DEF 14A of Apple Inc.
Filed Jan 11, 2024 · FY20230001308179-24-000010
Directors
Directors
Directors
| Board Composition and Refreshment | 30 | | Nominees for Election | 32 | | Compensation of Directors | 38 |
Directors
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 30 |
Board Composition and Refreshment
Board Composition and Refreshment
Board Composition
Board Composition Apple’s Board consists of a diverse group of highly qualified leaders in their respective fields. All of our directors have senior leadership experience at large domestic or multinational companies. In these positions, they have gained significant and diverse management experience, including in the areas of strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and a robust 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 experiences of our directors provide Apple with business acumen and a diverse range of perspectives to effectively address Apple’s evolving needs, oversee senior management in the competent and ethical operation of Apple, and represent the best interests of Apple’s shareholders. The Board considers its composition and refreshment in the context of Apple’s long-term strategic goals and seeks to thoughtfully manage the pace of change and refreshment of its members over time. Since 2021, the Board has added two new members, Monica Lozano and Alex Gorsky, and this year has nominated Wanda Austin for election at our 2024 Annual Meeting. The Board has adopted a policy that directors generally may not stand for reelection after attaining age 75. After years of dedicated and valuable service, James Bell and Al Gore will be retiring from the Board effective as of the 2024 Annual Meeting, having reached the age of 75. In consideration of the significant recent transitions in board composition and the value of retaining directors who have developed deep insights into the Company during their tenure, the Board determined that it would be in the best interests of Apple and its shareholders to ask Ron Sugar to stand for re-election at the 2024 Annual Meeting, although he has attained the age of 75. As Chair of the Audit Committee, Dr. Sugar has a significant technical and leadership role on the Board, which the Board took into consideration in its succession planning. Dr. Sugar also brings to the Board executive leadership experience as a former chairman and chief executive officer of a large international public company, financial expertise as a former chief financial officer, experience in worldwide operations, understanding of advanced technology, experience with government relations and public policy, and a global business perspective from his tenure at global companies and his service on other boards.
Board Composition
| New for 2023 |
Board Composition
| Refreshment Highlight | Our Board regularly reviews Board succession planning to maintain the diverse skills, qualities, attributes, and experiences that effectively address the Company’s evolving needs and represent the best interests of Apple’s shareholders. The Board has nominated Wanda Austin for election at our 2024 Annual Meeting. Dr. Austin brings to the Board executive leadership experience through her service as president and chief executive officer of a large research and development organization, significant expertise in advanced technology and innovation, experience with government relations and public policy, and a global business perspective from her service on other boards. |
Board Composition
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 31 |
Director Selection and Evaluation
Director Selection and Evaluation The Nominating Committee oversees board succession planning and recruitment of potential candidates. The Nominating Committee considers candidates 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, demonstrated leadership, ability and willingness to commit sufficient time to the Board, and relevant skills and experience in the context of the Board’s evolving needs. The Nominating Committee also considers the diversity of the Board overall with respect to age, disability, gender identity or expression, ethnicity, military veteran status, national origin, race, religion, sexual orientation, and other backgrounds and experiences. The Nominating Committee is committed to actively seeking out, and will instruct any search firm it engages to identify, individuals who will contribute to the overall diversity of the Board to be included in the pool of candidates from which nominees to the Board are selected. 63% of nominees self-identify as women or members of an underrepresented community, and 50% of Board leadership positions are held by women. The Board monitors the mix of skills and experience of its directors to help ensure it has the necessary tools to perform its oversight function effectively. The Nominating Committee, with the assistance of an outside search firm, and input from our independent directors, Chair of the Board, and CEO, identified Wanda Austin as a potential candidate and recommended her to the Board. Our Corporate Governance Guidelines require an annual review by the Nominating Committee of each director’s various time commitments, including their primary occupation, service on other public company boards and board committees, leadership positions on other boards, as well as service with private company boards and non-profit organizations. Following its review in 2023, the Nominating Committee has determined that, in its view, no director currently has time commitments that would prevent them from properly discharging their duties as directors. The Nominating Committee evaluates candidates recommended by shareholders using the same criteria it applies to evaluate other candidates. Shareholders who wish to recommend a director candidate should submit the candidate’s name and background information in writing to our Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA. In addition, the proxy access provisions in 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 for inclusion in our proxy statement. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found at investor.apple.com/leadership-and-governance. Any notice of director nomination submitted to Apple other than through proxy access must include the additional information required by Rule 14a-19(b) under the Exchange Act. 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.
Director Selection and Evaluation
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 32 |
Nominees for Election
Nominees for Election The following biographical disclosures only include information regarding nominees for election or reelection at the Annual Meeting. After years of dedicated and valuable service, James Bell and Al Gore will not stand for reelection at the Annual Meeting and are not represented in the following biographical disclosures. Wanda Austin has been nominated for election to the Board effective as of the Annual Meeting. The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the nominees that, among other factors, led the Board and the Nominating Committee to recommend these nominees for election to the Board. The matrix is intended to depict notable areas of focus for each director, and not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and oversight responsibilities. The demographic information presented below is based on voluntary self-identification by each nominee. Additional biographical information on each nominee is set out starting on page 34.
Nominee Skills and Demographic Matrix
Nominee Skills and Demographic Matrix
Nominee Skills and Demographic Matrix
| | Levinson | Cook | Austin | Gorsky | Jung | Lozano | Sugar | Wagner | | Core | | | | | | | | | | Leadership | | | | | | | | | | Corporate Governance | | | | | | | | | | Risk Management | | | | | | | | | | Financial | | | | | | | | | | Strategic | | | | | | | | | | People and Culture | | | | | | | | | | Global Business and Operations | | | | | | | | | | Innovation and Technology | | | | | | | | | | Brand and Marketing | | | | | | | | | | Privacy and Security | | | | | | | | | | Public Policy and Government | | | | | | | | | | Environment and Climate | | | | | | | | | | Identity | | | | | | | | | | Gender Expression | Male | Male | Female | Male | Female | Female | Male | Female | | LGBTQ+ | No | Yes | No | No | No | No | No | No | | Race/Ethnicity | White | White | African American | White | Asian | Latino | White | White | | Veteran | No | No | No | Yes | No | No | No | No |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 33 |
Nominee Skills and Demographic Matrix
| Core Skills | | Leadership Experience from serving in a significant leadership position, including as a chief executive officer, chief financial officer, or other senior leadership role, equips directors with valuable insight into organizational behavior and processes and a deep understanding of the various aspects of modern organizations, including strategic planning, financial reporting, compliance, values, and culture. | | Corporate Governance Experience on public company boards promotes an understanding of the dynamics and operation of a corporate board and its relationship with the chief executive officer and other senior management, as well as deep knowledge of corporate governance practices and policies and an appreciation of how they can impact the Company. | | Risk Management Experience identifying, managing, or mitigating risks develops a director’s ability to appreciate, anticipate, and effectively oversee the Company’s risk management. | | Financial Knowledge of financial markets, financing, and financial reporting processes helps our directors understand and oversee our financial position, results of operations, and related financial reporting, as well as our broader financing activities and capital structure. | | Strategic Skills | | People and Culture Because Apple operates in a very competitive talent market, directors with experience managing people and teams, including recruitment, retention, development, compensation, and incentivization of key talent, provide strategic value in overseeing our efforts to recruit, retain, and develop our people and teams and in determining compensation for our CEO and other senior executives. | | Global Business and Operations Experience in global business and operations, including exposure to global business cultures, consumer preferences, and economic, regulatory, and political conditions, helps directors oversee Apple’s global footprint and complex supply chain. | | Innovation and Technology Directors with an understanding of innovation and technology, including through experience in technology-related businesses or driving scientific innovation, are strategically equipped to oversee Apple’s innovation-focused product and services roadmap. | | Brand and Marketing Experience with the marketing and branding of products, building brand awareness, and enhancing corporate reputation can help directors successfully guide and advise management, and oversee related efforts. | | Privacy and Security At Apple, we believe privacy is a fundamental human right. Directors with expertise in information security, data privacy, and cybersecurity are uniquely qualified to oversee our product and services roadmap as well as privacy and cybersecurity risks. | | Public Policy and Government Experience in government relations, regulatory matters, or regulated industries provides a valuable perspective as Apple operates in an increasingly regulated global environment. | | Environment and Climate At Apple, we believe business can and should be a force for good. Directors with experience leading efforts to mitigate climate change and other environmental impacts are well qualified to oversee our environmental programs and product development. |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 34 |
Nominee Skills and Demographic Matrix
