require the executive 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 for family accompaniment on chartered business flights.Inc. | 2020 Proxy Statement | 39
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 publicly held company can deduct in any onetax year foron compensation paid to “covered employees.” Prior to the chief executive officer and the three most highly-compensated executive officers employed by the company at the endpassage of the year (other than the chief financial officer). However, the2017 Tax Cuts and Jobs Act, performance-based compensation paid to our “covered employees,” such as annual cash incentives and performance-based RSUs, was generally excluded from this $1 million deduction limitlimit. As a result of changes in the tax law, this previously-available exclusion for performance-based compensation is generally does not apply to compensation that is performance-based and provided under a shareholder-approved plan. While theno longer available after 2018. The Compensation Committee considers thetax deductibility of awards as one factorof many factors in determining executive compensation, including the impact of these tax law changes. However, the Compensation Committee also looks at other factors in making its decisions, as noted above, and retains the flexibilitydiscretion to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards aresuch compensation is not tax deductible by Apple for tax purposes.
In general, the 2016 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.
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 2016 are also intended to be exempt from the deduction limitation of Section 162(m).
Apple Inc. | 2017 Proxy Statement | 37
Base salary and RSU awards with only time-based vesting requirements, which represent a portion of the equity awards granted to our 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.
Despite the Compensation Committee’s efforts to structure the executive team annual cash incentives and performance-based RSUs in a manner intended to be exempt from Section 162(m) and therefore not subject to 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 satisfy the requirements for exemption from Section 162(m) in fact will. Further, the Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m)tax deductible if it determines that such modifications are consistent with Apple’s business needs. Thus, executive compensation arrangements may not be tax deductible or, if initially intended to be tax deductible, may not actually receive this treatment.
Recoupment of RSUs.Compensation Clawback. The terms of all outstanding RSU awards held by our named executive officers’ RSUs are granted pursuantofficers allow us to the terms of our standard RSU agreements. These terms require an employee to deliver or otherwise repay to Applerecoup any shares or other amount that may be paid in respect of RSUs in the event the employeeindividual engages in certain acts of misconduct. Effective for 2020, the Compensation Committee has extended its compensation recoupment policy to the annual cash incentives awarded to our named executive officers. Apple may recover compensation in the event the named executive officer commits a felony while employed by Apple or, while employed by Apple or at any time thereafter, the individual engages in a breach of confidentiality, materially breaches any agreement with Apple, commits an act of theft, embezzlement or fraud, or materially breaches any agreement withif Apple while employed by Apple or at any time thereafter.is required to prepare an accounting restatement as a result of the named executive officer’s misconduct.
Prohibition on Hedging, Pledging, and Short Sales. We prohibit short sales, hedging, and transactions in derivatives of Apple stock, including hedging transactions,securities for all Apple personnel, including directors, officers, employees, consultants,independent contractors and contractors of Apple.consultants. 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. We allow for certain portfolio diversification transactions, such as investments in exchange funds.
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. All 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 currently holds shares in excess of these guidelines. Shares may be owned directly by the individual, 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“Corporate Governance–Board Oversight of Risk Management” above for an additional discussion of risk considerations.
Apple Inc. | 20172020 Proxy Statement | 3840
Summary Compensation Table—2016, 2015,Table – 2019, 2018, and 20142017
The following table, footnotes, and related narrative show information regarding the total compensation of each named executive officer for 2016, 2015,2019, 2018, and 2014,2017, except in the case of Ms. Adams and Mr. Sewell,Williams who were not named executive officers in 2017, and Ms. O’Brien who was not a named executive officer in 2014.2018 or 2017.
Name and Principal Position (a) | Year (b) | Salary ($)(c) | Bonus ($)(d) | Stock Awards(1) ($)(e) | Non-Equity Incentive Plan Compensation(2) ($)(f) | All Other Compensation ($)(g) | Total ($)(h) | |||||||||||||||||||||
Tim Cook
Chief Executive Officer | 2016 | 3,000,000 | — | — | 5,370,000 | 377,719 | (3) | 8,747,719 | ||||||||||||||||||||
|
2015 |
|
|
2,000,000 |
|
|
— |
|
|
— |
|
|
8,000,000 |
|
|
281,327 |
|
|
10,281,327 |
| ||||||||
|
2014
|
|
|
1,748,462 |
|
|
— |
|
|
— |
|
|
6,700,000 |
|
|
774,176 |
|
|
9,222,638 |
| ||||||||
Luca Maestri
Senior Vice President, Chief Financial Officer | 2016 | 1,000,000 | — | 20,000,083 | 1,790,000 | 13,486 | (4) | 22,803,569 | ||||||||||||||||||||
|
2015 |
|
|
1,000,000 |
|
|
— |
|
|
20,000,105 |
|
|
4,000,000 |
|
|
337,872 |
|
|
25,337,977 |
| ||||||||
|
2014
|
|
|
717,211 |
|
|
— |
|
|
11,335,043 |
|
|
1,608,255 |
|
|
342,292 |
|
|
14,002,801 |
| ||||||||
Angela Ahrendts
Senior Vice President, | 2016 | 1,000,000 | — | 20,000,083 | 1,790,000 | 112,809 | (5) | 22,902,892 | ||||||||||||||||||||
|
2015 |
|
|
1,000,000 |
|
|
— |
|
|
20,000,105 |
|
|
4,000,000 |
|
|
779,124 |
|
|
25,779,229 |
| ||||||||
|
2014
|
|
|
411,538 |
|
|
500,000 |
|
|
70,001,196 |
|
|
1,648,352 |
|
|
790,038 |
|
|
73,351,124 |
| ||||||||
Eddy Cue
Senior Vice President, | 2016 | 1,000,000 | — | 20,000,083 | 1,790,000 | 17,461 | (6) | 22,807,544 | ||||||||||||||||||||
|
2015 |
|
|
1,000,000 |
|
|
— |
|
|
20,000,105 |
|
|
4,000,000 |
|
|
52,136 |
|
|
25,052,241 |
| ||||||||
|
2014
|
|
|
947,596 |
|
|
— |
|
|
20,000,900 |
|
|
3,437,500 |
|
|
59,743 |
|
|
24,445,739 |
| ||||||||
Dan Riccio
Senior Vice President, | 2016 | 1,000,000 | — | 20,000,083 | 1,790,000 | 17,461 | (7) | 22,807,544 | ||||||||||||||||||||
|
2015 |
|
|
1,000,000 |
|
|
— |
|
|
20,000,105 |
|
|
4,000,000 |
|
|
17,521 |
|
|
25,017,626 |
| ||||||||
|
2014
|
|
|
947,596 |
|
|
— |
|
|
20,000,900 |
|
|
3,437,500 |
|
|
17,239 |
|
|
24,403,235 |
| ||||||||
Bruce Sewell
Senior Vice President, | 2016 | 1,000,000 | — | 20,000,083 | 1,790,000 | 17,461 | (8) | 22,807,544 | ||||||||||||||||||||
|
2015 |
|
|
1,000,000 |
|
|
— |
|
|
20,000,105 |
|
|
4,000,000 |
|
|
17,521 |
|
|
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 | 2019 | 3,000,000 | — | — | 7,671,000 | 884,466 | (4) | 11,555,466 | ||||||||||||||||||||
2018 | 3,000,000 | — | — | 12,000,000 | 682,219 | 15,682,219 | ||||||||||||||||||||||
2017 | 3,057,692 | — | — | 9,327,000 | 440,374 | 12,825,066 | ||||||||||||||||||||||
Luca Maestri Senior Vice President, | 2019 | 1,000,000 | — | 21,633,416 | 2,557,000 | 19,221 | (5) | 25,209,637 | ||||||||||||||||||||
2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 17,804 | 26,509,692 | ||||||||||||||||||||||
2017 | 1,019,231 | — | 20,000,113 | 3,109,000 | 13,271 | 24,141,615 | ||||||||||||||||||||||
Kate Adams Senior Vice President, | 2019 | 1,000,000 | — | 21,633,416 | 2,557,000 | 41,384 | (6) | 25,231,800 | ||||||||||||||||||||
2018 | 884,615 | — | 21,509,765 | 4,000,000 | 306,280 | 26,700,660 | ||||||||||||||||||||||
Deirdre O’Brien Senior Vice President, Retail + People | 2019 | 877,500 | — | 16,469,527 | 1,795,000 | 17,753 | (7) | 19,159,780 | ||||||||||||||||||||
Jeff Williams Chief Operating Officer | 2019 | 1,000,000 | — | 21,633,416 | 2,557,000 | 17,503 | (8) | 25,207,919 | ||||||||||||||||||||
2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 51,818 | 26,543,706 | ||||||||||||||||||||||
Angela Ahrendts Former Senior Vice | 2019 | 630,361 | — | 21,633,416 | — | 14,465 | (9) | 22,278,242 | ||||||||||||||||||||
2018 | 1,000,000 | — | 21,491,888 | 4,000,000 | 46,942 | 26,538,830 | ||||||||||||||||||||||
2017 | 1,019,231 | — | 20,000,113 | 3,109,000 | 87,728 | 24,216,072 |
(1) | For 2019, 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 2019 salary for Ms. O’Brien reflects the portions earned both before and after the date she was promoted to her current role. The 2019 salary for Ms. Ahrendts reflects the portion earned through the date of her departure from Apple. 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 in accordance with FASB ASC 718 and based on the closing |
Apple Inc. | 2020 Proxy Statement | 41
of the performance-based RSUs granted to Mr. Maestri, Ms. Adams, and Mr. Williams in 2019 was $23,266,720. The 2019 RSU Awards granted to Ms. O’Brien represent: (i) performance-based and time-based RSUs granted on February 5, 2019 in connection with her promotion with a grant date fair value of $4,802,581 and $4,166,734, respectively; and (ii) time-based RSUs granted on September 30, 2018 prior to her promotion with a grant date fair value of $7,500,212. Assuming the highest level of performance is achieved under the applicable performance conditions, the maximum possible grant date fair value of the performance-based RSUs granted to |
Apple Inc. | 2017 Proxy Statement | 39
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 Report on Form10-K for the year ended September 28, 2019, and also see footnote 1 to the table entitled “Grants of Plan-Based |
As described under “Executive |
This amount represents: (i) Apple’s contributions to Mr. Cook’s account under |
|
(5) | This amount represents: (i) Apple’s contributions to |
(6) | This amount represents: (i) Apple’s contributions to |
(7) | This amount represents: (i) Apple’s contributions to |
Apple Inc. | 2020 Proxy Statement | 42
(8) | This amount represents: (i) Apple’s contributions to Mr. |
(9) | This amount represents: (i) Apple’s contributions to Ms. Ahrendts’ account under the 401(k) plan in the amount of $13,138; (ii) term life insurance premiums paid by Apple in the amount of $865; and (iii) personal security expenses in the amount of $462. |
The amounts in the salary, bonus, andnon-equity incentive plan compensation columns of the “Summary Compensation Table—2016, 2015,Table – 2019, 2018, and 2014”2017” reflect actual amounts paid forearned in the relevant years, while the amounts in the stock awards column reflect accounting values. The tables entitled “Outstanding Equity Awards at 2016 2019Year-End” and “Option Exercises and Stock Vested—2016”“Stock Vested – 2019” provide further information on the named executive officers’ potential realizable value and actual value realized with respect to their equity awards. The “Summary Compensation Table—2016, 2015,Table – 2019, 2018, and 2014”2017” should be read in conjunction with the Compensation Discussion and Analysis and the subsequent tables and narrative descriptions.
