{"id":40254,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/performance-bonus-plan2.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"performance-bonus-plan2","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/performance-bonus-plan2.html","title":{"rendered":"Performance Bonus Plan"},"content":{"rendered":"
APPLE COMPUTER, INC.<\/b><\/p>\n\n
PERFORMANCE BONUS PLAN<\/b><\/p>\n\n\n\n
1.               <\/i>Purposes of the Plan<\/i>. The\nPlan is intended to increase shareholder value and the success of the Company\nby motivating key executives (1) to perform to the best of their\nabilities, and (2) to achieve the Company\u0092s objectives. The Plan\u0092s goals\nare to be achieved by providing such executives with incentive awards based on\nthe achievement of goals relating to the performance of the Company or upon the\nachievement of objectively determinable individual performance goals. The Plan\nis intended to permit the payment of bonuses that may qualify as performance-based\ncompensation under Code section 162(m).<\/p>\n\n\n\n
2.               <\/i>Definitions<\/i>.<\/p>\n\n\n\n
(a)   \u0093Annual Revenue<\/i>\u0094 means the Company\u0092s or a\nbusiness unit\u0092s net sales for the Fiscal Year, determined in accordance with\ngenerally accepted accounting principles.<\/p>\n\n\n\n
(b)   \u0093Award<\/i>\u0094 means, with respect to each\nParticipant, the award determined pursuant to Section 8(a) below for a\nPerformance Period. Each Award is determined by a Payout Formula for a\nPerformance Period, subject to the Committee\u0092s authority under\nSection 8(a) to eliminate or reduce the Award otherwise payable.<\/p>\n\n\n\n
(c)   \u0093Base Salary<\/i>\u0094 means as to any Performance\nPeriod, the Participant\u0092s annualized salary rate on the last day of the\nPerformance Period. Such Base Salary shall be before both (a) deductions\nfor taxes or benefits, and (b) deferrals of compensation pursuant to\nCompany-sponsored plans.<\/p>\n\n\n\n
(d)   \u0093Board<\/i>\u0094 means the Board of Directors of the\nCompany.<\/p>\n\n\n\n
(e)   \u0093Cash Position<\/i>\u0094 means the Company\u0092s level\nof cash and cash equivalents.<\/p>\n\n\n\n
(f)    \u0093Code<\/i>\u0094 means the Internal Revenue Code of\n1986, as amended.<\/p>\n\n\n\n
(g)   \u0093Committee<\/i>\u0094 means the Compensation\nCommittee of the Board, or a sub-committee of the Compensation Committee, which\nshall, with respect to payments hereunder intended to qualify as performance-based\ncompensation under Code Section 162(m), consist solely of two or more\nmembers of the Board who are not employees of the Company and who otherwise\nqualify as \u0093outside directors\u0094 within the meaning of Section 162(m).<\/p>\n\n\n\n
(h)   \u0093Company<\/i>\u0094 means Apple Computer, Inc.\nor any of its subsidiaries (as such term is defined in Code\nSection 424(f)).<\/p>\n\n\n\n
(i)    \u0093Determination Date<\/i>\u0094 means the latest\npossible date that will not jeopardize a Target Award or Award\u0092s qualification\nas Performance-Based Compensation.<\/p>\n\n\n\n
(j)    \u0093Earnings Per Share<\/i>\u0094 means as to any Fiscal\nYear, the Company\u0092s or a business unit\u0092s Net Income, divided by a weighted\naverage number of common shares outstanding and dilutive common equivalent\nshares deemed outstanding, determined in accordance with generally accepted\naccounting principles.<\/p>\n\n\n\n
(k)   \u0093Fiscal Year<\/i>\u0094 means a fiscal year of the\nCompany.<\/p>\n\n\n\n
(l)    \u0093Individual Performance Objective<\/i>\u0094 means\nany individual Company business-related objective that is objectively\ndeterminable within the meaning of Code Section 162(m) and the Treasury\nRegulations promulgated thereunder. Individual Performance Objectives shall\ninclude, but not be limited to, improvement in customer satisfaction, opening\nof additional retail stores, and similar <\/p>\n\n\n\n
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objectively\ndeterminable performance objectives related to the Participant\u0092s job\nresponsibilities with the Company.<\/p>\n\n\n\n
(m)  \u0093Maximum Award<\/i>\u0094 means as to any Participant\nfor any Performance Period, $5 million.<\/p>\n\n\n\n
(n)   \u0093Net Income<\/i>\u0094 means as to any Fiscal Year,\nthe income after taxes of the Company for the Fiscal Year determined in\naccordance with generally accepted accounting principles.<\/p>\n\n\n\n
(o)   \u0093Operating Cash Flow<\/i>\u0094 means the Company\u0092s\nor a business unit\u0092s sum of Net Income plus depreciation and amortization less\ncapital expenditures plus changes in working capital comprised of accounts\nreceivable, inventories, other current assets, trade accounts payable, accrued\nexpenses, product warranty, advance payments from customers and long-term\naccrued expenses, determined in accordance with generally accepted accounting\nprinciples.<\/p>\n\n\n\n