| Art Levinson Chair of the Board Director since 2000 People and Compensation Committee |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Art Levinson brings to the Board executive leadership experience, including through his service as a chairman and chief executive officer of a large international public company, along with extensive financial expertise and brand marketing experience. Through his experiences at biotechnology and pharmaceutical companies, he also brings significant expertise in the health sector and technology and innovation. Career Highlights Dr. Levinson, 73, 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. Dr. Levinson also serves on the Board of Directors of the Broad Institute of MIT and Harvard and on the Board of Scientific Consultants at the Memorial Sloan Kettering Cancer Center. Dr. Levinson was awarded the National Medal of Technology and Innovation, the nation’s highest honor for achievement and leadership in advancing the fields of science and technology, and the Biotechnology Heritage Award from the Biotechnology Industry Organization and the Chemical Heritage Foundation. Dr. Levinson has been inducted into the Biotech Hall of Fame. Other Public Company Boards: None |
Nominee Skills and Demographic Matrix
| Tim Cook Chief Executive Officer Director since 2011 |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Tim Cook brings to the Board extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service, and support. Career Highlights Mr. Cook, 63, has served as Apple’s Chief Executive Officer since 2011, having previously served as Apple’s Chief Operating Officer from 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. Mr. Cook serves on the Board of Directors of The National Football Foundation & College Hall of Fame, Inc., the Board of Trustees of Duke University, and on the Leadership Council for the Malala Fund, an international non-profit organization that advocates for girls education. Other Public Company Boards: Current: NIKE, Inc. |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 35 |
Nominee Skills and Demographic Matrix
| Wanda Austin Nominated for 2024 |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Wanda Austin brings to the Board executive leadership experience through her service as president and chief executive officer of a large research and development organization, significant expertise in advanced technology and innovation, experience with government relations and public policy, and a global business perspective from her service on other boards. Career Highlights Dr. Austin, 69, is the retired President and Chief Executive Officer of The Aerospace Corporation, an independent, non-profit organization performing objective technical analyses and assessments for a variety of government, civil, and commercial customers, operating the only federally funded research and development center committed exclusively to the space enterprise. Dr. Austin served in this role from January 2008 until October 2016. Dr. Austin joined The Aerospace Corporation in 1979, serving in various positions of increasing responsibility. Dr. Austin is also a Member of the National Academy of Engineering and is a co-founder of MakingSpace, Inc., a leadership and science, technology, engineering, and mathematics (STEM) consulting firm. Dr. Austin was the Interim President of the University of Southern California from 2018 to 2019 and has also served on the Defense Policy Board from 2017 to 2019, the President’s Council of Advisors on Science and Technology from 2015 to 2017, the Defense Science Board from 2009 to 2017, and the NASA Advisory Council from 2005 to 2007 and 2014 to 2016. Other Public Company Boards: Current: Amgen Inc.; Chevron Corporation Within Last Five Years: Virgin Galactic Holdings, Inc. |
Nominee Skills and Demographic Matrix
| Alex Gorsky Director since 2021 People and Compensation Committee Nominating Committee |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Alex Gorsky brings to the Board executive leadership experience, as well as brand marketing expertise and extensive experience in the fields of health and technology through his service as a chairman and chief executive officer of a large international public company. Career Highlights Mr. Gorsky, 63, is the retired Chief Executive Officer and Executive Chairman of Johnson & Johnson, a global healthcare products company. Mr. Gorsky served as Executive Chairman from January 2022 to January 2023, having previously served as CEO from April 2012 and Chair of the Board from December 2012. Mr. Gorsky joined Johnson & Johnson in 1988, serving in various positions of increasing responsibility. In 2004, Mr. Gorsky left Johnson & Johnson to join Novartis Pharmaceuticals Corporation, where he served as head of its pharmaceutical business in North America, before returning to Johnson & Johnson in 2008. Mr. Gorsky serves on the boards of the Travis Manion Foundation, a non-profit organization that empowers veterans to develop character in future generations, and the National Academy Foundation, a non-profit organization that supports career academies within traditional high schools, and on the Board of Advisors of The Wharton School. Mr. Gorsky is the recipient of the Robert F. Kennedy Human Rights Ripple of Hope Award, and the Prix Galien Roy Vagelos Pro Bono Humanum Award. Other Public Company Boards: Current: International Business Machines Corporation; JPMorgan Chase & Co. Within Last Five Years: Johnson & Johnson |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 36 |
Nominee Skills and Demographic Matrix
| Andrea Jung Director since 2008 People and Compensation Committee (Chair) Nominating Committee |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Andrea Jung brings to the Board executive leadership experience, a global business perspective, and extensive brand marketing and consumer products experience, including through her service as a chair and chief executive officer of a large international public company, and her service on other boards. Career Highlights Ms. Jung, 65, has served as the President and Chief Executive Officer and a member of the Board of Grameen America LLC, a nonprofit microfinance organization helping women who live in poverty build small businesses, since April 2014. 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 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 Avon’s Board from January 1998 to December 2012. Ms. Jung also serves on the Board of Rockefeller Capital Management. Other Public Company Boards: Current: Unilever PLC; Wayfair Inc. Within Last Five Years: Unilever N.V. |
Nominee Skills and Demographic Matrix
| Monica Lozano Director since 2021 Audit Committee |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Monica Lozano brings to the Board executive leadership experience, and experience in operations, strategic planning, media and marketing, including through her service as a board chair and chief executive officer, and a global business perspective from her service on other boards. Career Highlights Ms. Lozano, 67, is the retired President and Chief Executive Officer of the College Futures Foundation, a charitable foundation working to increase the rate of college graduation for low-income California students. Ms. Lozano served in this role from December 2017 to August 2022. Ms. Lozano also co-founded The Aspen Institute Latinos and Society Program and served as Chair of its Advisory Board from January 2015 to October 2019. Her career in media spanned more than 30 years, including as Chair of the Board of Directors of U.S. Hispanic Media, Inc., the parent company of ImpreMedia, a national Hispanic news and information company, from June 2014 to January 2016, and as Chair of ImpreMedia from July 2012 to January 2016 and Chief Executive Officer from May 2010 to May 2014. She also served as Publisher of La Opinión from 2004 to May 2014 and Chief Executive Officer from 2004 to July 2012. Ms. Lozano chairs the Board of the Weingart Foundation, a private grantmaking foundation advancing racial, social, and economic justice in Southern California, and is a Member of the American Academy of Arts and Sciences. Other Public Company Boards: Current: Bank of America Corporation; Target Corporation |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 37 |
Nominee Skills and Demographic Matrix
| Ron Sugar Director since 2010 Audit Committee (Chair) |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Ron 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, experience in worldwide operations, understanding of advanced technology, experience with government relations and public policy, and a global business perspective from his tenure at global companies and his service on other boards. Career Highlights Dr. Sugar, 75, is the retired Chairman 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. Before joining Northrop Grumman, he held executive positions at Litton Industries and TRW Inc., where he served as Chief Financial Officer. Dr. Sugar is also a Member of the National Academy of Engineering and serves on the Board of Trustees of the University of Southern California and on the Board of the Los Angeles Philharmonic Association. Dr. Sugar was elected as a member of the National Academy of Engineering for major contributions to advanced space communication systems and leadership in aerospace innovation. Other Public Company Boards: Current: Amgen Inc.; Uber Technologies, Inc. Within Last Five Years: Air Lease Corporation; Chevron Corporation |
Nominee Skills and Demographic Matrix
| Sue Wagner Director since 2014 Nominating Committee (Chair) Audit Committee |
Nominee Skills and Demographic Matrix
| Key Skills and Qualifications Sue Wagner brings to the Board operational experience and a global business perspective, including through her service as chief operating officer of a large multinational public company, as well as her service on other boards. Ms. Wagner also brings extensive financial expertise and experience in the highly regulated financial services industry. Career Highlights Ms. Wagner, 62, is a co-founder of BlackRock, Inc., an asset management company. Ms. Wagner served as BlackRock’s Vice Chair from January 2006 until 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. Ms. Wagner also serves on the Board of Directors of Color Health, Inc., a privately held health technology company. Other Public Company Boards: Current: BlackRock, Inc.; Samsara Inc. Within Last Five Years: Swiss Re |
Nominee Skills and Demographic Matrix
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 38 |
Compensation of Directors
Compensation of Directors Members of the Board who are not Apple employees (“Non-Employee Directors”) receive compensation for their service on the Board. As an Apple employee, Mr. Cook, our CEO, does not receive compensation for his service on the Board. The People and Compensation Committee annually reviews the total compensation of our Non-Employee Directors and each element of our Non-Employee Director compensation program. As part of this process, the People and Compensation Committee evaluates market data provided by its independent compensation consultant, Pay Governance LLC (“Pay Governance”), and makes a recommendation to the Board. The Board determines the form and amount of Non-Employee Director compensation after reviewing the People and Compensation Committee’s recommendation. The Apple Inc. Non-Employee Director Stock Plan (the “Director Stock Plan”) provides for an annual limit of $1.5 million for all compensation paid or granted to a Non-Employee Director.
Director Compensation—2023
Director Compensation—2023 The following table shows information regarding the compensation earned or paid during 2023 to Non-Employee Directors who served on the Board during the year. Mr. Cook’s compensation is shown in the table entitled “Summary Compensation Table—2023, 2022, and 2021” and the related tables under the section entitled “Executive Compensation.”
