<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
APPLE COMPUTER, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 24, 1999
To Holders of Common Stock of
Apple Computer, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Apple
Computer, Inc., a California corporation (the "Company"), will be held on
Wednesday, March 24, 1999 at 10:00 a.m., local time, at the Company's principal
executive offices located at 1 Infinite Loop, Cupertino, California 95014, for
the following purposes, as more fully described in the accompanying Proxy
Statement:
1. To elect three Class I directors to the Company's Board of Directors.
2. To approve an amendment to the Company's Restated Articles of
Incorporation to eliminate the classification of the Company's Board of
Directors and thereby ensure that each director will stand for election
annually.
3. To ratify the appointment of KPMG LLP as independent auditors of the
Company for fiscal year 1999.
4. To transact such other business as may properly come before the meeting
and any postponement(s) or adjournment(s) thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure that each shareholder's vote is counted at the meeting,
shareholders are requested to mark, sign, date and return the enclosed proxy
card as promptly as possible in the envelope provided. Shareholders attending
the meeting may vote in person even if they have previously returned proxy
cards.
Only shareholders of record as of the close of business on January 29, 1999
are entitled to receive notice of, to attend and to vote at the meeting.
Sincerely,
[SIGNATURE]
NANCY R. HEINEN
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Cupertino, California
February 9, 1999
<PAGE>
APPLE COMPUTER, INC.
1 INFINITE LOOP
CUPERTINO, CALIFORNIA 95014
PROXY STATEMENT
INTRODUCTION
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"BOARD") of Apple Computer, Inc., a California corporation (the "COMPANY"), for
use at the Company's annual meeting of shareholders (the "ANNUAL MEETING") to be
held on Wednesday, March 24, 1999 at 10:00 a.m., local time, and at any
postponement(s) or adjournment(s) thereof. The purposes of the Annual Meeting
are set forth in this Proxy Statement and in the accompanying Notice of Annual
Meeting of Shareholders. The Annual Meeting will be held at the Company's
principal executive offices at the address set forth above.
The Company's complete mailing address is 1 Infinite Loop, Cupertino,
California 95014, and its telephone number is (408) 996-1010. Georgeson &
Company Inc., which is assisting with the mechanics of the return of the
proxies, may be contacted at (800) 223-2064.
These proxy solicitation materials were mailed on or about February 9, 1999
to all shareholders entitled to vote at the Annual Meeting.
PROCEDURAL MATTERS
Shareholders of record as of the close of business on January 29, 1999 (the
"RECORD DATE") are entitled to notice of, to attend and to vote at the Annual
Meeting. There were 136,416,662 shares of Common Stock issued and outstanding on
the Record Date. Each share has one vote on all matters. The closing sale price
of Common Stock as reported on the Nasdaq National Market on the Record Date was
$41.188 per share.
A shareholder may revoke any proxy given pursuant to this solicitation by
attending the Annual Meeting and voting in person, or by delivering to the
Company's Corporate Secretary at the Company's principal executive offices
referred to above, prior to the Annual Meeting, a written notice of revocation
or a duly executed proxy bearing a date later than that of the previously
submitted proxy.
The Company will bear the cost of this solicitation. The Company has
retained the services of Georgeson & Company Inc. to assist in obtaining proxies
from brokers and nominees of shareholders for the Annual Meeting. The estimated
cost of such services is $14,000 plus out-of-pocket expenses. In addition, the
Company will reimburse brokerage firms and other persons representing beneficial
owners of shares for their reasonable expenses in forwarding solicitation
material to such beneficial owners. Certain of the Company's directors, officers
and regular employees, without additional compensation, may solicit proxies
personally or by telephone, facsimile or telegram.
Attendance at the Annual Meeting is limited to shareholders. Admission to
the meeting will be on a first-come, first-served basis. Registration will begin
at 9:00 a.m. and each shareholder may be asked to present valid picture
identification such as a driver's license or passport. Cameras, recording
devices and other electronic devices will not be permitted at the meeting.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
In the election of directors, the three candidates receiving the highest
number of affirmative votes will be elected as directors. Proposal 2 requires
for approval the affirmative vote of a majority of the shares of Common Stock of
the Company outstanding as of the Record Date. Proposal 3 requires for approval
(i) the affirmative vote of a majority of the shares "represented and voting"
and (ii) the affirmative vote of a majority of the required quorum. The required
quorum for the transaction of business at the Annual Meeting is a majority of
the shares of Common Stock issued and outstanding on the Record Date (the
"QUORUM"). Shares that are voted "FOR", "AGAINST" or "ABSTAIN" in a matter are
treated as being present at the meeting for purposes of establishing the Quorum,
but only shares voted "FOR" or
<PAGE>
"AGAINST" are treated as shares "represented and voting" at the Annual Meeting
(the "VOTES CAST") with respect to such matter. Accordingly, abstentions and
broker non-votes will be counted for purposes of determining the presence or
absence of the Quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to a proposal.