Apple Inc. | 20172020 Proxy Statement | 4043
Grants of Plan-Based Awards—2016Awards – 2019
The following table shows information regarding the incentive awards granted to the named executive officers for 2016.2019.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(i) | Grant Date Fair Value Awards(1) ($)(j) | |||||||||||||||||||||||||||||||||||||||||||
Name (a) | Award Type | Grant Date (b) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | ||||||||||||||||||||||||||||||||||||||
Tim Cook
| Cash Incentive | — | 3,000,000 | 6,000,000 | 12,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Luca Maestri | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/5/2015 | — | — | — | — | — | — | 108,323 | 12,000,022 | |||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/5/2015 | — | — | — | 16,316 | 65,264 | 130,528 | — | 8,000,061 | |||||||||||||||||||||||||||||||||||||
Angela Ahrendts | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/5/2015 | — | — | — | — | — | — | 108,323 | 12,000,022 | |||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/5/2015 | — | — | — | 16,316 | 65,264 | 130,528 | — | 8,000,061 | |||||||||||||||||||||||||||||||||||||
Eddy Cue | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/5/2015 | — | — | — | — | — | — | 108,323 | 12,000,022 | |||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/5/2015 | — | — | — | 16,316 | 65,264 | 130,528 | — | 8,000,061 | |||||||||||||||||||||||||||||||||||||
Dan Riccio | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/5/2015 | — | — | — | — | — | — | 108,323 | 12,000,022 | |||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/5/2015 | — | — | — | 16,316 | 65,264 | 130,528 | — | 8,000,061 | |||||||||||||||||||||||||||||||||||||
Bruce Sewell | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Time-based RSUs | 10/5/2015 | — | — | — | — | — | — | 108,323 | 12,000,022 | |||||||||||||||||||||||||||||||||||||
Performance-based RSUs | 10/5/2015 | — | — | — | 16,316 | 65,264 | 130,528 | — | 8,000,061 |
Name | Award Type | Grant Date (b) |
Estimated Future Payouts Under |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock or Units (#)(i) | Grant Date Fair Value of Stock and Option Awards(1) ($)(j) | ||||||||||||||||||||||||||||||
Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | |||||||||||||||||||||||||||||||
Tim Cook | Cash Incentive | — | 3,000,000 | 6,000,000 | 12,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||
Luca Maestri | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||
Performance-based RSUs | 9/30/2018 | — | — | — | 11,075 | 44,299 | 88,598 | — | 11,633,360 | |||||||||||||||||||||||||||
Time-based RSUs | 9/30/2018 | — | — | — | — | — | — | 44,299 | 10,000,056 | |||||||||||||||||||||||||||
Kate Adams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||
Performance-based RSUs | 9/30/2018 | — | — | — | 11,075 | 44,299 | 88,598 | — | 11,633,360 | |||||||||||||||||||||||||||
Time-based RSUs | 9/30/2018 | — | — | — | — | — | — | 44,299 | 10,000,056 | |||||||||||||||||||||||||||
Deirdre O’Brien | Cash Incentive(2) | — | 782,500 | 1,581,250 | 3,113,750 | — | — | — | — | — | ||||||||||||||||||||||||||
Time-based RSUs | 9/30/2018 | — | — | — | — | — | — | 33,225 | 7,500,212 | |||||||||||||||||||||||||||
Performance-based RSUs | 2/5/2019 | — | — | — | 5,981 | 23,922 | 47,844 | — | 4,802,581 | |||||||||||||||||||||||||||
Time-based RSUs | 2/5/2019 | — | — | — | — | — | — | 23,922 | 4,166,734 | |||||||||||||||||||||||||||
Jeff Williams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||
Performance-based RSUs | 9/30/2018 | — | — | — | 11,075 | 44,299 | 88,598 | — | 11,633,360 | |||||||||||||||||||||||||||
Time-based RSUs | 9/30/2018 | — | — | — | — | — | — | 44,299 | 10,000,056 | |||||||||||||||||||||||||||
Angela Ahrendts(3) | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | ||||||||||||||||||||||||||
Performance-based RSUs | 9/30/2018 | — | — | — | 11,075 | 44,299 | 88,598 | — | 11,633,360 | |||||||||||||||||||||||||||
Time-based RSUs | 9/30/2018 | — | — | — | — | — | — | 44,299 | 10,000,056 |
(1) | The grant date fair value for time-based RSUs is |
Assumptions | 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 | ||||||||
10/5/2015 | 9/29/2018 | 2.98 | 26.91% | 0.89% | ||||||||||||
9/30/2018 | 9/25/2021 | 2.99 | 21.63% | 2.86% | ||||||||||||
2/5/2019 | 9/25/2021 | 2.64 | 24.24% | 2.50% |
Apple Inc. | 2020 Proxy Statement | 44
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 |
(2) | Ms. O’Brien’s annual cash incentive payout for 2019 reflects an adjustment under our annual cash incentive program for named executive officers as a result for hermid-year promotion to her current role. Prior to Ms. O’Brien’s promotion on February 5, 2019, she participated in Apple’s other performance-based cash bonus programs offered to our Vice Presidents. The amount shown in column (c) reflectspro-rated threshold bonus amounts of $32,500 under the Vice President and Director Quarterly Bonus Plan (“Quarterly Bonus Plan”) and $750,000 under our annual cash incentive program for named executive officers. The amount shown in column (d) reflectspro-rated target bonus amounts of $56,875 under the Quarterly Bonus Plan, $24,375 under the Vice President Annual Bonus Plan (“Annual Bonus Plan”), and $1,500,000 under our annual cash incentive program for named executive officers. The amount shown in column (e) reflectspro-rated maximum bonus amounts of $81,250 under the Quarterly Bonus Plan, $32,500 under the Annual Bonus Plan, and $3,000,000 under our annual cash incentive program for named executive officers. The quarterly and annual goals for the Quarterly Bonus Plan and Annual Bonus Plan are based on Apple’s net sales and operating income and are established by the Compensation Committee, at its discretion. |
(3) | All of the 2019 RSU Awards granted to Ms. Ahrendts and her 2019 annual cash incentive opportunity were canceled upon her departure from Apple. |
Apple Inc. | 20172020 Proxy Statement | 4145
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—2016”Awards – 2019” was granted under Apple’sthe Apple Inc. 2014 Employee Stock Plan (the “2014 Plan”), which provides flexibility to grant cash incentive awards and equity awards; however, as well as equity awards.described in that table and accompanying footnotes, the cash incentive opportunities awarded to Ms. O’Brien prior to her promotion on February 5, 2019 were granted under Apple’s other performance-based cash bonus programs offered to our Vice Presidents. The material terms of the 2016 2019non-equity incentive awards granted under the 2014 Plan are described under “Executive Compensation—Compensation – Compensation Discussion and Analysis” in the section entitled “Annual“2019 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—2016”Awards – 2019” was granted under, and is subject to, the terms of the 2014 Plan. The Compensation Committee administers the 2014 Plan.
Time-Based RSUs. The material terms of the time-based RSUs granted on October 5, 2015 are scheduled to vest in three annual installments commencing on April 1, 2018. Vesting is generally contingent on each officer’s continued employment with Apple throughMs. Adams, Ms. Ahrendts, Mr. Maestri, and Mr. Williams, and the applicable vesting date.
Performance-Based RSUs. The performance-basedtime-based RSUs granted on October 5, 2015to Ms. O’Brien in connection with her promotion, are scheduled to vest on October 1, 2018, subject to each officer’s continued employment with Apple through the vesting date and satisfaction of performance conditions for the performance period beginning on September 27, 2015 and ending on September 29, 2018. As described under “Executive Compensation—Compensation – Compensation Discussion and Analysis” in the section entitled “Other Named Executive Officers’ Long-Term Equity Awards,Awards.” The time-based RSUs granted to Ms. O’Brien on September 30, 2018, prior to her promotion, vest over four years, in eight equal semi-annual installments commencing on April 15, 2019, subject to continued employment with Apple through each case, between 0% and 200%applicable vesting date.
Performance-Based RSUs. The material terms of the target number of performance-based RSUs vest depending on Apple’s Relative TSR percentile comparedgranted to the other companiesMr. Maestri, Ms. Adams, Ms. Ahrendts, Ms. O’Brien, and Mr. Williams are described under “Executive Compensation – Compensation Discussion and Analysis” in the S&P 500 over the performance period, with 100% of the target RSUs vesting if Apple’s Relative TSR is at the 55th percentile. If Apple’s total shareholder return for the performance period is negative, the number of RSUs that vest is capped at 100% of target.section entitled “Other Named Executive Officers’ Long-Term Equity Awards.”
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 RSUs vest. At Mr. Cook’s request, none of his RSUs participate in dividend equivalents.
Apple Inc. | 20172020 Proxy Statement | 4246
Outstanding Equity Awards at 2016 2019Year-End
The following table shows information regarding the outstanding equity awards held by each of the named executive officers as of September 24, 2016.28, 2019.