Director Compensation—2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | James Bell | 100,000 | 275,022 | 5,529 | 380,551 | | Al Gore | 100,000 | 275,022 | 1,872 | 376,894 | | Alex Gorsky | 100,000 | 275,022 | 2,021 | 377,043 | | Andrea Jung | 132,500 | 275,022 | 6,909 | 413,431 | | Art Levinson | 275,000 | 275,022 | 5,254 | 555,276 | | Monica Lozano | 100,000(3) | 275,022 | 2,880 | 377,902 | | Ron Sugar | 137,500 | 275,022 | 14,328 | 426,850 | | Sue Wagner | 127,500 | 275,022 | 4,000 | 406,522 |
Director Compensation—2023
| (1) In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of stock awards granted to Non-Employee Directors during 2023, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). The grant date fair value for RSUs is measured based on the closing price of Apple’s common stock on the date of grant. Each Non-Employee Director serving on the Board on March 10, 2023 received an Annual Director Award of 1,852 RSUs with a grant date fair value for each RSU of $148.50. Each Non-Employee Director serving on the Board as of September 30, 2023 held 1,852 unvested RSUs. | | (2) The amounts shown reflect the value of one or more products received under the Board’s equipment program during the fiscal year. The amounts also include matching charitable contributions under Apple’s matching gifts program for Ms. Jung of $5,000 and Dr. Sugar of $10,000. | | (3) Ms. Lozano participated in the Deferred Compensation Plan and deferred $12,500 of her 2023 annual cash retainer. The Deferred Compensation Plan does not provide for above-market or preferential earnings. |
Director Compensation—2023
| Summary | Governance | Directors | Compensation | Proposals | Other Information | 2024 Proxy Statement | 41 |
Compensation Discussion and Analysis
| This Compensation Discussion and Analysis (“CD&A”) explains the guiding principles, policies, and practices upon which our executive compensation program is based, and the 2023 compensation paid to our named executive officers. Summary of 2023 Named Executive Officer Compensation Motivating and retaining a talented and experienced leadership team is a key factor in Apple’s long-term success. We have a consistent and effective executive compensation program that incorporates sound policies and best practices. We also believe that the compensation of our named executive officers should reflect the strength of our financial results and our commitment to values-driven leadership. The compensation paid to our executive officers in 2023 aligns with the continued strength of our financial results in an uneven macroeconomic environment and the significant progress made across our core values and key community initiatives. The vast majority of our named executive officers’ compensation is delivered through long-term equity awards. The performance-based equity awards that vested in 2023 reflected Apple’s exceptional stock price performance for the three fiscal year period from the start of 2020 through the end of 2022. Apple’s total shareholder return relative to other companies in the S&P 500 (“Relative TSR”) was at the 98th percentile for this performance period. As a result, in 2023 each of our named executive officers, other than Mr. Cook who did not have a performance-based RSU award scheduled to vest in 2023, vested in the maximum number of performance-based RSUs. | Our 2023 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 Jeff Williams Chief Operating Officer |
Executive Compensation Policies and Practices
| Prohibition on hedging, pledging, and short sales | We prohibit short sales, transactions in derivatives, hedging, and pledging of Apple securities by our named executive officers. | | Stock ownership guidelines | We have robust stock ownership guidelines for our named executive officers, including a ten times annual base salary requirement for our CEO. | | Compensation recoupment | We have recoupment provisions that comply with the new SEC rules and Nasdaq Listing Standards for our Section 16 officers for the recovery of any erroneously awarded performance-based incentive compensation. We also maintain a discretionary recoupment policy applicable to our named executive officers and our broader executive team that allows for recovery of annual cash incentives, equity awards, or other amounts that may be paid with respect to awards in certain events, including for certain acts of misconduct by our named executive officers. | | No repricing | We do not allow repricing of stock options without shareholder approval. | | No tax gross-ups on perquisites | We do not provide tax gross-ups for the limited types of perquisites provided to our named executive officers. For security and efficiency purposes, Mr. Cook is required by the Board to use private aircraft for all business and personal travel and is provided personal security services. | | No change of control payments | We do not provide change of control payments or gross-ups of related excise taxes. | | Vesting requirements for dividend equivalents | Dividend equivalents will not be paid unless the vesting and performance conditions for the underlying equity award are met. | | At-will employment | We employ our named executive officers at-will; our named executive officers do not have employment contracts. | | No pension or other supplemental benefits | We do not provide pension, supplemental executive health or insurance benefits. | | Annual compensation risk assessment | The People and Compensation Committee oversees an annual risk assessment of our compensation program. | | Independent compensation consultant | The People and Compensation Committee directly retains an independent compensation consultant that performs no services for Apple other than services for the People and Compensation Committee. |
Emphasis on Long-Term Equity Awards
Emphasis on Long-Term Equity Awards We emphasize long-term performance, retention, and alignment between the interests of our named executive officers and those of our shareholders by significantly weighting our named executive officers’ compensation towards long-term equity awards. Performance-based RSUs reward long-term out-performance relative to other companies. Time-based RSUs are also an important component of long-term equity awards because they promote stability and retention of an exceptional leadership team.
Executive Compensation Decision-Making Process
Executive Compensation Decision-Making Process Setting appropriate compensation for our named executive officers is a core responsibility of the People and Compensation Committee. The People and Compensation Committee consists entirely of independent directors who review and approve the compensation of Apple’s named executive officers each year. It also administers Apple’s employee equity compensation plans. The People and Compensation Committee may delegate its authority under its charter to Apple’s officers or employees, or any of its individual members, except to the extent otherwise prohibited by applicable law, or SEC or Nasdaq rules. The People and 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. The People and Compensation Committee reviews Apple’s executive compensation program each year and considers a variety of factors in setting total target compensation values and structure, including shareholder interests; the size, scope, and success of Apple; the scope of its business; evolving compensation trends; and Apple’s financial goals. It also evaluates shareholder feedback, as well as the views of its independent compensation consultant and management. However, the People and Compensation Committee makes final decisions regarding the compensation granted to our named executive officers based on our guiding compensation principles noted above and makes changes to our executive compensation program based on its own business judgment.
People and Compensation Committee Priorities when Setting Executive Compensation
| ● | Managing Apple for the long-term | | ● | Aligning pay with performance | | ● | Retaining exceptional, values-driven leaders | | ● | Responding to shareholders’ interests and feedback | | ● | Maintaining Apple’s unique team-based approach |
The Role of the Compensation Consultant
The Role of the Compensation Consultant The People and Compensation Committee selects and retains the services of its own independent compensation consultant and annually reviews the consultant’s performance. As part of the review process, the People and Compensation Committee considers the independence of the consultant in accordance with SEC and Nasdaq rules. During 2023, the People and Compensation Committee’s independent compensation consultant, Pay Governance, provided no services to Apple other than services for the People and Compensation Committee, and worked with Apple’s management, as directed by the People and Compensation Committee, only on matters for which the People and Compensation Committee is responsible. At the People and Compensation Committee’s request, Pay Governance regularly attends the People and Compensation Committee meetings. Pay Governance also communicates with the members of the People and Compensation Committee outside committee meetings regarding matters related to the People and Compensation Committee’s responsibilities. In 2023, the People and Compensation Committee generally sought input from Pay Governance on a range of external market factors related to Apple’s compensation programs; CEO pay; recoupment policy amendments; shareholder engagement; environmental, social, and governance performance metrics; people policies; overall compensation program design; evolving compensation trends; appropriate market reference points; and market compensation data. Pay Governance also provided input regarding the amount and form of compensation for our CEO and other named executive officers.
The Role of Shareholders
| What We Heard ● Request for more disclosure on Mr. Cook’s compensation and the compensation setting process. | Actions Taken in Response ● Detail was provided in the 2023 Proxy Statement and in this CD&A about Mr. Cook’s compensation and the compensation setting process. | | ● Concern over the amount of Mr. Cook’s total target compensation and preference for reduced equity award values for future grants if equity awards will be granted annually. | ● Mr. Cook’s 2023 target total compensation is $49 million, a reduction of over 40% from his 2022 target total compensation. The People and Compensation Committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years. | | ● Preference for a higher percentage of Mr. Cook’s equity award to be performance-based. | ● The portion of performance-based RSUs granted to Mr. Cook was increased from 50% to 75% of his 2023 target equity award and the portion of his performance-based RSUs will be at least 75% for future years. | | ● Preference for pro rata vesting of equity awards upon a termination of employment due to retirement. | ● The 2023 time-based RSUs granted to Mr. Cook provide for pro-rata vesting if he retires and the People and Compensation Committee intends to maintain this structure for future years. |
Role of Peer Groups
Role of Peer Groups The People and Compensation Committee reviews and approves the composition of a primary and a secondary peer group each year to serve as market reference points for compensation comparison purposes, to inform its decision-making process, and to set total target compensation levels that it believes are competitive and commensurate with Apple’s relative size, scope, and success. In connection with changes made to Mr. Cook’s 2023 total target compensation, the People and Compensation Committee stated its intention to set Mr. Cook’s total target compensation between the 80th and 90th percentiles relative to the CEO pay of our primary peer group companies for future years. To make this determination, the People and Compensation Committee will review with its independent compensation consultant the target annual total compensation opportunity provided to the CEOs in Apple’s primary peer group using the then available public filings for each of the companies. Apple remains significantly larger than most other companies and the People and Compensation Committee does not otherwise set compensation components for its named executive officers to meet specific benchmarks as compared to peer companies. Revenue shown is based on the trailing 12 months revenue for Apple and each of our primary peers ending closest to our 2023 fiscal year-end. Market capitalization for our primary peers is the amount reported by Bloomberg L.P. as of September 29, 2023, the last trading day of 2023. Our primary peer group consists of large U.S.-based, stand-alone, publicly traded companies in the technology, media, and internet services industries that, in the People and 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 2023 were $20 billion and $100 billion, respectively at the time the 2023 peer group was set. Based on the above criteria, the People and Compensation Committee removed Charter Communications and IBM and added Mastercard Incorporated, Tesla, Inc. and Warner Bros. Discovery, Inc. to the primary peer group for 2023. The 2023 primary group includes Alphabet, Amazon, AT&T, Cisco, Comcast, Disney, Intel, Mastercard, Meta, Microsoft, Netflix, Oracle, Qualcomm, Salesforce, Tesla, Verizon, Visa, and Warner Bros. Discovery. A secondary peer group of companies that have iconic brands or are industry or category leaders, rely on significant research and development, and innovation for growth, and require highly-skilled employees has been developed as an additional reference set, primarily to compare pay practices. The 2023 secondary peer group includes 3M, AbbVie, The Coca-Cola Company, Johnson & Johnson, Nike, PepsiCo, Pfizer, Procter & Gamble, Starbucks, and UnitedHealth Group. As shown in the chart above, Apple remains considerably larger than the typical company in the primary peer group. Apple has approximately four times the revenue and approximately twelve times the market capitalization of the median peer companies in its primary peer group. Apple’s size and scope with respect to its primary peer companies in terms of revenue and market capitalization supports our CEO’s total target compensation positioning between the 80th to 90th percentile of CEO total target compensation at these companies.
