Apple's Executive Compensation Policy incorporates 5 Cornerstones of Executive Compensation that represent a set of proven concepts that can be effectively applied to your business. I've also created a video describing Apple's plan (it appears on the first slide) which explains some of these concepts. Check it out and let me know what we might be missing at http://www.Exkalibur.com.

1. Five Cornerstones
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EXECUTIVE
Compensation Policy

2. Compensation Policy
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Source: Apple 2012 Proxy Statement
Compensation Committee Report
Annual Meeting of Shareholders, 2012

3. 1. Team-Based Approach
2. More focus on superior performance than
competitive peer company programs
3. Long Term Equity awards represent the best
method to align incentives with the best interests
of the Shareholders
4. Clear Performance Criteria
(a) No room for favoritism
5. Employment at Will
5 Key Themes
3

4. Use of RSU’s
(Restricted Stock
Units) as long
term equity
rewards
Most effective
way to attract
and retain talent
AND align
executive
interests with the
shareholders
1. Team-Based Approach
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A restricted stock unit is a grant valued in terms of
company stock, but company stock is not issued at the
time of the grant.
After the recipient of a unit satisfies the vesting
requirement, the company distributes shares or the
cash equivalent of the number of shares used to value
the unit.
If the plan rules allow it, the company may require or
the recipient may choose to defer distribution to a later
date.
Vesting requirements may be met by the passage of
time or by either company or individual performance. If
the recipient does not meet the requirements the
company set forth prior to the end of the vesting period,
the units are typically forfeited to the company.
Depending on plan rules, the participant or donor may
be allowed to choose whether to settle in stock or cash.

5. Cash compensation
opportunities for 2011
were BELOW the 25th
percentile of peer
companies
Deliberately set target &
maximum bonus BELOW
range of peer companies
2. Peer Companies
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Steve Jobs paid $1/year since 1997
Base salaries for other officers
approximately the median of peer
companies

6. Bonuses represent
relatively SMALL pct of
executive total
compensation
Company emphasizes
long-term equity awards
For 2012, the target and
maximum annual
performance–based cash
bonus levels for named
executive officers are
100% and 200%,
respectively, of the
officer’s base salary.
3. Performance Bonuses
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Emphasize long-term shareholder value
creation over annual operating results
Bonus program is therefore modestly
funded
Jobs did not participate;
The target bonus of 50% of base salary is
substantially lower than those of peer
companies generally, where median
target bonus payouts commonly range
from 125% to 145% of base salary;
The maximum bonus of 100% of base
salary for exceptional performance is
substantially lower than the maximum
bonus opportunities generally provided at
peer companies; and
The Company has no long-term cash
bonus program.

7. Net Sales & Operating Income
according to GAAP
Chosen because they reflect
commonly recognized measures
of overall company performance
that are associated with creation
of value for shareholders.
Payout structure is based on 50%
for operating income and 50% of
net sales because each measure
is considered equally important
in the company’s internal
business plan.
4. Performance Criteria
Performance goals are set at target
and maximum levels based on
objectives in the company’s
internal business plan
Target and maximum goals for net
sales in 2011 represented an
increase of 36% and 43%,
respectively, over the company’s
actual performance in 2011.
Likewise, target and maximum
goals for operating income in 2011
represent an increase of
approximately 25% and 33%,
respectively, over the company’s
actual performance in 2010.
No downward adjustments to the
bonuses were made based on a
subjective assessment of the
officer’s overall performance.
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8. Executive Officers are employed
at will.
The compensation program for
executive officers does NOT
include any of the pay practices
listed on the right.
5. Employment at Will
Employment Agreements
Severance agreements
Tax payments in connection with a
change in control of the company
Tax reimbursements
Supplemental executive
retirement benefits
The company does not provide
any perks or change in control
benefits to the executive officers
that are not available to other non-
executive employees.
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9. Tim Cook was appointed CEO on
August 24, 2011
The board granted Tim Cook 1
million RSUs as a promotion and
retention award.
Tim Cook, CEO
50% of his award is scheduled to
vest 5 years after the award date
The remaining 50% of the award
is scheduled to vest 10 years after
the award date, subject to Cook’s
continued employment with the
company through the applicable
vesting date.
The RSU award is intended as a
long-term retention incentive and
should be viewed as
compensation over the 10 year
vesting period.
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10. Restricted Stock Units
used for long-term
equity awards
Cash Compensation
BELOW peer companies
Cash bonus program is
small part of overall
executive compensation
plan.
There is no long-term
cash bonus program.
Important Details
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Cash bonuses are based
50% on net sales and 50%
on operating income.
Subjective assessment of
executive performance can
only LOWER but not
increase the cash bonus.
Executive officers serve
“at will” without
employment or severance
agreements.
RSU awards generally vest
over 4 years subject to
continued employment.

11. 1. Team-Based Approach
2. More focus on superior performance than
competitive peer company programs
3. Long Term Equity awards represent the best
method to align incentives with the best interests
of the Shareholders
4. Clear Performance Criteria
(a) No room for favoritism
5. Employment at Will
5 Key Themes
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12. 12
Lary R. Kirchenbauer
https://www.facebook.com/BuildYourBiz