Apple (AAPL)

3. Performance-Based Cash Incentive Plan Payments

The Company’s fiscal 2008 performance exceeded the revenue and operating income goals established under the cash incentive plan; as a result, the named executive officers earned payouts at the maximum of 100% of base salary, pursuant to the Percentage of Salary Payable As Performance-Based Cash Incentives chart in the section entitled “D. Executive Compensation Program Design and Implementation—4. The Role of Cash Compensation” above. The specific payment amounts are shown in the table entitled “Summary Compensation Table—Fiscal 2008 and Fiscal 2007” below. As noted above, Mr. Jobs does not participate in the Performance Bonus Plan.

Mr. Mansfield was promoted to his current position of Senior Vice President, Mac Hardware Engineering in May 2008. As a result, Mr. Mansfield received a pro-rated bonus under the Performance Bonus Plan based on the amount of time he served as a Senior Vice President in fiscal 2008. Prior to his promotion, Mr. Mansfield participated in the FY08 Vice President and Director Quarterly Bonus Plan (the “Quarterly Bonus Plan”) and the FY08 Vice President Annual Bonus Plan (the “Annual Bonus Plan”). The Compensation Committee establishes performance goals for the Quarterly Bonus Plan and the Annual Bonus Plan based on revenue and operating income objectives in the Company’s internal business plan. Because the business plan is highly confidential, the Company does not publicly disclose specific internal revenue or operating income objectives. Revealing specific objectives would provide competitors and other third parties with insights into the Company’s confidential planning process and strategies, thereby causing competitive harm. Mr. Mansfield’s target bonus and maximum bonus opportunities under the Quarterly Bonus Plan were 35% and 50% of base salary, respectively, and his target bonus and maximum bonus opportunities under the Annual Bonus Plan were 15% and 20% of base salary, respectively. The Company’s performance exceeded the revenue and operating income goals established under the Quarterly Bonus Plan and the Annual Bonus Plan; as a result, Mr. Mansfield earned a payout at the maximum amount, which was pro-rated based on the amount of time he participated in the Quarterly Bonus Plan and the Annual Bonus Plan prior to his promotion. Mr. Mansfield received a bonus of $151,100 under the Quarterly Bonus Plan and a bonus of $60,440 under the Annual Bonus Plan for fiscal 2008.

2. 2007 Performance-Based Cash Incentive Plan Payments

The Company’s fiscal year 2007 performance significantly exceeded the revenue and operating income goals established under the cash incentive plan, so the Compensation Committee, in the exercise of its discretion, approved payouts to the named executive officers at the maximum of 100% of base salary, pursuant to the Percentage of Salary Payable As Performance-Based Cash Incentives chart in the section entitled “Executive Compensation Program Design and Implementation—4. The Minor Role of Cash Compensation” above. The specific payment amounts are shown in the Summary Compensation Table below.