Name (a) | 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) ($)(f) | |||||||||||||||
Tim Cook | 8/24/2011 | 2,100,000(2) | 236,691,000 | 1,400,000(2) | 157,794,000 | |||||||||||||||
Luca Maestri | 3/4/2013 | 33,328(3) | 3,756,399 | — | — | |||||||||||||||
10/7/2013 | 37,674(4) | 4,246,237 | — | — | ||||||||||||||||
5/29/2014 | 19,100(5) | 2,152,761 | 7,749(5)(6) | 873,390 | ||||||||||||||||
10/17/2014 | 122,863(7) | 13,847,889 | 68,576(7)(6) | 7,729,201 | ||||||||||||||||
10/5/15 | 108,323(8) | 12,209,085 | 65,264(8)(6) | 7,355,905 | ||||||||||||||||
Angela Ahrendts | 5/1/2014 | 26,271(9) | 2,961,004 | — | — | |||||||||||||||
5/1/2014 | 78,110(10) | 8,803,778 | 40,229(10)(6) | 4,534,211 | ||||||||||||||||
10/17/2014 | 122,863(7) | 13,847,889 | 68,576(7)(6) | 7,729,201 | ||||||||||||||||
10/5/15 | 108,323(8) | 12,209,085 | 65,264(8)(6) | 7,355,905 | ||||||||||||||||
Eddy Cue | 3/3/2014 | 106,110(11) | 11,959,658 | 44,912(11)(6) | 5,062,032 | |||||||||||||||
10/17/2014 | 122,863(7) | 13,847,889 | 68,576(7)(6) | 7,729,201 | ||||||||||||||||
10/5/15 | 108,323(8) | 12,209,085 | 65,264(8)(6) | 7,355,905 | ||||||||||||||||
Dan Riccio | 3/3/2014 | 106,110(11) | 11,959,658 | 44,912(11)(6) | 5,062,032 | |||||||||||||||
10/17/2014 | 122,863(7) | 13,847,889 | 68,576(7)(6) | 7,729,201 | ||||||||||||||||
10/5/15 | 108,323(8) | 12,209,085 | 65,264(8)(6) | 7,355,905 | ||||||||||||||||
Bruce Sewell | 3/3/2014 | 106,110(11) | 11,959,658 | 44,912(11)(6) | 5,062,032 | |||||||||||||||
10/17/2014 | 122,863(7) | 13,847,889 | 68,576(7)(6) | 7,729,201 | ||||||||||||||||
10/5/15 | 108,323(8) | 12,209,085 | 65,264(8)(6) | 7,355,905 |
Name (a) | Grant Date (b) | Number of Shares or Units of Stock That Have Not Vested (#)(c) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($)(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 | 1,260,000 | (2) | 275,713,200 | 560,000 | (2) | 122,539,200 | |||||||||||||
Luca Maestri | 10/5/2015 | 36,107 | (3) | 7,900,934 | — | — | ||||||||||||||
10/14/2016 | 56,675 | (4) | 12,401,624 | 64,654 | (4)(5) | 14,147,588 | ||||||||||||||
10/1/2017 | — | — | 64,885 | (6)(5) | 14,198,136 | |||||||||||||||
10/15/2017 | 63,699 | (7) | 13,938,615 | — | — | |||||||||||||||
9/30/2018 | 44,299 | (8) | 9,693,507 | 44,299 | (8)(5) | 9,693,507 | ||||||||||||||
Kate Adams | 11/13/2017 | 28,740 | (9) | 6,288,887 | 57,482 | (9)(5) | 12,578,211 | |||||||||||||
9/30/2018 | 44,299 | (8) | 9,693,507 | 44,299 | (8)(5) | 9,693,507 | ||||||||||||||
Deirdre O’Brien | 10/5/2015 | 7,334 | (10) | 1,604,826 | — | — | ||||||||||||||
10/14/2016 | 20,721 | (11) | 4,534,169 | — | — | |||||||||||||||
10/15/2017 | 27,867 | (12) | 6,097,857 | — | — | |||||||||||||||
9/30/2018 | 29,071 | (13) | 6,361,316 | — | — | |||||||||||||||
2/5/2019 | 23,922 | (14) | 5,234,612 | 23,922 | (14)(5) | 5,234,612 | ||||||||||||||
Jeff Williams | 10/5/2015 | 36,107 | (3) | 7,900,934 | — | — | ||||||||||||||
10/14/2016 | 56,675 | (4) | 12,401,624 | 64,654 | (4)(5) | 14,147,588 | ||||||||||||||
10/1/2017 | — | — | 64,885 | (6)(5) | 14,198,136 | |||||||||||||||
10/15/2017 | 63,699 | (7) | 13,938,615 | — | — | |||||||||||||||
9/30/2018 | 44,299 | (8) | 9,693,507 | 44,299 | (8)(5) | 9,693,507 | ||||||||||||||
Angela Ahrendts(15) | — | — | — | — | — |
(1) | The dollar amounts shown in |
Apple Inc. | 2020 Proxy Statement | 47
(2) | 700,000 time-based RSUs subject to this award are scheduled to vest on August 24, 2021, provided that |
Apple Inc. | 2017 Proxy Statement | 43
(3) | The time-based RSUs subject to this award are scheduled to vest |
|
The time-based RSUs subject to this award are scheduled to vest in two annual installments commencing on |
The target number of performance-based RSUs is shown. As described under “Executive |
(6) | 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. |
(7) | The time-based RSUs subject to this award are scheduled to vest in three annual installments commencing on April 1, |
(8) | The time-based RSUs subject to this award are scheduled to vest in three annual installments commencing on April 1, |
(9) |
|
|
(10) | The time-based RSUs subject to this award vested on October 15, 2019. |
(11) | One-third of the time-based RSUs subject to this award vested on October 15, 2019 and the remainder of these time-based RSUs are scheduled to vest in two semi-annual installments commencing on April 15, 2020, provided that Ms. O’Brien continues to be employed with Apple through the applicable vesting date. |
Apple Inc. | 2020 Proxy Statement | 48
(12) | One-fifth of the time-based RSUs subject to this award vested on October 15, 2019 and the remainder of these time-based RSUs are scheduled to vest in four semi-annual installments commencing on April 15, 2020, provided that Ms. O’Brien continues to be employed with Apple through the applicable vesting date. |
(13) | One-seventh of the time-based RSUs subject to this award vested on October 15, 2019 and the remainder of these time-based RSUs are scheduled to vest in six semi-annual installments commencing on April 15, 2020, provided that Ms. O’Brien continues to be employed with Apple through the applicable vesting date. |
(14) | The time-based RSUs subject to this award are scheduled to vest in |
(15) | All unvested RSUs granted to Ms. Ahrendts were canceled upon her departure from Apple. |
Apple Inc. | 20172020 Proxy Statement | 4449
Stock Vested—2016Vested – 2019
The following table shows information regarding the vesting during 20162019 of RSUs previously granted to the named executive officers. No options were exercised by any named executive officer during 2016.2019.
Stock Awards | ||||||||||||||||
Stock Awards | ||||||||||||||||
Name (a) | Number of Shares Acquired on Vesting (#)(b) | Value Realized on Vesting(1) ($)(c) | Number of Shares Acquired on Vesting (#)(b) | Value Realized on Vesting(1) ($)(c) | ||||||||||||
Tim Cook | 1,260,000 | 136,117,800 | 560,000 | 113,478,400 | ||||||||||||
Luca Maestri | 117,243 | 13,114,923 | 235,928 | 51,715,960 | ||||||||||||
Kate Adams | 14,371 | 2,803,064 | ||||||||||||||
Deirdre O’Brien | 50,610 | 10,872,477 | ||||||||||||||
Jeff Williams | 235,928 | 51,715,960 | ||||||||||||||
Angela Ahrendts | 218,916 | 21,669,865 | 235,928 | 51,715,960 | ||||||||||||
Eddy Cue | 670,820 | 80,284,181 | ||||||||||||||
Dan Riccio | 338,320 | 38,919,456 | ||||||||||||||
Bruce Sewell | 670,820 | 75,674,681 |
(1) | The dollar amounts shown in |
Apple Inc. | 20172020 Proxy Statement | 4550
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 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 23, 2016, 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 $597,260, and the estimated amount she would have been entitled to under the Make Whole RSUs would have been $2,961,004. “Cause” and “Good Reason” are defined in Ms. Ahrendts’ offer letter. “Cause” generally means an act of fraud or material dishonesty; gross misconduct; failure to follow the lawful direction of the CEO or Board; failure to perform material duties for Apple; or material breach of an Apple policy. “Good Reason” generally means a material change in duties or responsibilities; a change in the reporting structure such that Ms. Ahrendts no longer reports to the CEO; a material change in primary work location; or a breach by Apple of any of its material commitments in connection with Ms. Ahrendts’ employment.
Apple Inc. | 2017 Proxy Statement | 46
Equity Acceleration upon Death or Disability
Time-Based RSUs. Time-based RSUs provide for partial accelerated vesting of the RSUs scheduled to vest on the next applicable vesting date following termination of employment due to disability and for full accelerated vesting upon death.
Performance-Based RSUs. Performance-based RSUs provide for a partial waiver of the service vesting condition upon the death or disability of the award recipient, with the number of shares that vest determined at the end of the performance period, based on actual performance results and the recipient’s dates of employment during the performance period.
The following table shows the estimated amounts that the named executive officers would have become entitled to under the terms of all outstanding RSUs had their employment terminated due to either death or disability on September 23, 2016,27, 2019, the last business day of Apple’s 2019 fiscal year. The estimated values for performance-based RSUs are shown at the maximum potential payout amounts.
Name | Estimated Total Value of Equity Acceleration upon Death(1) ($) | Estimated Total Value of Equity ($) | ||||||
Tim Cook | 270,871,096 | 38,070,282 | ||||||
Luca Maestri | 53,042,453 | 24,038,225 | ||||||
Angela Ahrendts | 60,163,584 | 31,472,351 | ||||||
Eddy Cue | 63,216,785 | 33,290,589 | ||||||
Dan Riccio | 63,216,785 | 33,290,589 | ||||||
Bruce Sewell | 63,216,785 | 33,290,589 |
Name | Estimated Total Value of Equity Acceleration upon Death(1) ($) | Estimated Total Value of Equity Acceleration upon Disability(1) ($) | ||||||
Tim Cook | 340,728,561 | 165,413,259 | ||||||
Luca Maestri | 101,330,588 | 68,671,473 | ||||||
Kate Adams | 39,814,536 | 27,752,548 | ||||||
Deirdre O’Brien | 26,969,520 | 8,224,758 | ||||||
Jeff Williams | 101,330,588 | 68,671,473 | ||||||
Angela Ahrendts(2) | — | — |
(1) | The dollar amounts are determined by (i) multiplying the number of |
Apple Inc. | 2017 Proxy Statement | 47
This Proxy Statement contains 9 proposals requiring shareholder action:
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Apple Inc. | 2020 Proxy Statement | 51
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Each proposalThe 2019 annual total compensation of our CEO was $11,555,466, the 2019 annual total compensation of our median compensated employee was $57,596, and the ratio of these amounts is discussed201 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 more detail2019 as our consistently applied compensation measure. We applied this measure to our global employee population as of September 28, 2019, the last day of our 2019 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 2019 annual total compensation using the same methodology that is used to calculate our CEO’s annual total compensation in the pages that follow.
Apple Inc. | 20172020 Proxy Statement | 4852
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 eightseven 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 eightseven nominees.
The term of any incumbent director who does not receive the affirmative vote of (1)(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.
For more information on the director nominees, please see the biographies of the director nominees beginning on page 19.