Role of Peer Groups
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Annual Cash Incentive
Annual Cash Incentive Our annual cash incentive program is a performance-based, at-risk component of our named executive officers’ compensation. Cash incentive awards are granted under the Apple Inc. Executive Cash Incentive Plan (the “Cash Incentive Plan”). Variable payouts are designed to motivate our named executive officers to deliver strong annual financial results, while advancing Apple values and key community initiatives. The structure and payout opportunities under the Cash Incentive Plan did not change for 2023. Additional details regarding the Cash Incentive Plan for 2023 can be found below in the section entitled “Cash Incentive Plan- 2023 Financial Performance Measures and Payout Opportunities.”
Long-Term Equity Awards
Long-Term Equity Awards We pay for performance and manage Apple for the long-term. Consistent with this approach and our guiding compensation principles, the vast majority of our named executive officers’ annual compensation is granted in the form of long-term equity incentives that emphasize long-term shareholder value creation and the retention of a strong executive leadership team through a mix of performance-based and time-based RSU awards. Additional details regarding these awards and the performance-based RSUs that vested in 2023 can be found below in the section entitled “2023 Long-Term Equity Awards and Results.”
Long-Term Equity Awards
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Summary of CEO Compensation
| Tim Cook Chief Executive Officer Role: 12 years Apple Tenure: 25 years | 2023 Total Target Compensation: $49 million Base Salary: $3 million Mr. Cook’s base salary has remained the same since 2016 Cash Incentive Plan Opportunity: $6 million Mr. Cook’s target Cash Incentive Plan opportunity for 2023 remained at 200% of his base salary Target Equity Award Value: $40 million Award Mix: 75/25 Mr. Cook was granted an equity award with 75% of the equity award subject to performance-based vesting and 25% of the equity award subject to time-based vesting |
CEO Equity Awards
CEO Equity Awards Equity awards granted to Mr. Cook are intended to create meaningful equity incentives aligned with the long-term interests of our shareholders. The People and Compensation Committee recognizes the growth and success Mr. Cook has delivered to shareholders for more than a decade as CEO, and the impact of his leadership is evident in the Company’s short-term and long-term success. The amount and structure of Mr. Cook’s equity awards are intended to align with our philosophy of managing Apple for the long term and create incentives to drive continued success. Mr. Cook’s first RSU award as CEO in 2011 had a unique 10-year structure (the “2011 Award”). As the final vesting tranches of the 2011 Award approached, the People and Compensation Committee evaluated Mr. Cook’s equity compensation structure in light of the rapid growth and unparalleled success that Apple had achieved under Mr. Cook’s leadership. The People and Compensation Committee also considered the strong compensation structure and practices that had developed for our other named executive officers, and the differences that had developed between the structure of Mr. Cook’s long-term equity incentives and the long-term equity incentives awarded to our other named executive officers annually since 2014. Taking these factors into consideration, Mr. Cook was granted an equity award in 2021 for the first time since he was promoted to CEO and a second award, identical in amount and structure, was granted for 2022.
CEO Equity Awards
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CEO Equity Awards
In 2023, Mr. Cook was granted an equity award with a total target equity grant value of $40 million (“2023 Equity Award”), a reduction in value of almost 40% from his 2022 target equity grant value. The 2023 Equity Award was specifically designed to continue to align pay with performance and shareholder interests and recognize Mr. Cook’s outstanding leadership. It was further designed to balance shareholder feedback, Apple’s exceptional performance, a desire to continue to create meaningful performance and retention incentives, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received. The People and Compensation Committee also changed the mix of the 2023 Equity Award to increase the performance-based portion of the award from 50% to 75% and reduce the time-based portion of the award from 50% to 25%. The portion of his performance-based RSUs will also be at least 75% for future years. The People and Compensation Committee believes these changes are responsive to shareholder feedback and meet the other objectives it considered for Mr. Cook’s compensation, as noted above.
Alignment with Shareholder Value Creation
Alignment with Shareholder Value Creation The majority of Mr. Cook’s compensation has been delivered through long-term equity awards since his promotion to CEO in 2011. The equity awards he has received align with Apple’s growth and success and the tremendous value delivered to our shareholders under his leadership. As of the end of 2023, Apple’s Relative TSR increased approximately 1,402% during Mr. Cook’s tenure as CEO, significantly outpacing the S&P 500 which increased approximately 360% over the same time period. Apple’s market capitalization also grew by more than $2 trillion during Mr. Cook’s tenure as CEO.
2024 CEO Total Target Compensation
2024 CEO Total Target Compensation When evaluating our executive compensation program and the total target value of Mr. Cook’s compensation for 2024, the People and Compensation Committee considered Mr. Cook’s continued exceptional performance as CEO, the Company’s strong financial performance in an uneven macroeconomic environment, and shareholder feedback. Upon review of the relevant benchmark data with its independent compensation consultant the People and Compensation Committee increased the target value of Mr. Cook’s equity award for 2024 to $50 million, which, along with his base salary and target Cash Incentive Plan award, positions his 2024 total target compensation within the 80th to 90th percentile of CEO pay at the companies in our primary peer group. The People and Compensation Committee maintained the same equity award structure and weightings with 75% of the equity award subject to performance-based vesting and 25% of the equity award subject to time-based vesting. No changes were made to the amount of Mr. Cook’s base salary or the 2024 target payout opportunity under the Cash Incentive Plan.
Summary of Other Named Executive Officer Compensation
| Luca Maestri SVP, Chief Financial Officer Role: 9 years Apple Tenure: 10 years | 2023 Total Target Compensation: $23 million Base Salary: $1 million The annual base salaries for our named executive officers did not change for 2023. Cash Incentive Plan Opportunity: $2 million Our named executive officers’ target Cash Incentive Plan opportunity for 2023 remained unchanged at 200% of their base salary. Target Equity Award Value: $20 million Award Mix: 50/50 Our named executive officers were granted a balanced equity award, with 50% of the equity award subject to performance-based vesting and 50% subject to time-based vesting, to encourage long-term performance, retention, and alignment with shareholders’ interests. | Kate Adams SVP, General Counsel and Secretary Role: 6 years Apple Tenure: 6 years | | Deirdre O’Brien SVP, Retail Role: 4 years Apple Tenure: 35 years | | Jeff Williams Chief Operating Officer Role: 8 years Apple Tenure: 25 years |
Cash Incentive Plan - 2023 Financial Performance Measures and Payout Opportunities
Cash Incentive Plan - 2023 Financial Performance Measures and Payout Opportunities Our Cash Incentive Plan awards are designed to motivate and reward our named executive officers for delivering strong performance against annual financial goals and values-driven performance expectations. As in prior years, the People and Compensation Committee chose net sales and operating income, calculated in accordance with generally accepted accounting principles, as the financial performance measures for the 2023 Cash Incentive Plan awards. Net sales and operating income continue to reflect commonly recognized key measures of overall company performance and profitability and are drivers of shareholder value creation. Payouts for our named executive officers under the Cash Incentive Plan are first determined quantitatively based on an equal weighting of the net sales and operating income performance measures. The target payout opportunity for each of the net sales and operating income performance measures is 100% of annual base salary for our named executive officers. Threshold performance results in a payout equal to 50% of target and maximum performance results in a payout equal to 200% of target for each of the performance measures. If the threshold goal is not achieved for a financial performance measure, there is no payout for that measure and the total payout opportunity for each financial performance measure is capped at 200%. Payouts for our named executive officers are linearly interpolated for achievement between goal levels. The People and Compensation Committee primarily considers factors relevant to the current fiscal year when it sets the net sales and operating income goals for the annual Cash Incentive Plan awards because each year presents a unique set of challenges and business conditions for our executives to navigate. Financial results from prior years are used as a reference point, but the annual goals are set primarily to align pay with performance that reflects strong financial results commensurate with the projected business and economic conditions for the current fiscal year.
2023 Financial Performance Goals and Results
2023 Financial Performance Goals and Results As part of its goal-setting process for 2023, the People and Compensation Committee considered the likelihood of a range of business scenarios that could impact net sales and operating income results for the year taking into account several factors. These factors included anticipated foreign currency headwinds, the ongoing uneven macroeconomic environment and the continuing effects of the prolonged uncertainty caused by the COVID-19 pandemic including, country-specific policies and lockdowns. Accordingly, the People and Compensation Committee determined that focusing on the underlying business performance was an appropriate method of evaluating the 2023 performance goals. The Committee believed that attaining similar underlying performance to 2022’s record-breaking net sales and operating income results would require a high level of performance given these factors, and set the target goals at this level. For 2023, the Company’s total net sales decreased 3%. However, the weakness in foreign exchange relative to the US dollar accounted for more than the entire year-over-year decrease in total net sales. On an underlying basis, the company delivered strong performance in a challenging environment driven by all-time high revenue records in emerging markets, and we achieved an all-time revenue record in Services. The Company was also thoughtful and deliberate on spending while driving cost and gross margins improvements throughout the year. Overall, we reported net sales of $383.3 billion and operating income of $114.3 billion. These achievements resulted in 153.1% and 179.1% target payout opportunities, respectively, for an aggregate payout opportunity of 166.1% prior to application of the modifier described below.