(p)   \u0093Operating Income<\/i>\u0094 means the Company\u0092s or a\nbusiness unit\u0092s income from operations determined in accordance with generally\naccepted accounting principles.<\/p>\n\n\n\n
(q)   \u0093Participant<\/i>\u0094 means an eligible executive\nor key employee of the Company participating in the Plan for a Performance\nPeriod.<\/p>\n\n\n\n
(r)    \u0093Payout Formula<\/i>\u0094 means as to any\nPerformance Period, the formula or payout matrix established by the Committee\npursuant to Section 7 in order to determine the Awards (if any) to be paid\nto Participants. The formula or matrix may differ from Participant to\nParticipant.<\/p>\n\n\n\n
(s)   \u0093Performance-Based Compensation<\/i>\u0094\nmeans compensation that is intended to qualify as \u0093performance-based\ncompensation\u0094 within the meaning of Section 162(m).<\/p>\n\n\n\n
(t)    \u0093Performance Goals<\/i>\u0094 means the goal(s) (or\ncombined goal(s)) determined by the Committee (in its discretion) to be\napplicable to a Participant with respect to an Award. As determined by the\nCommittee, the Performance Goals applicable to an Award may provide for a\ntargeted level or levels of achievement using one or more of the following\nmeasures: (a) Annual Revenue, (b) Cash Position, (c) Earnings\nPer Share, (d) Net Income, (e) Operating Cash Flow,\n(f) Operating Income, (g) Return on Assets, (h) Return on\nEquity, (i) Return on Sales, (j) Total Stockholder Return, and\n(k) Individual Performance Objectives. The Performance Goals may differ\nfrom Participant to Participant and from Award to Award. The Committee shall\nappropriately adjust any evaluation of performance under a Performance Goal to\nexclude (i) any extraordinary non-recurring items as described in\nAccounting Principles Board Opinion No. 30 and\/or in management\u0092s\ndiscussion and analysis of financial conditions and results of operations\nappearing in the Company\u0092s annual report to shareholders for the applicable\nyear, or (ii) the effect of any changes in accounting principles affecting\nthe Company\u0092s or a business units\u0092 reported results.<\/p>\n\n\n\n
(u)   \u0093Performance Period<\/i>\u0094 means any Fiscal Year\nor such other period longer than a Fiscal Year but not in excess of three\nFiscal Years, as determined by the Committee in its sole discretion.<\/p>\n\n\n\n
(v)   \u0093Plan<\/i>\u0094 means this Performance Bonus Plan.<\/p>\n\n\n\n
(w)  \u0093Plan Year<\/i>\u0094 means the Company\u0092s fiscal\nyear.<\/p>\n\n\n\n
(x)    \u0093Return on Assets<\/i>\u0094 means the percentage\nequal to the Company\u0092s or a business unit\u0092s Operating Income before incentive\ncompensation, divided by average net Company or business unit, as applicable,\nassets, determined in accordance with generally accepted accounting principles.<\/p>\n\n\n\n
(y)   \u0093Return on Equity<\/i>\u0094 means the percentage\nequal to the Company\u0092s Net Income divided by average shareholder\u0092s equity,\ndetermined in accordance with generally accepted accounting principles.<\/p>\n\n\n\n
(z)    \u0093Return on Sales<\/i>\u0094 means the percentage\nequal to the Company\u0092s or a business unit\u0092s Operating Income before incentive\ncompensation, divided by the Company\u0092s or the business unit\u0092s, as applicable,\nrevenue, determined in accordance with generally accepted accounting\nprinciples.<\/p>\n\n\n\n
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(aa) \u0093Section 162(m)<\/i>\u0094 means\nSection 162(m) of the Code, or any successor to Section 162(m), as\nthat Section may be interpreted from time to time by the Internal Revenue\nService, whether by regulation, notice or otherwise.<\/p>\n\n\n\n
(bb) \u0093Target Award<\/i>\u0094 means the target award\npayable under the Plan to a Participant for the Performance Period, expressed\nas a percentage of his or her Base Salary or a specific dollar amount, as\ndetermined by the Committee in accordance with Section 6.<\/p>\n\n\n\n
(cc) \u0093Total Stockholder Return<\/i>\u0094 means the total\nreturn (change in share price plus reinvestment of any dividends) of a share of\nthe Company\u0092s common stock.<\/p>\n\n\n\n
3.               <\/i>Plan Administration<\/i>.<\/p>\n\n\n\n
(a)   The Committee\nshall be responsible for the general administration and interpretation of the\nPlan and for carrying out its provisions. Subject to the requirements for\nqualifying compensation as Performance-Based Compensation, the Committee\nmay delegate specific administrative tasks to Company employees or others as\nappropriate for proper administration of the Plan. Subject to the limitations\non Committee discretion imposed under Section 162(m), the Committee shall\nhave such powers as may be necessary to discharge its duties hereunder,\nincluding, but not by way of limitation, the following powers and duties, but\nsubject to the terms of the Plan:<\/p>\n\n\n\n