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. | 20172020 Proxy Statement | 4954
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 2017.2020. Ernst & Young 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 as Apple’s independent registered public accounting firm for 2017.2020. 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 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 24, 2016,28, 2019 and September 26, 2015.29, 2018.
Ernst & Young | 2016 ($) | 2015 ($) | 2019 ($) | 2018 ($) | ||||||||||||
Audit Fees(1) | 13,537,500 | 12,414,100 | 17,208,700 | 17,266,600 | ||||||||||||
Audit-Related Fees(2) | 653,000 | 636,800 | 942,400 | 1,008,700 | ||||||||||||
Tax Fees(3) | 1,863,700 | 2,381,100 | 3,019,100 | 2,306,000 | ||||||||||||
All Other Fees(4) | 62,200 | 50,000 | 115,000 | 107,500 | ||||||||||||
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Total | 16,116,400 | 15,482,000 | 21,285,200 | 20,688,800 |
(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 audit or review of Apple’s financial statements. |
(3) | Tax fees relate to professional services rendered in connection with tax compliance and preparation relating to tax returns and tax audits, as well as for tax consulting and planning services. |
(4) | All other fees relate to professional services not included in the categories above, including services related to other regulatory reporting requirements. |
Apple Inc. | 20172020 Proxy Statement | 5055
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 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 2016.2019.
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. | 20172020 Proxy Statement | 5156
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 simple,motivate and reward exceptional performance in a straightforward and effective and link pay to performance. It reflectsway, while also recognizing the remarkable size, scope, and success of Apple’s business, as well asbusiness. Apple reported another year of strong financial performance in 2019. We believe that the responsibilitiescompensation of our named executive officers. We believe our compensation program appropriatelyofficers reflects and rewards performancetheir contributions to Apple’s success and is aligneddemonstrates alignment with Apple’s annual financial results and the long-term interests of our shareholders.
We encourage shareholders to read the Compensation Discussion and Analysis, beginning on page 28 of this Proxy Statement,30, which describes the details of our executive compensation program and the decisions made by the Compensation Committee in 2016.2019.
We had another yearAt the 2019 annual meeting of strong financial results in 2016 with net salesshareholders, 94% of $215.6 billion and operating income of $60.0 billion. These two financial measures are used to evaluate executive performance under our annual cash incentive program. For 2016, these measures declined from our record-breaking 2015 levels, and were below the target performance goals set by the Compensation Committee. The annual cash incentives paid to our named executive officers for 2016 reflected these results with below-target payouts. While the annual cash incentives are intended to reward the achievement of short-term financial goals, our executive compensation program emphasizes and rewards results over the long-term through equity incentives that have a substantial performance-based component and multi-year vesting schedules. For 2017, we placed an even greater emphasis on long-term performance by increasing the performance-based component of our equity incentives to 50%. We have also implemented robust stock ownership guidelines that apply to all executive officers.
We value the feedback provided by our shareholders, whovotes cast supported our executive compensation program at the 2016 annual meeting of shareholders with approximately 95% of votes cast.program. We have discussions with many of our shareholders on an ongoing basis regarding various corporate governance topics, including executive compensation, and take into accountrelated trends, such as environmental, social, and governance considerations. The Compensation Committee will continue to consider shareholder feedback and the viewsresults of shareholders regarding the design and effectiveness of our executivesay-on-pay votes when making future compensation program.decisions.
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. 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 20182021 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. | 20172020 Proxy Statement | 5257
Proposal No. 4 – Advisory Vote on Frequency of Say-on-Pay Votes
As described inShareholder Proposal No. 3 above, 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 advisory vote to approve the compensation of our named executive officers. This Proposal No. 4 affords shareholders the opportunity to cast an advisory vote on how often we should include a say-on-pay proposal in our proxy materials for future annual shareholder meetings or any special shareholder meeting for which we must include executive compensation information in the proxy statement for that meeting (a “say-on-pay frequency proposal”). Under this Proposal No. 4, shareholders may vote to have the say-on-pay vote every year, every two years, or every three years.
Our shareholders voted on a similar proposal in 2011 with the majority voting to hold the say-on-pay vote every year. We continue to believe that say-on-pay votes should be conducted every year so that our shareholders may annually express their views on our executive compensation program.
As an advisory vote, this proposal is not binding on 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 decisions regarding the frequency of conducting a say-on-pay vote.
It is expected that the next vote on a say-on-pay frequency proposal will occur at the 2023 annual meeting of shareholders.
Shareholders may cast their advisory vote to conduct advisory votes on executive compensation every “1 Year,” “2 Years,” or “3 Years,” or “Abstain.”
The Board recommends a vote on Proposal No. 4 to hold say-on-pay votes every 1 YEAR (as opposed to 2 years or 3 years).
Vote Required
A plurality of the votes cast for Proposal No. 4 will determine the shareholders’ preferred frequency for holding an advisory vote on executive compensation. This means that the option for holding an advisory vote every 1 year, 2 years, or 3 years receiving the greatest number of votes will be considered the preferred frequency of the shareholders.
Apple Inc. | 2017 Proxy Statement | 53
Proposal No. 5 – Shareholder Proposal
Apple has been advised that the National Center for Public Policy Research, 20 F Street, NW, Suite 700, Washington, DC 20001, 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:
Charitable Giving – Recipients, Intents and Benefits
Whereas, in addition to providing benefits to society at-large, charitable contributions should enhance the public image of our company. Increased disclosure about these contributions would provide shareholders with better insight into our corporate giving strategy.
Resolved: The proponent requests that the company provide an annual report, omitting proprietary information and at reasonable cost, disclosing: the company’s standards for choosing recipients of company assets in the form of charitable contributions; the business rationale and purpose for each of the charitable contributions, if any; personnel participating in the decision to contribute; the benefits to society at-large produced by company contributions; and a follow-up report confirming the contribution was used for the purpose stated. The report should be published on the company’s website.
Supporting Statement
Absent a system of accountability and transparency, some donated assets may be misused and potentially harm the company’s reputation and shareholder value. Current disclosure is insufficient to allow the company’s Board and shareholders to evaluate the use of corporate assets by outside organizations.
For example, the company has donated to the Center for American Progress (CAP) – an openly left-wing organization that, as reported by the Washington Post, made statements the head of the Anti-Defamation League called “anti-Semitic and borderline anti-Semitic.”
Many support CAP’s leftist policy work, many others do not. Most Americans would acknowledge that donating to an extremely ideological organization in this highly polarized political climate is controversial.
Also, while education advocates would likely applaud the company’s donations of iPads and other equipment to schools through its ConnectED program, certain labor unions and their political allies would likely oppose the company’s ConnectED donations to charter schools.
Furthermore, according to public reports, the company donated to the Clinton Foundation. Public reports indicate that the FBI is investigating or has investigated that organization for possible public corruption. Media reports also strongly imply that individuals and corporations may have sought preferential treatment from government actors in exchange for donations to the Clinton Foundation. The Clinton Foundation has many supporters who would support the company’s donation, but it also has many detractors that would disapprove of this type of giving.
Fuller disclosure would provide enhanced feedback opportunities from which our company could make more fruitful decisions. Corporate philanthropy should be transparent to better serve the interests of the shareholders.
Apple Inc. | 2017 Proxy Statement | 54
Apple’s Statement in Opposition to Proposal No. 5
The Board recommends a vote AGAINST Proposal No. 5.
Apple already provides detailed information about our core values and our most significant charitable contributions on our website atapple.com/diversity/creating-opportunities andapple.com/product-red. Apple’s largest charitable contributions, which are made only following extensive internal vetting and approval from one or more of our executive officers, focus on some of the most important issues facing our communities today. For example:
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Apple publicly discloses detailed information about the cost and impact of these initiatives on our website.
Apple also supports many other organizations that share our core values, such as American Red Cross, The Conservation Fund, Grace Hopper Celebration of Women in Computing, Mercy Corps, National Center for Women & Information Technology, National Society of Black Engineers, and World Wildlife Fund. In September 2011, Apple implemented a matching gifts program where Apple matches employee contributions of money, Apple products, or volunteer time to eligible nonprofit organizations. In certain cases, Apple matches cash contributions on a 2-for-1 basis, such as in cases of natural disasters or other major humanitarian crises. Apple has contributed to more than 11,000 different charitable organizations through this matching gifts program.
Apple believes in leaving the world better than we found it. We actively support our communities through philanthropic activities. The requested report would do nothing to advance these philanthropic activities, and would provide immaterial incremental additional information. Apple believes it is better to focus our efforts on actively supporting our communities than to divert time and resources to the preparation of a report that would have limited value to shareholders.
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.
Apple Inc. | 2017 Proxy Statement | 55
Proposal No. 6 – Shareholder Proposal
Apple has been advised that Mr. Antonio Avian Maldonado, II is a beneficial owner of at least $2,000 in market value of Apple’s common stock, and Zevin Asset Management, 11 Beacon Street, Suite 1125, Boston, MA 02108, is a beneficial owner of at least $2,000 in market value of Apple’s common stock. Mr. Maldonado’s address will be supplied promptly upon oral or written request. Apple has been advised that Mr. Maldonado and Zevin Asset Management intend to submit jointly 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 fail to adequately represent diversity and inclusion (particularly Hispanic, African American, Native American and other people of color).
Stockholder Supporting Statement
The tech industry is characterized by the persistent and pervasive underrepresentation of minorities and women in senior positions as detailed in a 2014 U.S. Equal Employment Opportunity Commission report. According to a USA Today analysis of 2014 Computing Research Association data, “[t]op universities turn out black and Hispanic computer science and computer engineering graduates at twice the rate that leading technology companies hire them.”1 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 one of the largest companies in the world.
Shareholders are concerned that low levels of diversity at the Company’s senior management and board level, as well as painstakingly slow improvements, are a business risk.
According to the Company’s website, “Diversity is critical to innovation and it is essential to Apple’s future.”2 Further, the Company has stated in multiple Proxy Statements 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.”3
Shareholders believe that companies with comprehensive diversity programs, and strong commitment to implementation, enhance their long-term value, reducing the Company’s potential legal and reputational risks associated with workplace discrimination and building a reputation as a fair employer. Equally, shareholders believe 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 business. This is confirmed by McKinsey & Company, which found companies with highly diverse executive teams had higher returns on equity and earnings performance than those with low diversity, and a May 2014 study found gender diverse teams were better at driving “radical innovation”.4 “Diversity helps companies react more effectively to market shifts and new customer needs.”5
1http://www.usatoday.com/story/tech/2014/10/12/silicon-valley-diversity-tech-hiring-computer-science-graduates-african-american-hispanic/14684211/
2https://www.apple.com/diversity/
3 http://investor.apple.com/secfiling.cfm?filingid=1193125-14-8074&cik=320193
4Diversity Matters, McKinsey & Company, November 2011.