2023 Financial Performance Goals and Results
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Annual Assessment of Apple Values and Key Community Initiatives
Annual Assessment of Apple Values and Key Community Initiatives We believe that our business can and should be a force for good. Achieving that takes innovation, collaboration, and a focus on serving others. It also means leading with our values in the technology we make, the way we make it, and how we treat people and the planet we all share. We’re always working to leave the world better than we found it, and to create powerful tools that empower others to do the same. To support these ambitions, the Cash Incentive Plan includes a modifier based on our named executive officers’ efforts to further our values and key community initiatives. After the People and Compensation Committee determines the preliminary payout opportunity based on our net sales and operating income performance measures, it may choose to apply a modifier to the preliminary payout opportunity of up to 10%, upwards or downwards, or determine not to make any adjustment at all. The Cash Incentive Plan award is subject to an overall cap on each of the named executive officers’ payout of 200% of the total target payout opportunity, regardless of the results of the People and Compensation Committee’s values assessment. For 2023, the People and Compensation Committee reviewed with management an extensive scorecard for each Apple value and key community initiative to inform its overall values assessment. Each scorecard included a long-term vision, 2023 areas of focus, highlights, including qualitative and quantitative data to measure progress, areas of opportunity, and management’s assessment of our overall progress to advance each value and key community initiative. Based on its discussions with management and overall evaluation of the Apple values scorecard presented for the year, the People and Compensation Committee recognized the significant progress achieved as represented by the select highlights below, while also recognizing the areas of opportunity, and applied a modifier of 7.5% out of the maximum of 10%.
2023 Cash Incentive Plan Payouts
2023 Cash Incentive Plan Payouts Our 2023 net sales and operating income attainment resulted in a net sales payout opportunity of 153.1% of target and an operating income payout opportunity of 179.1% of target for an aggregate payout opportunity of 166.1% of target. The People and Compensation Committee recognized the significant progress achieved in furtherance of our values and key community initiatives and applied a modifier of 7.5% out of the maximum of 10% resulting in a final Cash Incentive Plan award for 2023 of 178.6% of the target payout opportunity for each of our named executive officers in 2023.
2023 Long-Term Equity Awards and Results
2023 Long-Term Equity Awards and Results When setting the value of equity awards for our named executive officers, the People and Compensation Committee considers the size and performance of Apple relative to peer companies, and the scope of our named executive officers’ roles. Each named executive officer other than Mr. Cook was granted a long-term equity award on September 25, 2022 of 50% performance-based and 50% time-based RSUs. Mr. Cook was granted a long-term equity award on September 25, 2022 of 75% performance-based and 25% time-based RSUs.
2023 Time-Based RSUs
2023 Time-Based RSUs Equity awards with time-based vesting align the interests of our named executive officers with the interests of our shareholders by promoting the stability and retention of a high-performing executive team over the longer term. Vesting schedules for time-based RSUs are generally longer than our peer companies. Time-based RSUs granted to our named executive officers on September 25, 2022, will vest in three equal annual installments over approximately four and one-half years, with the first installment vesting on April 1, 2025 (approximately two and one-half years following the grant date), subject to the award agreements. The number of time-based RSUs granted to each named executive officer was determined by dividing the target value of $10 million by the closing stock price on the date of grant. The grant date fair value for these RSUs is reported in the “Summary Compensation Table—2023, 2022, and 2021.”
2023 Performance-Based RSUs
2023 Performance-Based RSUs The People and Compensation Committee continued to use Relative TSR as the metric for performance-based RSUs with the S&P 500 as the comparative group because it continues to be an objective and meaningful metric to evaluate our performance against the performance of other large companies and aligns the interests of our named executive officers with the interests of our shareholders in creating long-term value. Performance-based RSUs 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 that vest, if any, depends entirely on Relative TSR for the applicable performance period. To earn the target number of performance-based RSUs, Apple must achieve above-median performance at the 55th percentile of the S&P 500. We measure Relative TSR for the applicable performance period based on the change in each company’s stock price during the applicable performance period, taking into account any dividends paid during that period, which are assumed to be reinvested in the stock. We use a 20-trading-day averaging period to determine the beginning and ending stock price to calculate the TSR of Apple and each company in the S&P 500. This averaging period 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. For each company, the change in stock price from the beginning to the end of the performance period is divided by the beginning stock price to determine TSR.
2023 Performance-Based RSUs
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2023 Performance-Based RSUs
The performance-based RSUs granted on September 25, 2022, have a three-fiscal-year performance period from the beginning of 2023 through the end of 2025. Subject to the terms of the award agreements, between zero and 200% of the target number of performance-based RSUs will vest on October 1, 2025, depending on Apple’s Relative TSR percentile ranking for the performance period, as follows:
2023 Performance-Based RSUs
| Relative TSR Percentile v. S&P 500 Companies | Performance-Based RSUs Vesting as a Percentage of Target | | 85th Percentile or above | 200% | | 55th Percentile | 100% | | 25th Percentile | 25% | | Below 25th | 0% |
2023 Performance-Based RSUs
If Apple’s TSR for the performance period is negative, the number of performance-based RSUs that vest will be capped at 100% of the target 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 vest will be linearly interpolated between the two nearest vesting percentages. The target number of performance-based RSUs granted to Mr. Cook was determined by dividing the target value of $30 million by the closing stock price on the date of grant. The target number of performance-based RSUs granted to Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams was determined by dividing the target value of $10 million by the closing stock price on the date of grant. The grant date fair values of these RSUs are reported in the “Summary Compensation Table—2023, 2022, and 2021.”
Dividend Equivalents
Dividend Equivalents All equity awards granted to our employees in 2023 have dividend equivalent rights. The dividend equivalents will only pay out if the time-based vesting and performance-based vesting conditions have been met for the underlying RSUs.
Performance-Based RSU 2023 Results
Performance-Based RSU 2023 Results On October 1, 2022, Ms. Adams, Mr. Maestri, Ms. O’Brien and Mr. Williams each vested in performance-based RSUs that were granted on September 29, 2019. 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 a maximum 200% vesting for performance at or above the 85th percentile. Mr. Cook did not have a performance-based RSU scheduled to vest in 2023. For the three-year performance period from September 29, 2019 through September 24, 2022, Ms. Adams, Mr. Maestri, and Mr. Williams each vested in 365,600 performance-based RSUs, representing 200% of the target number of performance-based RSUs.
Performance-Based RSU 2023 Results
| | Relative TSR Percentile Ranking for Three-Year Performance Period | TSR Results for Three-Year Performance Period | | Apple | 98th Percentile | 173.34% | | S&P 500 Companies | 85th Percentile | 77.0% | | | 55th Percentile | 31.04% | | | 25th Percentile | 4.99% | | | Below 25th | <4.99% |
Performance-Based RSU 2023 Results
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Compensation Upon Termination of Employment
Compensation Upon Termination of Employment Our named executive officers do not have employment contracts or guaranteed cash severance arrangements and are not entitled to acceleration of their equity awards or any other payments upon a change in control. The time-based RSU award agreements for all our employees, including Mr. Cook, provide for full accelerated vesting upon a termination due to death. The time-based RSU agreements for all our employees, other than Mr. Cook, provide for pro-rata accelerated vesting upon a termination due to disability. The performance-based RSU award agreements for our named executive officers, other than Mr. Cook, provide for pro-rata accelerated vesting upon a termination due to death or disability. The time and performance-based RSU agreements for Mr. Cook provide for full vesting upon a termination due to disability with settlement occurring on the originally scheduled vesting dates. The People and Compensation Committee also approved a retirement vesting provision in Mr. Cook’s outstanding equity awards to recognize the unique impact of his leadership decisions on the long-term growth and success of Apple. Retirement is defined as a termination of employment after reaching at least 60 years of age and completing at least 10 years of service with Apple. Mr. Cook has met these requirements. The People and Compensation Committee considered shareholder feedback provided in recent engagements that the primary purpose of time-based RSUs should be retention. Thus, while treatment in the event of death or disability remained unchanged, Mr. Cook’s 2023 time-based RSUs were structured to vest on a pro rata basis, based on the dates of employment, in the event of his termination due to retirement on or after the first anniversary of the grant date. Unless otherwise determined by the People and Compensation Committee, Mr. Cook’s outstanding performance-based RSU agreements provide for a continued right to receive the full number of earned shares underlying the performance-based RSUs on the original vesting dates upon a termination due to death, disability, or termination of employment due to retirement that occurs on or after the first anniversary of the grant date. If Mr. Cook retires on or after the first anniversary of the grant date, the shares underlying his RSU awards will be released on the original vesting date, subject to the attainment of the performance goals for the performance-based RSUs. The delivery of the vested shares underlying Mr. Cook’s equity awards and any dividend equivalents that have accrued on such awards are not accelerated upon retirement.
Recoupment of Compensation
Recoupment of Compensation The terms of all outstanding RSU awards held by our named executive officers in 2023 allow us to recoup any shares or other amount that may be paid in respect of RSUs in the event the named executive officer engages in certain acts of misconduct. The compensation recoupment policy also applies to the awards and payout opportunities granted under the Cash Incentive Plan to our executive officers. Apple may recover compensation in the event a named executive officer commits a felony while employed by Apple or, while employed by Apple or at any time thereafter, a named executive officer engages in a breach of confidentiality; materially breaches any agreement with Apple; commits an act of theft, embezzlement or fraud; or if Apple is required to prepare an accounting restatement as a result of the named executive officer’s misconduct. Apple also adopted additional recoupment provisions in 2024 in accordance with the SEC rules and Nasdaq Listing Standards effective on October 2, 2023, which mandate the recovery of certain erroneously paid performance-based incentive compensation that may be received by our Section 16 officers on or after October 2, 2023, if Apple has a qualifying financial restatement during the three completed fiscal years immediately prior to the fiscal year in which a financial restatement determination is made, subject to limited exceptions.