(i)    discretionary\nauthority to construe and interpret the terms of the Plan, and to determine\neligibility, Awards and the amount, manner and time of payment of any Awards\nhereunder;<\/p>\n\n\n\n
(ii)   to prescribe\nforms and procedures for purposes of Plan participation and distribution of\nAwards; and<\/p>\n\n\n\n
(iii)  to adopt\nrules, regulations and bylaws and to take such actions as it deems necessary or\ndesirable for the proper administration of the Plan.<\/p>\n\n\n\n
(b)   Any rule or\ndecision by the Committee that is not inconsistent with the provisions of the\nPlan shall be conclusive and binding on all persons, and shall be given the\nmaximum deference permitted by law.<\/p>\n\n\n\n
4.               <\/i>Eligibility.<\/i> The\nemployees eligible to participate in the Plan for a given Performance Period\nshall be executive officers and other key employees of the Company who are\ndesignated by the Committee in its sole discretion. No person shall be\nautomatically entitled to participate in the Plan.<\/p>\n\n\n\n
5.               <\/i>Performance Goal Determination<\/i>. The Committee, in its sole discretion, shall establish the Performance\nGoals for each Participant for the Performance Period. Such Performance Goals\nshall be set forth in writing prior to the Determination Date.<\/p>\n\n\n\n
6.               <\/i>Target Award Determination<\/i>. The Committee, in its sole discretion, shall establish a Target Award\nfor each Participant. Each Participant\u0092s Target Award shall be determined by\nthe Committee in its sole discretion, and each Target Award shall be set forth\nin writing prior to the Determination Date.<\/p>\n\n\n\n
7.               <\/i>Determination of Payout Formula or Formulae<\/i>. On or prior to the Determination Date, the Committee, in its sole\ndiscretion, shall establish a Payout Formula or Formulae for purposes of\ndetermining the Award (if any) payable to each Participant. Each Payout Formula\nshall (a) be set forth in writing prior to the Determination Date,\n(b) be based on a comparison of actual performance to the Performance\nGoals, (c) provide for the payment of a Participant\u0092s Target Award if the\nPerformance Goals for the Performance Period are achieved, and (d) provide\nfor an Award greater than or less than the Participant\u0092s Target Award,\ndepending upon the extent to which actual performance exceeds or falls below\nthe Performance Goals. Notwithstanding the preceding, in no event shall a\nParticipant\u0092s Award for any Performance Period exceed the Maximum Award.<\/p>\n\n\n\n
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8.               <\/i>Determination of Awards; Award Payment<\/i>.<\/p>\n\n\n\n
(a)   Determination and Certification<\/i>.\nAfter the end of each Performance Period, the Committee shall certify in\nwriting (which may be by approval of the minutes in which the certification was\nmade) the extent to which the Performance Goals applicable to each Participant\nfor the Performance Period were achieved or exceeded. The Award for each\nParticipant shall be determined by applying the Payout Formula to the level of\nactual performance that has been certified by the Committee. Notwithstanding\nany contrary provision of the Plan, the Committee, in its sole discretion, may\neliminate or reduce the Award payable to any Participant below that which\notherwise would be payable under the Payout Formula.<\/p>\n\n\n\n
(b)   Right to Receive Payment<\/i>. Each\nAward under the Plan shall be paid solely from the general assets of the\nCompany. Nothing in this Plan shall be construed to create a trust or to\nestablish or evidence any Participant\u0092s claim of any right to payment of an\nAward other than as an unsecured general creditor with respect to any payment\nto which he or she may be entitled.<\/p>\n\n\n\n
(c)   Form of Distributions<\/i>. The Company\nshall distribute all Awards to the Participant in cash.<\/p>\n\n\n\n
(d)   Timing of Distributions<\/i>. Subject\nto Section 8(e) below, the Company shall distribute amounts payable to\nParticipants as soon as is practicable following the determination and written\ncertification of the Award for a Performance Period, but in no event later than\n90 days after the end of the applicable Performance Period.<\/p>\n\n\n\n
(e)   Deferral<\/i>. The Committee may defer\npayment of Awards, or any portion thereof, to Covered Employees as the\nCommittee, in its discretion, determines to be necessary or desirable to\npreserve the deductibility of such amounts under Section 162(m). In\naddition, the Committee, in its sole discretion, may permit a Participant to\ndefer receipt of the payment of cash that would otherwise be delivered to a\nParticipant under the Plan. Any such deferral elections shall be subject to\nsuch rules and procedures as shall be determined by the Committee in its sole discretion.<\/p>\n\n\n\n