5Diversity wins!, McKinsey & Company, November 2011.
Apple Inc. | 2017 Proxy Statement | 56
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 a meaningful way that would not cause the company to breach the assurances of confidentiality and privacy that it has made to its employees. Currently shareholders have insufficient information to determine if the company has been successful in expanding diversity.
We urge shareholders to vote FOR the proposal.
Apple’s Statement in Opposition to Proposal No. 6
The Board recommends a vote AGAINST Proposal No. 6.
Our ongoing efforts to increase diversity are much broader than the “accelerated recruitment policy” requested by this proposal, which is focused only on Apple’s senior management and Board. At Apple, we take a holistic view of inclusion and diversity that includes the varied perspectives of our employees as well as app developers, suppliers, and anyone who aspires to a future in tech. We also support diversity by creating opportunities beyond Apple. Here are just a few examples:
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Apple publicly discloses information about our inclusion and diversity initiatives and detailed statistics about our progress to date atapple.com/diversity. As disclosed on this dedicated website, our hiring trends over the last three years show steady progress in attracting more women and under-represented minorities (defined as groups whose representation in tech has been historically low — Black, Hispanic, Native American, Native Hawaiian, and Other Pacific Islander). In addition, Apple is cultivating diverse leadership and tech talent through on-campus training, events, and programs.
The examples above are evidence of the high level of support from our senior management of our holistic view of inclusion and diversity.
Our Board shares this commitment to increase diversity. Pursuant to its charter, the Nominating Committee of the Board actively seeks out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen. Our current eight-person Board includes two women and members of diverse ethnic groups.
The “accelerated recruiting policy” called for by this proposal is not necessary or appropriate because we have already demonstrated our commitment to a holistic view of inclusion and diversity and made detailed information about our inclusion and diversity initiatives, and the progress we have made with respect to these initiatives, available on our website
Apple Inc. | 2017 Proxy Statement | 57
atapple.com/diversity. A substantially similar proposal was presented by Mr. Maldonado at the 2016 annual meeting of shareholders and received the support of less than 5% of votes cast. We believe that the low level of support for this proposal last year reflects the positive recognition by our shareholders of Apple’s significant commitment to inclusion and diversity.
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.
Apple Inc. | 2017 Proxy Statement | 58
Proposal No. 7 — 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 7 – 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 essential elementsthe following changes or their equivalent for substantial implementation to better facilitate meaningful proxy access by more shareholders as follows:the purpose of increasing the potential number of nominees:
1. The number of “Shareholder Nominees” eligible to appear in proxy materials shall be 25%20% of the directors 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. Apple has only 8 directors. Under20% of 8, rounding down to the nearest whole number is 1. Therefore, Apple allows shareholders to nominate only one director, given the current 8-member board shareholder nominees are currently limited to nominating one. Any shareholder nominee elected under the current bylaws could be easily isolated.
2. No limitation shall be placed on the number of shareholders that can aggregate their shares to achieve the 3% “Ownership Requirements” for “Eligible Shareholders.” Under current provisions, even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria at most of companies examined by the Council of Institutional Investors. Allowing an unlimited number of shareholders to aggregate shares will facilitate participation by individuals and institutional investors in meeting the Ownership Requirements.
3. No limitation shall be imposed on the re-nomination of “Shareholder Nominees” based on the number or percentage of votes received in any election. Such limitations do not facilitate the shareholders’ traditional state law rights and add unnecessary complexity.
Supporting Statement:size.
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 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.
Proxy Access: Best Practices
(http://www.cii.org/files/publications/misc/08_05_15_Best%20Practices%20-%20Proxy%20Access.pdf) by the Council of Institutional Investors “highlightsnotes: “It is important that shareholder nominees have meaningful representation on the board, and in many or most troublesome provisions” in recently implementedcases, one director is insufficient to achieve that goal. Having at least two nominees helps ensure that the nominees, if elected, can serve on multiple committees and have greater opportunities to bring an independent perspective into board decisions.” (Proxy Access: Best Practices 2017, https://corpgov.law.harvard.edu/2017/08/28/proxy-access-best-practices-2017/)
Sidley Austin reports that 89% of companies with proxy access bylaws.
Although the Company’s board adoptedallow either a proxy access bylaw in 2015, it contains troublesome provisions, as outlined above, that significantly impair the abilityminimum of shareholders2 directors to participate as Eligible Shareholders, the ability of Shareholder Nominees to effectively serve if elected, and the ability of Shareholder Nominees to run again if they receive less thanbe nominated or 25% of the vote. Adoptionboard. Only 11% of allcompanies have the requested amendments would largely remedy these issuessame standard as Apple — 20% of the board with no minimum. (The Latest on Proxy Access, January 11, 2019, https://www.sidley.com/-/media/update-pdfs/2019/01/20190111-corporate-governance-update-w-appendices.pdf?la=en) However, the vast majority of companies with a similar standard to Apple’s have boards of 10 or more, so 20% still yields at least 2 nominees. Only a very small minority of those 11%, like Arch Coal and would better ensure meaningfulEOG Resources (formerly known as Enron Oil & Gas Company), limit proxy access by more shareholders.candidates to 1. Should this really be our peer group?
In favor of a similar proposal last year at Apple: Norges Bank, Nuveen, UBS Global, Legal & General, Alliance Bernstein, Parametric, Eaton Vance, Allianz, CalPERS, CalSTRS, PNC, MFS, AQR, New York State Teachers’ Retirement System, Florida SBA, SWIB, BNP Paribas, OppenheimerFunds, USAA, ProShares, Colorado PERA, OPERS, Schroders, AXA, M&G, Parnassus, Robeco, Aviva, Gateway, CPPIB, Teacher Retirement System of Texas, BCI, Guggenheim, Kentucky Teachers, First Trust, Texas Education Agency, Mutual of America, Investec, Employees Retirement System of Texas, Saturna Capital, Gotham, Hermes, ProFund, New Mexico Education Retirement Board, Victory Capital, Crossmark, Domini, Trillium, Bridgeway, Boston Common, OMERS, Aberdeen Standard, Calvert, Christian Brothers, PRIM, LACERS, LACERA, New York City Pension Funds, Ohio SERS, Pennsylvania SERS, State of Connecticut Retirement Plans, State of Rhode Island, SURS, United Church Funds, University of California and others.
Apple has proxy access but is out of step with industry best practices, which allow shareholders to nominate up to 20% of the board or 2, whichever is greater.
Increase shareholder value
Vote for Shareholder Proxy Access Amendments – Proposal 74
Apple Inc. | 20172020 Proxy Statement | 5958
Apple’s Statement in Opposition to Proposal No. 74
The Board recommends a vote AGAINST Proposal No. 7.4.
Our current corporate governance framework reflects our commitment to robust, balanced governance practices combined with responsiveness and accountability to shareholders. Our existingApple has received a proxy access bylaws, whichproposal every year for the last six years and, in each case, the proposal failed to receive majority support. As in previous years, we continue to believe that the changes advocated by the proponent are not necessary because Apple proactively adopted in 2015 and further enhanced in 2016, establishes a prudent andshareholders already have an effective mechanism for proxy access, making adoption ofaccess. Apple has a small Board compared to many public companies, and if approved this proposal unnecessarycould have negative unintended consequences, putting the company and unwarranted.shareholder value at risk.
In 2015, afterAfter careful consideration of the varying viewpoints and feedback offered by many of our shareholders, the Board amended Apple’s bylaws to adopt proxy access.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. The Board currently consists of eight directors, and shareholders may nominate one proxy access candidate.
But we did not stop there. After initially amending our bylaws to provide for proxy access, we continued to closely monitormonitoring proxy access developments and reach out toengaging with many of our largest shareholders, governance experts, and advisors to discuss evolving market practice and trendspractices and the preferences of our shareholders. As a result of these engagements, in December 2016,shareholders, the Board adopted enhancements to Apple’s bylaws to streamline ourthe “secondary” elements of the proxy access framework and makeprovisions in our bylaws in December 2016. These enhancements made it easier for shareholders to nominate proxy access candidates. These enhancements includedcandidates by eliminating the following changes:
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We believe our proxy access framework strikes the right balance between promoting shareholder nomination rights and protecting the interests of our shareholders. Our framework is a reasonable, usable one that reinforces the Board’s accountability and provides broad discretion to shareholders to nominate candidates of their choosing, while mitigating the risk of misuse of proxy access including utilizationcandidates is reduced; extending the deadline by which nominating shareholders pursuing objectives that are not broadly supported by other shareholders. Implementationand 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 changes requested byBoard to unilaterally interpret the proposal beyond those Apple has already made would make Apple an outlier among public companies that have adopted proxy access.
Beyond mere proxy access Apple’sprovisions. Our proxy access bylaws also keepoverall 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 accountableand 20% of the Board could have unintended effects that could negatively impact shareholder value, including promoting the use of proxy access to shareholders by providinglay the groundwork for an automatic terminationeffecting a change of servicecontrol; encouraging the pursuit of any incumbent director who fails to be elected by an affirmative votespecial interests at the expense of a majorityholistic, long-term strategic view; or otherwise disrupting the effective functioning of the shares represented and voting in an uncontested election. Some companies merely require a director to submit a resignation letter
Apple Inc. | 2017 Proxy Statement | 60
under similar circumstances, and give the board of directors discretion as to whether to accept the resignation – potentially allowing the director to remain on the board indefinitely. Apple believes that our process, which results in automatic termination of the director’s term, fosters greater accountability and responsiveness to shareholders.
TheOur Board has also shown an ongoing commitment to board refreshment and to having highly qualified, directors who bring diverse perspectives toindependent voices in the Board’s decision-making processes. Through the Board’sboardroom through a robust director nomination and annual self-evaluation process, two new directors have been added since 2014.
process. We are committed to ensuring effective, balanced corporate governance while also continually engaging with shareholders. This is evidenced by Apple’s proactive adoption of proxy access in 2015 and shareholder-favorable enhancements in 2016, and by the other actions Apple has taken to ensure that shareholders are given a voice, many of which are described in this Proxy Statement. The Board believescontinues to believe that these objectives are being achieved through Apple’s current governance processes and that changing our proxy access framework yet again, as outlined by the proponentproposal, is therefore unnecessary, unwarranted, and unwarranted.potentially detrimental to shareholder value.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 7.4.
Apple Inc. | 2020 Proxy Statement | 59
Vote Required
Approval of Proposal No. 74 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
RESOLVED: Shareholders request the Board Compensation Committee prepare a report assessing the feasibility of integrating sustainability metrics into performance measures, performance goals or vesting conditions that may apply to senior executives under the Company’s compensation incentive plans. Sustainability is defined as how environmental and social considerations, and related financial impacts, are integrated into corporate strategy over the long term.