Summary Compensation Table—2023, 2022, and 2021
Summary Compensation Table—2023, 2022, and 2021 The following table, footnotes, and related narrative show information regarding the total compensation of each named executive officer for 2023, 2022, and 2021.
Summary Compensation Table—2023, 2022, and 2021
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation ($) | Total ($) | | Tim Cook Chief Executive Officer | 2023 | 3,000,000 | | 46,970,283 | 10,713,450 | 2,526,112(3) | 63,209,845 | | | 2022 | 3,000,000 | — | 82,994,164 | 12,000,000 | 1,425,933 | 99,420,097 | | | 2021 | 3,000,000 | — | 82,347,835 | 12,000,000 | 1,386,559 | 98,734,394 | | Luca Maestri Senior Vice President, Chief Financial Officer | 2023 | 1,000,000 | | 22,323,641 | 3,571,150 | 41,092(4) | 26,935,883 | | | 2022 | 1,000,000 | — | 22,132,015 | 4,000,000 | 19,783 | 27,151,798 | | | 2021 | 1,000,000 | — | 21,959,620 | 4,000,000 | 18,883 | 26,978,503 | | Kate Adams Senior Vice President, General Counsel and Secretary | 2023 | 1,000,000 | | 22,323,641 | 3,571,150 | 46,914(5) | 26,941,705 | | | 2022 | 1,000,000 | — | 22,132,015 | 4,000,000 | 15,208 | 27,147,223 | | | 2021 | 1,000,000 | — | 21,959,620 | 4,000,000 | 14,533 | 26,974,153 | | Deirdre O’Brien Senior Vice President, Retail | 2023 | 1,000,000 | | 22,323,641 | 3,571,150 | 42,219(6) | 26,937,010 | | | 2022 | 1,000,000 | — | 22,132,015 | 4,000,000 | 19,783 | 27,151,798 | | | 2021 | 1,000,000 | — | 21,959,620 | 4,000,000 | 61,191 | 27,020,811 | | Jeff Williams Chief Operating Officer | 2023 | 1,000,000 | | 22,323,641 | 3,571,150 | 66,435(7) | 26,961,226 | | | 2022 | 1,000,000 | — | 22,132,015 | 4,000,000 | 18,337 | 27,150,352 | | | 2021 | 1,000,000 | — | 21,959,620 | 4,000,000 | 17,437 | 26,977,057 |
Summary Compensation Table—2023, 2022, and 2021
| (1) The grant date fair value for time-based RSUs is measured in accordance with FASB ASC 718 and based on the closing price of Apple’s common stock on the date of grant. The grant date fair value for performance-based RSUs is calculated using a Monte-Carlo model for each award on the date of grant, as determined under FASB ASC 718 based on the probable outcome of the performance condition as of the grant date. The grant date fair value for each award may differ based on the applicable data, assumptions, and estimates used in the model. See footnote 1 to the table entitled “Grants of Plan-Based Awards—2023.” | | (2) As described under “Executive Compensation—Compensation Discussion and Analysis,” the named executive officers’ Cash Incentive Plan awards are based on the performance of Apple relative to predetermined financial goals for the year and the performance of the individual named executive officer. The threshold, target, and maximum payout amounts for each named executive officer’s Cash Incentive Plan payout opportunity for 2023 are shown in the table entitled “Grants of Plan-Based Awards—2023.” In 2023, Apple’s performance exceeded the target performance goals for both net sales and operating income, resulting in a preliminary payout of 166.1% of the total target payout opportunity for each named executive officer. Upon review and discussion with management of the significant actions taken and progress achieved across each of our values and key community initiatives during 2023, the People and Compensation Committee modified the preliminary payout opportunities by 7.5% and awarded Cash Incentive Plan payouts equal to 178.6% of the target payout opportunity for each of our named executive officers. |
Summary Compensation Table—2023, 2022, and 2021
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Summary Compensation Table—2023, 2022, and 2021
| (3) This amount represents: (i) Apple’s contributions to Mr. Cook’s account under the 401(k) plan in the amount of $19,800; (ii) term life insurance premiums paid by Apple in the amount of $2,964; (iii) vacation cash-out in the amount of $57,692; (iv) security expenses in the amount of $820,309, which represents the incremental cost to Apple for personal security services provided to Mr. Cook as determined by allocating both direct costs and a percentage of fixed costs incurred by Apple and used to provide such personal security services; (v) personal air travel expenses in the amount of $1,621,468, which represent the incremental cost to Apple for Mr. Cook’s personal use of private aircraft based on hourly flight charges and other variable costs incurred by Apple for such use, including variable fuel charges, departure fees, and landing fees; and (vi) the incremental cost to Apple for a tenure-based service award for Mr. Cook. For security and efficiency reasons, the Board requires Mr. Cook to use private aircraft for all business and personal travel. | | (4) This amount represents: (i) Apple’s contributions to Mr. Maestri’s account under the 401(k) plan in the amount of $19,800; (ii) term life insurance premiums paid by Apple in the amount of $1,483; (iii) expenses in the amount of $18,069, which represent the incremental costs to Apple for personal and guest attendance at a business-related entertainment event; and (iv) the incremental cost to Apple of cybersecurity expenses for Mr. Maestri. | | (5) This amount represents: (i) Apple’s contributions to Ms. Adams’ account under the 401(k) plan in the amount of $19,800; (ii) term life insurance premiums paid by Apple in the amount of $1,483; (iii) expenses in the amount of $22,151, which represent the incremental costs to Apple for personal and guest attendance at a business-related entertainment event; and (iv) the incremental cost to Apple of cybersecurity expenses for Ms. Adams. | | (6) This amount represents: (i) Apple’s contributions to Ms. O’Brien’s account under the 401(k) plan in the amount of $19,800; (ii) term life insurance premiums paid by Apple in the amount of $1,483; (iii) expenses in the amount of $20,066, which represent the incremental costs to Apple for personal and guest attendance at a business-related entertainment event; and (iv) the incremental cost of cybersecurity expenses for Ms. O’Brien; | | (7) This amount represents: (i) Apple’s contributions to Mr. Williams’ account under the 401(k) plan in the amount of $19,800; (ii) term life insurance premiums paid by Apple in the amount of $37; (iii) expenses in the amount of $36,847, which represent the incremental costs to Apple for personal and guest attendance at a business-related entertainment event; and (iv) the incremental cost to Apple of a tenure-based service award and cybersecurity expenses for Mr. Williams. |
Summary Compensation Table—2023, 2022, and 2021
The amounts in the salary, bonus, and non-equity incentive plan compensation columns of the “Summary Compensation Table—2023, 2022, and 2021” reflect actual amounts earned or paid in the relevant years, while the amounts in the stock awards column reflect accounting values determined as of the date of grant. The tables entitled “Outstanding Equity Awards—2023” and “Stock Vested—2023” provide further information on the named executive officers’ potential realizable value and actual value realized with respect to their equity awards. The “Summary Compensation Table—2023, 2022, and 2021” should be read in conjunction with the Compensation Discussion and Analysis and the subsequent tables and narrative descriptions.
Summary Compensation Table—2023, 2022, and 2021
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Grants of Plan-Based Awards—2023
Grants of Plan-Based Awards—2023 The following table shows information regarding the incentive awards granted to the named executive officers for 2023.
Grants of Plan-Based Awards—2023
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: | | | Name (a) | Award Type | Grant Date (b) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | Number of Shares of Stock or Units (#)(i) | Grant Date Fair Value of Stock Awards(1) ($)(j) | | Tim Cook | Cash Incentive | — | 3,000,000 | 6,000,000 | 12,000,000 | — | — | — | — | — | | | Performance-based RSUs | 9/25/2022 | — | — | — | 49,858 | 199,429 | 398,858 | — | 36,970,148 | | | Time-based RSUs | 9/25/2022 | — | — | — | — | — | — | 66,477 | 10,000,135 | | Luca Maestri | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | | | Performance-based RSUs | 9/25/2022 | — | — | — | 16,620 | 66,477 | 132,954 | — | 12,323,506 | | | Time-based RSUs | 9/25/2022 | — | — | — | — | — | — | 66,477 | 10,000,135 | | Kate Adams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | | | Performance-based RSUs | 9/25/2022 | — | — | — | 16,620 | 66,477 | 132,954 | — | 12,323,506 | | | Time-based RSUs | 9/25/2022 | — | — | — | — | — | — | 66,477 | 10,000,135 | | Deirdre O’Brien | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | | | Performance-based RSUs | 9/25/2022 | — | — | — | 16,620 | 66,477 | 132,954 | — | 12,323,506 | | | Time-based RSUs | 9/25/2022 | — | — | — | — | — | — | 66,477 | 10,000,135 | | Jeff Williams | Cash Incentive | — | 1,000,000 | 2,000,000 | 4,000,000 | — | — | — | — | — | | | Performance-based RSUs | 9/25/2022 | — | — | — | 16,620 | 66,477 | 132,954 | — | 12,323,506 | | | Time-based RSUs | 9/25/2022 | — | — | — | — | — | — | 66,477 | 10,000,135 |
Grants of Plan-Based Awards—2023
| (1) The grant date fair value for time-based RSUs is calculated in accordance with FASB ASC 718 based on the closing price of Apple’s common stock on the date of grant. The grant date fair value for performance-based RSUs is calculated using a Monte-Carlo model for each award on the date of grant, determined under FASB ASC 718, incorporating the following assumptions: |
Grants of Plan-Based Awards—2023
| | | Assumptions | | | | Grant Date | Performance Period End Date | Expected Term (years) | Expected Volatility | Risk-Free Interest Rate | | 9/25/2022 | 9/27/2025 | 3.01 | 35.25% | 4.17% |
Grants of Plan-Based Awards—2023
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.