9.               <\/i>Term of Plan<\/i>. The\nPlan shall first apply to the Company\u0092s 2005 Plan Year. The Plan shall\nterminate with respect to the 2005 Plan Year and all subsequent Plan Years\nunless it is approved at the 2005 annual meeting of the Company\u0092s shareholders.\nOnce approved by the Company\u0092s shareholders, the Plan shall continue until\nterminated under Section 10 of the Plan.<\/p>\n\n\n\n
10.         <\/i>Amendment and Termination of the Plan<\/i>. The Committee may amend, modify, suspend or terminate the Plan, in\nwhole or in part, at any time, including the adoption of amendments deemed\nnecessary or desirable to correct any defect or to supply omitted data or to\nreconcile any inconsistency in the Plan or in any Award granted hereunder;\nprovided, however, that no amendment, alteration, suspension or discontinuation\nshall be made which would (i) impair any payments to Participants made\nprior to such amendment, modification, suspension or termination, unless the\nCommittee has made a determination that such amendment or modification is in\nthe best interests of all persons to whom Awards have theretofore been granted;\nprovided further, however, that in no event may such an amendment or\nmodification result in an increase in the amount of compensation payable\npursuant to such Award or (ii) cause compensation that is, or may become,\npayable hereunder to fail to qualify as Performance-Based Compensation.\nTo the extent necessary or advisable under applicable law, including\nSection 162(m), Plan amendments shall be subject to shareholder approval.\nAt no time before the actual distribution of funds to Participants under the\nPlan shall any Participant accrue any vested interest or right whatsoever under\nthe Plan except as otherwise stated in this Plan.<\/p>\n\n\n\n
11.         <\/i>Withholding<\/i>.\nDistributions pursuant to this Plan shall be subject to all applicable federal\nand state tax and withholding requirements.<\/p>\n\n\n\n
12.         <\/i>At-Will Employment<\/i>. No\nstatement in this Plan should be construed to grant any employee an employment\ncontract of fixed duration or any other contractual rights, nor should this\nPlan be <\/p>\n\n\n\n
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interpreted\nas creating an implied or an expressed contract of employment or any other\ncontractual rights between the Company and its employees. The employment\nrelationship between the Company and its employees is terminable at-will. This\nmeans that an employee or the Company may terminate the employment relationship\nat any time and for any reason or no reason.<\/p>\n\n\n\n
13.         <\/i>Successors<\/i>. All\nobligations of the Company under the Plan, with respect to awards granted\nhereunder, shall be binding on any successor to the Company, whether the\nexistence of such successor is the result of a direct or indirect purchase,\nmerger, consolidation, or otherwise, of all or substantially all of the\nbusiness or assets of the Company.<\/p>\n\n\n\n
14.         <\/i>Indemnification<\/i>. Each\nperson who is or shall have been a member of the Committee, or of the Board,\nshall be indemnified and held harmless by the Company against and from\n(a) any loss, cost, liability, or expense that may be imposed upon or\nreasonably incurred by him or her in connection with or resulting from any\nclaim, action, suit, or proceeding to which he or she may be a party or in\nwhich he or she may be involved by reason of any action taken or failure to act\nunder the Plan or any award, and (b) from any and all amounts paid by him\nor her in settlement thereof, with the Company\u0092s approval, or paid by him or\nher in satisfaction of any judgment in any such claim, action, suit, or\nproceeding against him or her, provided he or she shall give the Company an\nopportunity, at its own expense, to handle and defend the same before he or she\nundertakes to handle and defend it on his or her own behalf. The foregoing\nright of indemnification shall not be exclusive of any other rights of indemnification\nto which such persons may be entitled under the Company\u0092s Certificate of\nIncorporation or Bylaws, by contract, as a matter of law, or otherwise, or\nunder any power that the Company may have to indemnify them or hold them\nharmless.<\/p>\n\n\n\n
15.         <\/i>Nonassignment<\/i>. The\nrights of a Participant under this Plan shall not be assignable or transferable\nby the Participant except by will or the laws of intestacy.<\/p>\n\n\n\n
16.         <\/i>Governing Law<\/i>. The\nPlan shall be governed by the laws of the State of California.<\/p>\n\n\n\n
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