SUPPORTING STATEMENT: Effectively managing for sustainability offers positive opportunities for companies and should be a key metric by which senior executives are judged. Linking sustainability metrics to executive compensation could reduce risks related to sustainability underperformance, incentivize employees to meet sustainability goals and achieve resultant benefits, and increase accountability. Metrics relevant to our Company could include indicators related to pressing issues such as: environmental impacts and waste, supply chain human rights and risk management, worker health and safety, diversity and inclusion, and data privacy and security.
WHEREAS: Numerous studies suggest companies that integrate environmental, social and governance (ESG) factors into their business strategy reduce reputational, legal and regulatory risks and improve long-term performance.
BlackRock, the largest asset manager in the world, said in 2017: “Environmental, social, and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects.”
Apple has taken steps to address ESG issues and provide public disclosure. However, our Company has not explicitly linked sustainability goals with senior executive incentives. Investors seek clarity on how Apple drives sustainability improvement and how that strategy is supported by executive accountability. Integrating sustainability into executive compensation assessments would enhance Apple’s approach.
Many multi-national companies, including Intel, Alcoa, PepsiCo, and Mead Johnson, have integrated sustainability metrics into their executive pay incentive plans. Another prominent example is Royal Dutch Shell, which announced in December 2018 its plans to tie a portion of executive pay to concrete targets linked to the company’s net carbon footprint.
The increasing incorporation of sustainability metrics into executive pay evaluative criteria stems from the growing recognition that sustainability strategies can drive growth, as well as enhance profitability and shareholder value.
The 2016 Glass Lewis reportIn-Depth: Linking Compensation to Sustainability found a “mounting body of research showing that firms that operate in a more responsible manner may perform better financially.... Moreover, these companies were also more likely to tie top executive incentives to sustainability metrics.”
A Harvard Business School study of S&P 500 executives’ pay packages found a positive relationship between the presence of explicit incentive compensation for corporate social responsibility (CSR) and firms’ social performance (Hong, et al, 2015).
A 2012 guidance issued by the United Nations Principles for Responsible Investment and the UN Global Compact found “the inclusion of appropriate Environmental, Social and Governance (ESG) issues within executive management goals and incentive schemes can be an important factor in the creation and protection of long-term shareholder value.”
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Proposal No. 8 – Shareholder Proposal
Apple has been advised that Mr. Jing Zhao, 262 Altadena Circle, Bay Point, CA 94565, 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:
Shareholder Proposal on Executive Compensation Reform
Resolved: shareholders recommend that Apple Inc. engage multiple outside independent experts or resources from the general public to reform its executive compensation principles and practices.
Supporting Statement
According to Apple Notice of 2016 Annual Meeting of Shareholders, “Since 2014, the Compensation Committee has engaged the services of Pay Governance LLC,… on matters for which the Compensation Committee is responsible.” (p.26). However, any single consulting firm cannot represent the general public, such as independent scholars, think tanks, unions and academic societies, to advise fair, just and ethical compensation principles. The failure of our executive compensation principles and practices is clearly shown in the same $1,000,000 salary, the same $20,000,105 stock award and the same $4,000,000 non-equity incentive plan compensation each in 2015 to our five of six named executive officers (p.35). What is use of the Compensation Committee when it could not differentiate the contribution of the tremendously different functions of the CFO, the Retail and Online Stores SVP, the Internet Software and Services SVP, the Hardware Engineering SVP and the Secretary of our company?
As Professor Thomas Piketty (Capital in the Twenty- First Century, trans. Arthur Goldhammer. Cambridge: The Belknap Press of Harvard University Press, 2014) stated, “there is absolutely no doubt that the increase of inequality in the United States contributed to the nation’s financial instability.” (p.297) “Let me return now to the cause of rising inequality in the United States. The increase was largely the result of an unprecedented increase in wage inequality and in particular the emergence of extremely high remunerations at the summit of the wage hierarchy, particularly among top managers of large firms.” (p.298) “Because it is objectively difficult to measure individual contributions to a firm’s output, top managers found it relatively easy to persuade boards and stockholders that they were worth the money, especially since the members of compensation committees were often chosen in a rather incestuous manner.” (p.510)
For the purpose of this proposal, the Board and the Compensation Committee have the flexibility to select multiple independent experts or sources.
Apple’s Statement in Opposition to Proposal No. 85
The Board recommends a vote AGAINST Proposal No. 8.5.
OurApple cares deeply about the people who build our products and the planet we all share. We are a market leader in responsible business practices and reporting. We hold ourselves and our suppliers to the highest standards to be stewards of our environment and ensure that the world and our business are safe for the next generation. And we share our work openly so others can follow our lead. Each year, we release a Supplier Responsibility Progress Report and an Environmental Responsibility Report, which disclose the efforts Apple has undertaken in achieving our goals regarding a host of different environmental, social, and governance issues. For example, we have delivered on our goal to cover 100% of our operations with 100% renewable electricity, and we have achieved a 35% reduction in our overall carbon footprint compared to 2015. In addition, 44 Apple suppliers have committed to power all of their Apple production with 100% renewable electricity, putting us on track to far exceed our goal to bring four gigawatts of new clean energy into our supply chain.
Apple’s environmental leadership has been widely recognized. In 2019, the United Nations honored Apple with a UN Global Climate Action Award, and we were recognized by Ceres, a nonprofit that promotes environmental innovation in the corporate and investment communities.
Apple is also committed to ensuring that our employees, and the employees of our suppliers, are treated with dignity and respect. For example, since 2008, 3.6 million supply chain employees have participated in Apple’s skill-building education programming. In addition, we are committed to help raise awareness of a person’s rights at work at every step of our supply chain. Over 17.3 million employees have received training on their workplace rights under local labor laws and the human rights protections outlined in our Supplier Code of Conduct. These are but a few examples of the many efforts that have contributed to our reputation as a leader in this space. At Apple, we believe that we lead in innovation because we lead with our values. We are proud of the actions we have taken and will continue to take to promote our Apple Values – accessibility, education, environment, inclusion and diversity, privacy and security, and supplier responsibility – throughout our business. To learn more about our commitment to these principles, we encourage all of our shareholders to review the Supplier Responsibility Progress Report, the Environmental Responsibility Report, and other information about our Apple Values available onapple.com, as well as the section entitled “Apple Values” beginning on page 7 of this Proxy Statement.
Apple’s executive compensation program is designed to attract, motivate and retainreward exceptional performance in a talented, entrepreneurial,straightforward and creative teameffective way, while also recognizing the remarkable size, scope, and success of executives who will provide leadership for Apple’s success in dynamicbusiness. We do this through incentives focused on commonly recognized measures of overall company performance and competitive markets. Internal pay equity among our executive officers does not demonstrateprofitability that drive long-term shareholder value creation. Preparing a failurereport to assess the feasibility of integrating sustainability metrics into the incentive compensation principles and practices; rather, it is a hallmark of the team-based approachplans of our senior executives would not further the environmental and social ideals that we already embrace in our business practices.
An effective approach to “sustainability,” as that term is defined by the proponent, requires more than simply tying executive compensation program. Our executive officers are expected to operatethe achievement of environmental, social, and governance goals. That is why, as a high-performing team,company, we already incorporate the Apple Values into our business strategy. These core values, and the behaviors they drive, are fundamental to how we believe that generally awardingoperate our business for the same base salary, annual cash incentive,long-term. Our commitment to these Apple Values is evident across our business practices and long-term equity awardsprovides a more holistic and effective approach to each of our executive officers, otherthese core principles than the CEO, successfully supports this goal.
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Apple’s Compensation CommitteeApple is responsiblededicated to leaving the world better than we found it and to creating powerful tools for Apple’s compensationothers to do the same. Our record and incentive plansour unwavering commitment to accessibility, education, environment, inclusion and programs, approves all compensationdiversity, privacy and security, and supplier responsibility speaks for Apple’s executive officers, and acts asitself. It is neither necessary nor a good use of company resources to prepare a feasibility report on the administrative committee for Apple’s employee equity plans. The Compensation Committee consists entirelynarrow issue of independent directors who have various resources and tools at their disposal to assist in the performance of their duties without the addition of multiple outside independent experts or resources from the general public whose priorities and interests may differ from those of Apple or our shareholders.
Under the terms of its charter, the Compensation Committee has the right, in its sole discretion, at any time to retain or obtain advice, reports, or opinions from such internal and external counsel, compensation consultants, and other experts and advisors as it deems necessary or appropriate to assist it in the full performance of its functions. For many years, the Compensation Committee has retained an independent compensation consultant, and has engaged the services of Pay Governance since 2014. Pay Governance works with the Compensation Committee to develop effective executive pay programs based on its knowledge of Apple’s industry and business needs. Pay Governance provides advice to the Compensation Committee on a range of external market factors, including evolving compensation trends, appropriate peer companies, and market survey data. Pay Governance also provides general observations about our compensation programs and management recommendations regarding the amount and form of compensation for our executive officers.
Each year, the Compensation Committee conducts a review of Apple’s executive compensation, program and takes into account numerous factors, including the advice of its independent compensation consultant, management recommendations, pay practices and program designs at peer companies, shareholder feedback, and the Compensation Committee’s own business judgment, which is informed by the significant experience of its members. Shareholders also have an opportunity each year to cast an advisory vote on the compensation of our named executive officers, the results of which the Compensation Committee considers each year when reviewing our executive compensation program. We believe the alignment of our executive compensation program with the interests of shareholders is reflected by the fact that approximately 95% of votes cast on our say-on-pay proposal at the 2016 annual meeting of shareholders voted to approve the compensation paid to our named executive officers.
Apple believes this Proposal No. 8 is unnecessary, not consistent with market practice, and would provide no benefit to Apple or our shareholders. The Compensation Committeewe are already has extensive knowledge and resources at its disposal to establish appropriate executive compensation principles and practices for Apple that are aligned with the interests of our shareholders.addressing these critical issues in a much more fundamental way.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 8.5.
Vote Required
Approval of Proposal No. 85 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. | 20172020 Proxy Statement | 63
Proposal No. 96 – Shareholder Proposal
Apple has been advised that Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, 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 9 – Executives To Retain Significant Stock
Resolved: Shareholders urgeof Apple Inc. (“Apple” or the “Company”) request that our executive pay committee adopt a policy requiring senior executives to retain a significant percentagethe Board of stock acquired through equity pay programs until reaching normal retirement age and toDirectors report annually to shareholders, at reasonable expense and excluding confidential and proprietary information, regarding the policy before our Company’s next annual meeting. Forpolicies on freedom of expression and access to information, including whether it has publicly committed to respect freedom of expression as a human right; the purposeoversight mechanisms for formulating and administering policies on freedom of this policy, normal retirement age would be an ageexpression and access to information; and a description of at least 60the actions Apple has taken in the past year in response to government or other third-party demands that were reasonably likely to limit free expression or access to information.