Grants of Plan-Based Awards—2023
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Outstanding Equity Awards—2023
Outstanding Equity Awards—2023 The following table shows information regarding the outstanding equity awards held by each of the named executive officers as of September 30, 2023.
Outstanding Equity Awards—2023
| 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 | 9/27/2020 | 222,658(2) | 38,121,276 | 333,987(3) | 57,181,914 | | | 9/26/2021 | 255,241(4) | 43,699,812 | 255,241(4)(5) | 43,699,812 | | | 9/25/2022 | 66,477(6) | 11,381,527 | 199,429(5)(6) | 34,144,239 | | Luca Maestri | 9/29/2019 | 60,932(7) | 10,432,168 | — | — | | | 9/27/2020 | 59,376(8) | 10,165,765 | 89,064(5)(9) | 15,248,647 | | | 9/26/2021 | 68,065(4) | 11,653,409 | 68,065(4)(5) | 11,653,409 | | | 9/25/2022 | 66,477(6) | 11,381,527 | 66,477(5)(6) | 11,381,527 | | Kate Adams | 9/29/2019 | 60,932(7) | 10,432,168 | — | — | | | 9/27/2020 | 59,376(8) | 10,165,765 | 89,064(5)(9) | 15,248,647 | | | 9/26/2021 | 68,065(4) | 11,653,409 | 68,065(4)(5) | 11,653,409 | | | 9/25/2022 | 66,477(6) | 11,381,527 | 66,477(5)(6) | 11,381,527 | | Deirdre O’Brien | 9/29/2019 | 60,932(7) | 10,432,168 | — | — | | | 9/27/2020 | 59,376(8) | 10,165,765 | 89,064(5)(9) | 15,248,647 | | | 9/26/2021 | 68,065(4) | 11,653,409 | 68,065(4)(5) | 11,653,409 | | | 9/25/2022 | 66,477(6) | 11,381,527 | 66,477(5)(6) | 11,381,527 | | Jeff Williams | 9/29/2019 | 60,932(7) | 10,432,168 | — | — | | | 9/27/2020 | 59,376(8) | 10,165,765 | 89,064(5)(9) | 15,248,647 | | | 9/26/2021 | 68,065(4) | 11,653,409 | 68,065(4)(5) | 11,653,409 | | | 9/25/2022 | 66,477(6) | 11,381,527 | 66,477(5)(6) | 11,381,527 |
Outstanding Equity Awards—2023
| (1) The dollar amounts shown in columns (d) and (f) are determined by multiplying the number of shares or units shown in column (c) or (e), as applicable, by $171.21, the closing price of Apple’s common stock on September 29, 2023, the last trading day of Apple’s fiscal year. | | (2) 111,329 time-based RSUs subject to this award vested on April 1, 2023, and subject to the terms of the award agreement, the remainder of the RSUs are scheduled to be released in two annual installments of 111,329, commencing on April 1, 2024. | | (3) 153% of the 333,987 target number of performance-based RSUs subject to this award (totaling 511,000 performance-based RSUs) vested on October 1, 2023, based on Apple’s Relative TSR compared to other companies in the S&P 500 over the relevant performance period. | | (4) Subject to the terms of the award agreement, the time-based RSUs subject to this award are scheduled to vest or be released, as applicable, in three annual installments commencing on April 1, 2024. Subject to the terms of the award agreement, the performance-based RSUs subject to this award are scheduled to vest or be released, as applicable, on October 1, 2024, provided the applicable performance condition is satisfied. | | (5) The target number of performance-based RSUs is shown. As described under “Executive Compensation—Compensation Discussion and Analysis,” in each case, between 0% and 200% of the target number of performance-based RSUs may vest depending on Apple’s Relative TSR compared to the other companies in the S&P 500 over the relevant performance period. |
Outstanding Equity Awards—2023
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Outstanding Equity Awards—2023
| (6) Subject to the terms of the award agreement, the time-based RSUs subject to this award are scheduled to vest or be released, as applicable, in three annual installments commencing on April 1, 2025. Subject to the terms of the award agreement, the performance-based RSUs subject to this award are scheduled to vest or be released, as applicable, on October 1, 2025, provided the applicable performance condition is satisfied. | | (7) Subject to the terms of the award agreement, the remaining 60,932 time-based RSUs are scheduled to vest on April 1, 2024. | | (8) 29,688 RSUs subject to this award vested on April 1, 2023, and subject to the terms of the award agreement, the remainder of the RSUs are scheduled to vest in two annual installments of 29,688, commencing on April 1, 2024. | | (9) 153% of the 89,064 target number of performance-based RSUs subject to this award (totaling 136,268 performance-based RSUs) vested on October 1, 2023, based on Apple’s Relative TSR compared to other companies in the S&P 500 over the relevant performance period. |
Stock Vested—2023
Stock Vested—2023 The following table shows information regarding the vesting during 2023 of RSUs previously granted to the named executive officers.
Stock Vested—2023
| | Stock Awards | | | Name (a) | Number of Shares Acquired on Vesting (#)(b) | Value Realized on Vesting ($)(c)(1) | | Tim Cook | 111,329 | 18,604,189 | | Luca Maestri | 515,284 | 76,609,760 | | Kate Adams | 515,284 | 76,609,760 | | Deirdre O’Brien | 504,728 | 74,928,183 | | Jeff Williams | 515,284 | 76,609,760 |
Stock Vested—2023
| (1) The dollar amounts shown in column (c) are determined by multiplying the number of shares acquired on vesting by the per-share closing price of Apple’s common stock on the vesting date, plus dividend equivalents attributable to such shares in the amount of $246,037 for Mr. Cook, $1,400,948 for each of Ms. Adams, Mr. Maestri, and Mr. Williams, and $1,355,503 for Ms. O’Brien. |
Stock Vested—2023
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Non-Qualified Deferred Compensation—2023
Non-Qualified Deferred Compensation—2023 The following table shows information regarding the participation of our named executive officers in the Deferred Compensation Plan as of September 30, 2023.
Non-Qualified Deferred Compensation—2023
| Name (a) | Executive Contributions ($)(b) | Apple Contributions ($)(c) | Aggregate Earnings ($)(d) | Aggregate Withdrawals/ Distributions ($)(e) | Aggregate Balance at September 30,2023 ($)(f) | | Kate Adams | 2,400,000(1) | — | 492,257 | — | 7,095,419(2) |
Non-Qualified Deferred Compensation—2023
| (1) Reflects the portion of Ms. Adams’ annual cash incentive payout for 2022 deferred and contributed to the Deferred Compensation Plan. The payout was reflected in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table—2023, 2022, and 2021,” under 2022, the year it was earned. | | (2) The balance reflects $7,303,650 that was reported as compensation in the “Summary Compensation Table” in prior years. |
Description of Non-Qualified Deferred Compensation
Description of Non-Qualified Deferred Compensation Our named executive officers and Non-Employee Directors are eligible to participate in the Deferred Compensation Plan. Deferred Compensation Plan participants may elect to defer up to 50% of their annual base salary and commissions and up to 90% of their eligible cash bonus, or up to 100% of their annual cash retainer in the case of Non-Employee Directors, by timely completing a deferral election form. Amounts deferred under the Deferred Compensation Plan, as adjusted for applicable earnings gains and losses and fees, are credited to an account in the participant’s name and remain fully vested at all times. Participants may select at any time from a diversified menu of notional investment options that generally mirror the investment options of Apple’s 401(k) plan, and the value of their Deferred Compensation Plan account balance may increase or decrease based on the performance of their selected investment options. In 2023, annual returns on the investment options available for the Deferred Compensation Plan generally ranged from 0.75% to 29.28%. Deferred Compensation Plan participants may elect to receive distributions of their deferred amounts either upon separation from service or as of a specified in-service distribution date. Distributions will be made in a lump sum payment unless the participant elects installment payments between two and 10 years. A Deferred Compensation Plan participant also may request to receive a hardship distribution on account of an eligible unforeseeable emergency. If a Deferred Compensation Plan participant dies before receiving a complete distribution of their account, the remaining account will be paid to their beneficiaries in a lump sum by December 31 of the year following the participant’s death.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control We do not have any cash severance arrangements with our named executive officers, and none of our named executive officers’ equity awards outstanding as of 2023 fiscal year-end provide for acceleration or a right to receive shares in connection with a change of control, or termination of employment for reasons other than death, disability, or for Mr. Cook, retirement. Retirement is defined as a termination of employment after reaching at least 60 years of age and at least 10 years of service with Apple.
Pay versus Performance
Pay versus Performance The information below is provided pursuant to the SEC pay versus performance disclosure requirements set forth in Item 402(v) of SEC Regulation S-K (the “Pay Versus Performance Rule”), which requires companies to disclose certain information about the relationship between performance and the compensation of named executive officers.
