Apple (AAPL)

2. Mix of Equity, Cash Incentives and Salary

The Company relies on long-term equity awards in the form of RSUs because the Company and the Compensation Committee believe they are the most effective compensation element for attracting entrepreneurial, creative executives and promoting their long-term commitment to the Company. An RSU award generally vests only if the named executive officer continues employment until the specified vesting date. To help promote retention, the Compensation Committee has established vesting intervals of no less than two years

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for ongoing RSU awards for the named executive officers. RSU awards also help to ensure a strong connection between executive compensation and the interests of the Company’s shareholders because the value of RSUs depends on the Company’s future share price.

Although the Compensation Committee reviews the compensation practices of its peer companies as described in the section entitled “D. Executive Compensation Program Design and Implementation—6. The Role of Peer Groups, Surveys and Benchmarking” below, the Compensation Committee does not adhere to strict formulas or rely to any significant extent on survey data to determine the mix of compensation elements. Instead, as described in the section entitled “D. Executive Compensation Program Design and Implementation” below, the Compensation Committee considers a variety of factors in exercising its discretion to determine compensation, including the experience, responsibilities and performance of each named executive officer and the Company’s overall financial performance. This flexibility is particularly important in designing compensation arrangements to attract new executives in the highly-competitive, rapidly changing market in which the Company competes.

2. Mix of Equity, Cash Incentives and Salary

The Company relies heavily on long-term equity awards because the Compensation Committee believes they are the most effective compensation element for attracting entrepreneurial, creative executives and promoting their long-term commitment to the Company. An RSU award generally vests only if the named executive officer continues employment until the specified vesting date, typically two to four years after the date of grant. Equity awards also help to ensure a strong connection between executive compensation and the Company’s financial performance because the value of RSUs depends on the Company’s future share price.

Although the Compensation Committee reviews the compensation practices of its peer companies as described in the section entitled “Executive Compensation Program Design and Implementation—6. The Role of Peer Groups, Surveys and Benchmarking” below, the Compensation Committee does not adhere to strict formulas or survey data to determine the mix of compensation elements. Instead, as described in the section entitled “Executive Compensation Program Design and Implementation” below, the Compensation Committee considers various factors in exercising its discretion to determine compensation, including the experience, responsibilities and performance of each named executive officer as well as the Company’s overall financial performance. This flexibility is particularly important in designing compensation arrangements to attract new executives in highly-competitive, rapidly changing markets.