SUPPORTING STATEMENT
Apple sells products and be determinedservices in countries whose governments limit free expression and punish dissent. The government of China, a market accounting for 20% of Apple’s net sales in 2018,1 “suppress[es] politically sensitive speech” and “wrong-oriented” online content, according to Human Rights Watch, and blocks sites using a filtering system nicknamed the “Great Firewall.”2
Apple has cooperated with requests made by our executive pay committee. Shareholders recommendthe government of China to restrict free expression and access to information. In 2017, Apple removed almost all virtual private network (VPN) providers’ apps from its Chinese App Store, following a share retention percentage requirementrequest from the government of 75% of net after-tax shares.
This single unified policy shall prohibit hedging transactions for shares subjectChina. VPNs have been used by activists and others to this policy whichcircumvent the Great Firewall, leading to a ban on their private use. The U.N.’s special rapporteur on opinion and expression registered concern over Apple’s move.3 Such controversies are not saleslikely to be limited to China: Russia and Turkey have also enacted curbs on VPNs, and Russian President Vladimir Putin recently signed legislation giving the government broad powers to punish speech.4
Apple removed 634 apps in 2018 for “legal violation,” 517 of them in China. Apple disclosed that the “vast majority relate to illegal gambling or pornography,”5 but reducedid not indicate why the riskothers were removed. Apple pulled The New York Times app from the Chinese App Store in 2017 following a request from the government of lossChina. The Times’ website had been blocked in China since a series of 2012 stories describing personal wealth amassed by the country’s political elite.6
The 2019 Corporate Accountability Index by Ranking Digital Rights (“RDR”) ranked Apple 7th among 12 “internet and mobile ecosystem companies.” Although RDR gave Apple good marks for privacy, it criticized the Company’s governance of freedom of expression issues, including its failure to commit publicly to respect freedom of expression as a human right, and its lack of transparency on policies and practices related to freedom of expression.7 The information requested in this Proposal is intended to close those gaps. The Proposal would not elicit disclosure about actions, such as the executive. Otherwise our directors might be ableremoval of gambling or pornography apps, that are unrelated to avoid the impact offree expression or access to information.
We urge shareholders to vote for this proposal. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented without violating current company contractual obligations or the terms of any current pay or benefit plan.Proposal.
Requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus our executives on our company’s long-term success. A Conference Board Task Force report stated that hold-to-retirement requirements give executives “an ever-growing incentive to focus on long-term stock price performance.”
Please vote to protect shareholder value:
Executives To Retain Significant Stock – Proposal 91 See Filing on Form10-K filed on Nov. 5, 2018, at p. 23.
2 Seehttps://www.hrw.org/world-report/2019/country-chapters/china-and-tibet#eaa21f
3https://www.zdnet.com/article/un-special-rapporteur-apple-letter-china-vpn-demands/
4 https://arstechnica.com/tech-policy/2019/03/russia-makes-it-illegal-to-insult-officials-or-publish-fake-news/
5 https://www.apple.com/legal/transparency/cn.html
6https://www.nytimes.com/2017/01/04/business/media/new-york-times-apps-apple-china.html
7 https://rankingdigitalrights.org/index2019/companies/apple/index/
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Apple’s Statement in Opposition to Proposal No. 96
The Board recommends a vote AGAINST Proposal No. 9.6.
Apple believesmakes products that unleash creativity, that enable communication and sharing across borders, and that open pathways to innovation, collaboration, and entrepreneurship. Free expression is central to our long-termcompany and its success, depends largely onand we hold passionately to the belief that the world is made better when more people enjoy greater freedom in more places.
In the countries in which we operate, we have an obligation to comply with local laws and to protect the safety of our abilitycustomers and employees. For example, local law may require us to attract and retainlimit the availability of a high-performing executive team. Experienced personnelparticular app in the technology industry areApp Store. In such cases, the government demanding removal of an app must present a basis in high demand, and competitionlaw, such as a statutory or regulatory requirement, or a valid court order.
In these instances, we prioritize engagement, advocating for executive talentthe outcome we believe is intense. A policy that would require senior executives to hold 75% of the net after-tax shares from their equity awards until reaching normal retirement age is excessive, not consistent with current practice among our peer groups, and would put Apple at a competitive disadvantage for recruiting and retaining talented executives.
The Board believes that the Compensation Committee is the governing body best suited to formulate Apple’s executive compensation policies. As described in the Compensation Discussion and Analysis, our executive compensation program emphasizes long-term shareholder value creation by using both time-based and performance-based RSUs to deliver long-term compensation incentives. The Compensation Committee believes this is the most effective way to attract and retain a talented executive team and align executives’ interests with those of shareholders. As a result, Apple’s executive compensation program is weighted considerably toward long-term equity awards rather than cash compensation and our executives hold significant unvested RSUs at any particular time. The Compensation Committee believes that this practice creates a substantial retention incentive, encourages our executives to focus on Apple’s long-term success, and aligns with the long-termbest interests of our shareholders.
Our Business Conduct Policy sets out the principles of responsible business conduct that define the way we do business worldwide. And, through the work of our Supplier Responsibility team, we strive to ensure that people throughout our supply chain have a safe and healthy workplace where they are treated with dignity and respect, and that the planet we all share is protected. Information about our commitment to the highest standards of business conduct is available atapple.com/supplier-responsibility.
We also work collaboratively with other companies, interested individuals, and non-governmental organizations devoted to the promotion and protection of human rights. Apple Inc. | 2017 Proxy Statement | 64
Apple already has robust stock ownership guidelinessupports grassroots human rights defenders through our partnership with the Fund for Global Human Rights. The partnership, which expanded in 2019, focuses on supporting critical work facilitated by the Fund, including labor rights training, legal aid for victims of human rights abuses, and fighting for the CEO,release of illegally-detained activists.
Apple’s Board plays a vital and important role in this work. Our Audit Committee, consisting entirely of independent directors, assists the executive officers,Board in monitoring our significant business risks, including operational and the Non-Employee Directors. Under the guidelines, Mr. Cook is expectedreputational exposures that may relate to own shares of Apple common stock that have a value equal to ten times his base salary. This stock ownership requirement is among the highest of any CEO in the Fortune 100. Within five years after first becoming subject to the guidelines, each executive officer is expected to own shares of Apple common stock that have a value equal to three times the executive officer’s base salaryhuman rights and each Non-Employee Director is expected to own shares of Apple common stock that have a value equal to five times the annual cash retainer for serving as a director.
In addition to stock ownership guidelines, Apple maintains other significant governance policies relating to Apple stock heldcompliance with governmental laws, regulations, and orders. The additional report requested by executives. These include an anti-hedging policy for all employees and a prohibition against short sales of Apple common stock by executive officers and directors. Moreover, RSUs granted to executives are subject to the recoupment provisions of Apple’s standard forms of RSU agreement, which provide that Apple may recover any shares or other amounts obtained from RSUs in the event the executive 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 while employed by Apple or at any time thereafter.
Apple believes this Proposal No. 9proposal is unnecessary based on the extensive information that is already publicly provided to our shareholders and would provide no benefit to Apple or our shareholders. Apple’s current executive compensation program and governance practices already create a substantial retention incentive and encourage Apple’s executives to focus on Apple’s long-term business objectives, stock price performance, and shareholders’ interests.users.
For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 9.6.
Vote Required
Approval of Proposal No. 96 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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Each of Proposals No. 4 through No. 6 were submitted for the Annual Meeting by a shareholder or shareholders who have represented to Apple that they are a beneficial owner of at least $2,000 in market value of Apple’s common stock. We will promptly provide you with the name, address, and, to our knowledge, the number of voting securities held by the proponents of the shareholder proposals, upon receiving a written or oral request directed to Apple’s Secretary at One Apple Park Way, MS:169-5GC, Cupertino, CA 95014 USA.
Apple knows of no other matters to be submitted to the shareholders at the Annual Meeting, other than the proposals referred toidentified 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.
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Audit and Finance Committee Report
TheAs of October 25, 2019, the date of this report, the Audit and Finance Committee consistsconsisted of four members: Ron Sugar, who serves as the Chair of the Committee, James Bell, Art Levinson, and Sue Wagner. Each member is an independent director under NASDAQ, NYSE,Nasdaq and SEC auditrules, and meets the standards for committee structure and membership requirements.independence as set forth in Apple’s Corporate Governance Guidelines. 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.cfmleadership-and-governance.
The Audit and Finance Committee assists the Board’s 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 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.
The Audit and Finance Committee is responsible for the appointment, compensation, retention, and oversight of the work 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 24, 201628, 2019 with Apple’s management and Ernst & Young, 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. 1301, “Communications with Audit Committees” issued bythe applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”). and the SEC.
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.
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 Form10-K for the year ended September 24, 201628, 2019 for filing with the SEC.
Members of the Audit and Finance Committee
Ron Sugar (Chair) | James Bell | Art Levinson | Sue Wagner
Apple Inc. | 20172020 Proxy Statement | 6768
Certain Beneficial Owners and Management
The following table shows certain information as of December 30, 2016January 2, 2020 (the “Table Date”), unless otherwise indicated, with respect toregarding the beneficial ownership of Apple’s common stock by: (i) each person known to Apple believesto beneficially holdsown 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—2016, 2015,Table – 2019, 2018, and 2014”2017” under the section entitled “Executive Compensation”; and (iv) all current directors and executive officers as a group. As of the Table Date, 5,257,816,0004,384,027,000 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, Cupertino, California 95014.