Pay versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year(a) | Summary Compensation Table Total for Mr. Cook($)(b) | Compensation Actually Paid to Mr. Cook($)(c) | Average Summary Compensation Table Total for Other NEOs($)(d) | Average Compensation Actually Paid to Other NEOs($)(e) | Total Shareholder Return($)(f) | Peer Group Total Shareholder Return($)(g) | Net Income ($M)(h) | Net Sales ($M)(i) | | 2023 | 63,209,845 | 106,643,588 | 26,943,956 | 41,980,664 | 155.24 | 116.88 | 96,995 | 383,285 | | 2022 | 99,420,097 | 128,833,021 | 27,150,293 | 41,564,946 | 135.59 | 92.09 | 99,803 | 394,328 | | 2021 | 98,734,394 | 311,845,801 | 26,987,631 | 75,307,922 | 131.69 | 136.57 | 94,680 | 365,817 |
Pay versus Performance
| (1) The dollar amounts in column (b) represent the compensation reported for Mr. Cook for each corresponding year in the “Total” column of the “Summary Compensation Table – 2023, 2022, and 2021” on page 62 of this Proxy Statement. |
Pay versus Performance
| (2) The dollar amounts in columns (c) and (e) represent the amount of “Compensation Actually Paid” (otherwise known as CAP), as computed in accordance with SEC rules. Compensation Actually Paid does not represent cash and/or equity value realized or paid to Apple’s NEOs but rather is a value calculated under applicable SEC rules. The following table details how Compensation Actually Paid is determined: |
Pay versus Performance
| | 2023 | | 2022 | | 2021 | | | | Mr. Cook ($) | Average for Other NEO ($) | Mr. Cook ($) | Average for Other NEO($) | Mr. Cook ($) | Average for Other NEO ($) | | Summary Compensation Table (“SCT”) Total | 63,209,845 | 26,943,956 | 99,420,097 | 27,150,293 | 98,734,394 | 26,987,631 | | Grant Date Fair Value of Stock Awards from SCT | (46,970,283) | (22,323,641) | (82,994,164) | (22,132,015) | (82,347,835) | (21,959,620) | | Fair Value of Equity Awards Granted in the Year and Unvested as of Year End | 53,968,355 | 26,781,593 | 96,725,167 | 25,793,656 | 103,300,873 | 27,547,147 | | Change in Fair Value from Prior Year End of Outstanding and Unvested Awards Granted in Prior Years | 32,763,652 | 12,828,520 | 16,199,600 | 7,769,730 | 0 | 38,719,413 | | Change in Fair Value from Prior Year End of Vested(a) Awards Granted in Prior Years | 86,782 | (2,249,765) | (517,680) | 2,983,282 | 192,158,369 | 4,013,351 | | Fair Value at Vesting Date of Vested Awards Granted in Current Year | 3,585,238 | 0 | 0 | 0 | 0 | 0 | | Compensation Actually Paid | 106,643,588 | 41,980,664 | 128,833,021 | 41,564,946 | 311,845,801 | 75,307,922 |
Pay versus Performance
| (a) For the purposes of CAP and this table, time-based RSUs are considered “vested” on the date of retirement eligibility. As a result, 100% of the time-based RSUs granted to Mr. Cook in 2021 and 2022 RSUs were considered “vested”. A pro rata portion of Mr. Cook’s 2023 time-based RSUs are considered “vested” consistent with the retirement provisions of that award. No other NEOs, other than Mr. Cook, have retirement provisions in their equity awards. The fair values of the RSUs included in the compensation actually paid to our CEO and the average compensation actually paid to our other NEOs are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described above in footnote 1 to the “Summary Compensation Table – 2023, 2022, and 2021” and footnote 1 to the “Grants of Plan-Based Awards – 2023” table, respectively. Any changes to the time-based RSU and performance-based RSU grant date fair values (for 2023 grants) and from prior year-end (for 2021 and 2022 grants) are based on an updated stock price valuation on the measurement dates and for the performance-based RSUs, including updated input variables for the Monte-Carlo model to estimate the probability of satisfying the performance objectives established for the respective award. |
Pay versus Performance
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Pay versus Performance
| (3) The dollar amounts in column (d) represent the average amounts of compensation reported for the other NEOs for each corresponding year in the “Total” column of the “Summary Compensation Table – 2023, 2022, and 2021” as set forth on page 62 of this proxy statement. For each of 2021, 2022 and 2023, the other NEOs were Luca Maestri, Kate Adams, Deirdre O’Brien, and Jeff Williams. |
Pay versus Performance
| (4) Apple’s TSR in column (f) was determined based on the value of an initial fixed investment of $100, as of September 26, 2020, including the reinvestment of any dividends. |
Pay versus Performance
| (5) The peer groups used to calculate Peer Group TSR in column (g) are our primary peer group as disclosed in the Compensation Discussion and Analysis section of this Proxy Statement, our 2023 Proxy Statement for 2022 and our 2022 Proxy Statement for 2021. TSR is based on the value of an initial fixed investment of $100 at the start of 2021 and is weighted for the market capitalization of each peer company in each applicable year. |
Pay versus Performance
| (6) In addition to Relative TSR and Operating Income, Net Sales in column (i) represents the most important financial performance measure used to link Compensation Actually Paid to company performance (the “Company Selected Measure” as defined in the Pay Versus Performance rules). |
Relationship Between Compensation Actually Paid and our Total Shareholder Return
Relationship Between Compensation Actually Paid and our Total Shareholder Return Long-term equity incentives represent a vast majority of our NEOs’ total target compensation and our stock price performance or TSR is the key driver of Compensation Actually Paid. We also use Relative TSR as the key performance measure for our performance-based RSUs. Over the three-year period covered in this disclosure, Apple’s TSR on an absolute basis was high, 55.24%, and outperformed the TSR of our primary peer group by 16.88%. Apple’s Relative TSR measured against the members of the S&P 500 Index (the peer group for performance-based RSUs) was also strong, resulting in above-target payouts for the performance-based RSUs with applicable performance periods ending in 2021, 2022, and 2023. Further, the TSR relative to the currently outstanding performance-based RSUs (granted in 2022 and 2023) continues to trend towards above-target payouts due to strong TSR relative to the members of the S&P 500. This shows how Compensation Actually Paid to our NEOs and TSR are tightly linked. The 2021 Compensation Actually Paid values for the CEO and NEOs are higher than the Summary Compensation Table totals in 2021, and higher than the Compensation Actually Paid values in 2022 and 2023 because Apple’s significant and outstanding stock price increase in the years immediately preceding 2021 resulted in our NEOs holding a larger value of unvested equity awards as of the start of 2021.
Relationship Between Compensation Actually Paid and Net Income
Relationship Between Compensation Actually Paid and Net Income Net Income is generally a key indicator of company profitability and for Apple can contribute to changes in our stock price, which in turn drives Compensation Actually Paid. We do not use Net Income as a financial measure in our executive compensation program but Operating Income from which Net Income is derived. Operating Income and Net Sales are the two financial performance measures for our Cash Incentive Plan.
Relationship Between Compensation Actually Paid and Net Sales
Relationship Between Compensation Actually Paid and Net Sales Net Sales is one of the two financial measures, the People and Compensation Committee has set for our Cash Incentive Plan, and therefore along with Operating Income is the next most important financial metric in determining Compensation Actually Paid behind Relative TSR. Strong performance in Net Sales and Operating Income led to above target bonus payouts in 2021, 2022, and 2023 which in turn increased Compensation Actually Paid.
Tabular List of Apple’s most important metrics that link Compensation Actually Paid to the Mr. Cook and other NEOs
Tabular List of Apple’s most important metrics that link Compensation Actually Paid to the Mr. Cook and other NEOs For 2023, the following list represented the most important financial performance measures used by Apple to link Compensation Actually Paid with our financial performance:
Tabular List of Apple’s most important metrics that link Compensation Actually Paid to the Mr. Cook and other NEOs
| Net Sales | | Operating Income | | Relative TSR |
Tabular List of Apple’s most important metrics that link Compensation Actually Paid to the Mr. Cook and other NEOs
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CEO Pay Ratio—2023
CEO Pay Ratio—2023 We offer a wide range of benefits to our global employee population, and we are committed to paying our employees competitively and equitably based on their role. For 2023, we used the same median employee that was identified in 2022 since there has been no change in our employee population or employee compensation that we reasonably believe would result in a significant change in the pay ratio disclosure. We determined our median compensated employee in 2022 by using base salary, bonuses, commissions, and grant date fair value of equity awards granted to employees in 2022 as our consistently applied compensation measure. We applied this measure to our global employee population as of September 24, 2022, the last day of our 2022 fiscal year, and annualized base salaries for permanent full-time and part-time employees that did not work the full year. We calculated the median compensated employee’s 2023 annual total compensation using the same methodology that is used to calculate our CEO’s annual total compensation in the table entitled “Summary Compensation Table–2023, 2022, and 2021.” The 2023 annual total compensation of our CEO was $63,209,845, the 2023 annual total compensation of our median compensated employee was $94,118, and the ratio of these amounts is 672 to 1. Thus, this pay ratio reflects a reasonable estimate consistent with SEC rules based on the methodology we described above. Because SEC rules for identifying a median compensated employee allow companies to apply certain exclusions, include estimates, and adopt different methodologies that reflect their employee population and compensation practices, the ratio above may not be comparable to the CEO pay ratio reported by other companies.
CEO Pay Ratio—2023
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Election of Directors
Election of Directors The Board has nominated Wanda Austin, Tim Cook, Alex Gorsky, Andrea Jung, Art Levinson, Monica Lozano, Ron Sugar, and Sue 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. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, for the election of the Board’s eight nominees. The term of any incumbent director who does not receive the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum, and has not earlier resigned, will end on the date that is the earlier of (a) 90 days after the date on which the voting results for the Annual Meeting are determined by the inspector of election, or (b) the date on which the Board selects a person to fill the office held by that director in accordance with Apple’s bylaws. Each of the director nominees 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 a one-year term. If any nominee is unable to serve or for good cause will not 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, directors, and nominees. For more information on the director nominees, please see the section entitled “Directors” beginning on page 29.
Election of Directors
| | The Board recommends a vote FOR each of the nominees | 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. |
Election of Directors
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