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Name of Beneficial Owner | Shares of Common Stock Beneficially Owned(1) | Percent of Common Stock Outstanding | ||||||
The Vanguard Group | 338,533,988 | (2) | 7.72 | % | ||||
BlackRock, Inc. | 296,598,349 | (3) | 6.77 | % | ||||
Berkshire Hathaway Inc. / Warren E. Buffett | 255,300,329 | (4) | 5.82 | % | ||||
Kate Adams | 22,639 | (5) | * | |||||
Angela Ahrendts | 30,848 | * | ||||||
James Bell | 7,716 | (6) | * | |||||
Tim Cook | 847,969 | (7) | * | |||||
Al Gore | 115,014 | (8) | * | |||||
Andrea Jung | 33,548 | (9) | * | |||||
Art Levinson | 1,148,712 | (10) | * | |||||
Luca Maestri | 27,448 | (11) | * | |||||
Deirdre O’Brien | 33,852 | (12) | * | |||||
Ron Sugar | 24,714 | (13) | * | |||||
Sue Wagner | 14,809 | (14) | * | |||||
Jeff Williams | 122,195 | (15) | * | |||||
All current executive officers and directors as a group (11 persons) | 2,398,616 | (16) | * |
Apple Inc. | 2020 Proxy Statement | 69
(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. |
Apple Inc. | 2017 Proxy Statement | 68
(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) | Represents shares of Apple’s common stock beneficially owned as of December 31, 2018, based on the Schedule 13G filed with the SEC on February 14, 2019 by Warren E. Buffett, Berkshire Hathaway Inc. and certain other reporting persons. In such filing, Mr. Buffett and Berkshire Hathaway list their address as 3555 Farnam Street, Omaha, NE 68131, and indicate that they have voting and dispositive power over all shares beneficially owned. |
(5) | Excludes |
Includes |
Represents |
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(8) | Includes |
(9) | Includes |
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Includes 14,000 shares of Apple’s common stock held by Dr. Levinson’s spouse |
Excludes |
Excludes |
(13) | Includes 1,429 RSUs held by Dr. Sugar that are scheduled to vest on February 1, 2020. |
(14) |
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(15) | Includes 13,986 shares of Apple’s common stock held in the name of Mr. Williams’ family trust and excludes 401,364 RSUs held by Mr. |
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Apple Inc. | 2020 Proxy Statement | 70
(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. |
Apple Inc. | 20172020 Proxy Statement | 6971
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 10% 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 10% 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 2016, except that one Form 4 was filed for Chris Kondo on August 5, 2016 with respect to the disposition of 9,829 shares of Apple’s common stock on August 2, 2016.
Apple Inc. | 2017 Proxy Statement | 70
Equity Compensation Plan Information
The following table shows information, as of September 24, 2016, concerning28, 2019, regarding shares of Apple’s common stock authorized for issuance under Apple’s equity compensation plans. As of September 24, 2016,28, 2019, 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) | 81,760,959 | (3) | 23.43 | 278,499,890 | (4) |
(1) | The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding |
(2) |
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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, 2017
Apple Inc. | 20172020 Proxy Statement | 7172
Directions to the 2017General Information
2020 Annual Meeting of Shareholders
Steve Jobs Theater | February 26, 2020 | |||
| 9:00 a.m. Pacific Time | |||
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The Record Date for the Annual Meeting is January 2, 2020. Only shareholders of record as of the close of business on this date are entitled to vote at the Annual Meeting.
AttendanceYou are invited to vote on the proposals described in this Proxy Statement because you were an Apple shareholder on the Record Date, January 2, 2020.
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 FormForm 10-K for the year ended September 24, 201628, 2019 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 2020 Annual Meeting. To 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 4, 2020. 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. Receiving a legal proxy does not constitute registration for the meeting. Please note that due to space constraints and security concerns, we will not be able to provide access to the Annual Meeting or 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 receive a valid confirmation of registration and plan on attending the Annual Meeting in person, we encourage you to vote your shares in advance using one of the methods described beginning on page 76 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 attendees who are permitted to speak.
Apple Inc. | 2020 Proxy Statement | 73
Proxy Materials
These materials were first sent or made available to shareholders on January 3, 2020, and include:
• | The Notice of 2020 Annual Meeting of Shareholders |
• | This Proxy Statement for the Annual Meeting |
• | Apple’s Annual Report on Form10-K for the year ended September 28, 2019 |
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 on Form10-K for the year ended September 28, 2019 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 onForm 10-K for the year ended September 28, 2019 to any shareholder that elects not to participate in householding.
Apple Inc. | 2020 Proxy Statement | 74
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 on Form 10-K for the year ended September 28, 2019, or separate copies of any future notice, proxy statement, or annual report, you may write or call Apple at the following physical address, phone number, or email address:
Apple Investor Relations
One Apple Park Way
MS927-4INV
Cupertino, CA 95014 USA
Phone: (408)974-3123
Email:investor_relations@apple.com
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.
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.
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 Inc. | 2020 Proxy Statement | 75
Apple’s Fiscal Year
Apple’s fiscal year is the52- or53-week period that ends on the last Saturday of September. Apple’s 2019 fiscal year included 52 weeks and ended on September 28, 2019. Information presented in this Proxy Statement is based on Apple’s fiscal calendar.
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 4,384,027,000 shares of Apple’s common stock issued and outstanding, held by 23,000 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.
Shareholders 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 Owners 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.
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. |
Apple Inc. | 2020 Proxy Statement | 76
• | 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 receive a valid confirmation of registration 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.
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, CA 95014 USA. 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.
Apple Inc. | 2020 Proxy Statement | 77
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 2020 (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 through No. 6. |
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. 6.
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. 6 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.
Apple Inc. | 2020 Proxy Statement | 78
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.
Director Nominations and Other Matters for the 2021 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, CA 95014 USA, or by email toshareholderproposal@apple.com.
Matters for Inclusion in the Proxy Materials for the 2021 Annual Meeting of Shareholders
Matters for inclusion in the proxy materials for the 2021 annual meeting of shareholders, other than nominations of directors, must be received on or before September 5, 2020. All proposals must comply with Rule14a-8 under the Exchange Act.
Apple Inc. | 2020 Proxy Statement | 79
Matters for Consideration at the 2021 Annual Meeting of Shareholders, but not for Inclusion in the Proxy Materials
Matters for consideration at the 2021 annual meeting of shareholders, but not for inclusion in the proxy materials, must be received no earlier than the close of business on October 29, 2020 and no later than the close of business on November 28, 2020. 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 2021 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 6, 2020 and no later than the close of business on September 5, 2020.
Nominations of Individuals for Election as Directors at the 2021 Annual Meeting of Shareholders, but not Included in the Proxy Materials
Director nominations that a shareholder intends to present at the 2021 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 October 29, 2020 and no later than the close of business on November 28, 2020. 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 3, 2020
Apple Inc. | 2020 Proxy Statement | 80
Apple Inc.C123456789IMPORTANT ANNUAL MEETING INFORMATION000004ENDORSEMENT LINE SACKPACK000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 extMR A SAMPLEDESIGNATION (IF ANY)ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6Electronic 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 28, 2017.Vote by InternetLog on tousing the Internet and, gowhen prompted, indicate that you agree towww.investorvote.com/AAPLFollow receive 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 telephoneCall 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. XApple Inc. Annual Shareholder Meeting Proxy Card1234 5678 9012 345IF 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: E88431-P31159 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THE BOTTOMTHIS PORTION IN THE ENCLOSED ENVELOPE.A Proposals—ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. APPLE INC. The Board of Directors recommends a vote FOR all the listed nominees, FOR Proposals 2 and 3, and 1 YEAR for Proposal 4.
nominees. 1. The election to Apple’s Board of Directors of the eightseven nominees named in the Proxy Statement
Nominees: For Against Abstain 1a. James Bell 1b. Tim Cook 1c. Al Gore 1d. Andrea Jung 1e. Art Levinson 1f. Ron Sugar 1g. Sue Wagner For address changes and/or comments, please check this box and write them on the back where indicated. The Board of Directors recommends a vote FOR For Against Abstain For Against Abstain01 - JAMES BELL04 - BOB IGER07 - RON SUGAR02 - TIM COOK05 - ANDREA JUNG08 - SUE WAGNER03 - AL GORE06 - ART LEVINSONFor Against Abstain
Proposals 2 and 3. 2. Ratification of the appointment of Ernst & Young LLP as Apple’s independent registered public accounting firm for 2017For Against Abstain
2020 3. Advisory vote to approve executive compensation1 Year 2 Years 3 Years Abstain4. Advisory vote on the frequency of shareholder votes on executive compensationB Shareholder Proposals—The Board of Directors recommends a vote AGAINST Proposals 5, 6, 7, 8 and 9.
For Against AbstainFor Against Abstain5. A shareholder proposal entitled “Charitable Giving - Recipients, Intents Proposals 4, 5 and Benefits”
6. A shareholder proposal regarding diversity among our senior management and board of directors7.4. A shareholder proposal entitled “Shareholder Proxy Access Amendments”8. 5. A shareholder proposal entitled “Executive Compensation Reform”9.relating to sustainability and executive compensation 6. A shareholder proposal entitled “Executivesrelating to Retain Significant Stock”policies on freedom of expression 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) DateIF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - D ON BOTH SIDES OF THIS CARD.C 1234567890 J N T1 U P X 2 9 9 1 6 8 1MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
Apple Inc.2017 2020 Annual Meeting of Shareholders
February 28, 2017
26, 2020 9:00 a.m. Pacific Time1 Infinite Loop, Town Hall (Building 4), Steve Jobs Theater Apple Park Cupertino, California 95014Upon arrival, please present your photo identification at Attending the registration desk.Directions to the 2017 Annual Meeting of– Advance Registration Required We are pleased to welcome shareholders to Steve Jobs Theater at Apple Park for the 2020 Annual Meeting. To accommodate as many attendees as possible, we have established a registration process. ShareholdersTake Interstate 280 (south from San Francisco, north from San Jose) Exit will need to register in advance at De Anza BoulevardTurn south onto De Anza Boulevard toward CupertinoTurn left onto Mariani AvenueContinueproxyvote.com beginning at 8:00 a.m. Pacific Time on Mariani, which leads into the Apple parking lotProceed to Town Hall (Building 4) for meeting registrationAttendance at the 2017 Annual Meeting of Shareholders is limited to shareholders. Admission to the meetingFebruary 4, 2020. Registration will be on a first-come, first- servedfirst-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 Annual ReportMeeting or 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 Form 10-Kthe voting procedures of the organization that holds the 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 receive a valid confirmation of registration and plan on attending 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 24, 2016 in lieu of producing a glossy annual report.. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
meeting, including time limits applicable to attendees who are permitted to speak. E88432-P31159 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF APPLE INC.
FOR THE 20172020 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 28, 2017
26, 2020 The undersigned shareholder of Apple Inc., a California corporation, hereby acknowledges receipt of the Notice of 20172020 Annual Meeting of Shareholders and Proxy Statement with respect to the 20172020 Annual Meeting of Shareholders of Apple Inc. to be held at 1 Infinite Loop, Town Hall (Building 4),Steve Jobs Theater at Apple Park, Cupertino, California 95014 on Tuesday,Wednesday, February 28, 201726, 2020 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.THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE ELECTION OF THE NOMINEES, FOR PROPOSALS 2 AND 3, 1 YEAR FOR PROPOSAL 4, AGAINST PROPOSALS 4, 5 6, 7, 8 AND 9,6 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 ItemsChange of Address — Please print new address below.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 BelowNOTE: 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.