INTERNET VOTING
Shareholders whose shares are registered in the name of a bank or brokerage
firm, may be eligible to vote electronically through the Internet or by
telephone. A large number of banks and brokerage firms are participating in the
ADP Investor Communication Services online program. This program provides
eligible shareholders the opportunity to vote via the Internet or by telephone.
Voting forms will provide instructions for shareholders whose bank or brokerage
firm is participating in ADP's program. Shareholders whose form does not
reference Internet or telephone voting information, should complete and return
the enclosed paper proxy card. Signing and returning the proxy card or
submitting the proxy via the Internet or by telephone does not affect the right
to vote in person at the Annual Meeting.
DIRECTORS
The name of, principal occupation of, and certain additional information
about each of the three nominees and the three current directors with unexpired
terms are set forth below.
Shareholders are being asked to approve an amendment to the Company's
Restated Articles of Incorporation which would, if approved, eliminate the
classification of the Board and ensure that each director will stand for
election annually. For a description of this proposal, see the section of this
Proxy Statement entitled "PROPOSAL NO. 2--APPROVAL OF AN AMENDMENT TO THE
COMPANY'S RESTATED ARTICLES OF INCORPORATION TO ELIMINATE CLASSIFICATION OF THE
BOARD OF DIRECTORS".
Listed below are the Class I directors nominated for re-election at the
Annual Meeting. If shareholders approve the proposal to declassify the Board,
all of the directors elected at the Annual Meeting will serve a one-year term
expiring at the next annual meeting of shareholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ---------------------------------------------- -------------------------------------------------- --- -----------
<S> <C> <C> <C>
William V. Campbell........................... Director 58 1997
Gareth C.C. Chang............................. Director 55 1996
Jerome B. York................................ Director 60 1997
</TABLE>
Listed below are the Class II directors whose two-year terms do not expire
until the next annual meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ------------------------------------------------------------ -------------------------------------------- ---- --------
<S> <C> <C> <C>
Steven P. Jobs.............................................. Director and interim Chief Executive Officer 43 1997
Lawrence J. Ellison......................................... Director 54 1997
Edgar S. Woolard, Jr........................................ Director 64 1996
</TABLE>
WILLIAM V. CAMPBELL has been chairman of the Board of Directors of Intuit,
Inc. since August 1998. Mr. Campbell was President and Chief Executive Officer
and a director of Intuit, Inc. from April 1994 to August 1998. From January 1991
to December 1993, Mr. Campbell was President and Chief Executive Officer of GO
Corporation. Mr. Campbell also serves on the board of directors of Netscape
Communications Corporation, SanDisk Corporation and Great Plains Software.
2
<PAGE>
GARETH C. C. CHANG was appointed September 1, 1998 as Executive Chairman of
STAR TV. Prior to joining STAR TV, Mr. Chang was President of Hughes Electronics
International and Corporate Senior Vice President of Hughes Electronics since
1993. Previously, he was Corporate Vice President of McDonnell Douglas
Corporation. He is currently a director of Mallinckrodt, Inc., a director of
News Corp. and a member of the Advisory Council of Nike Inc.
LAWRENCE J. ELLISON has been Chief Executive Officer and a director of
Oracle Corporation ("ORACLE") since he co-founded Oracle in May 1977, and was
President of Oracle until June 1996. Mr. Ellison has been Chairman of the Board
of Oracle since June 1995. Mr. Ellison is a director of SuperGen, Inc., Dian
Fossey Gorilla Fund and Co-Chairman of California's Council on Information
Technology.
STEVEN P. JOBS is one of the Company's co-founders and currently serves as
its interim Chief Executive Officer. Mr. Jobs is also the Chairman and Chief
Executive Officer of Pixar Animation Studios. In addition, Mr. Jobs co-founded
NeXT Software, Inc. ("NEXT") and served as the Chairman and Chief Executive
Officer of NeXT from 1985 until 1997 when NeXT was acquired by the Company.
EDGAR S. WOOLARD, JR. has served as Chairman of the Board of Directors of
Conoco Inc. since July 1998. He served as Chairman of the Board of Directors of
E. I. DuPont de Nemours & Co. ("DUPONT") until October 1997. Previously, he held
the positions of President and Chief Executive Officer of DuPont. He is
currently a director of CITIGROUP, Inc. and DuPont.
JEROME B. YORK has served as Vice Chairman of Tracinda Corporation since
September 1995. In May 1993, he joined International Business Machines
Corporation ("IBM") as Senior Vice President and Chief Financial Officer, and he
served as a director of IBM from January 1995 to August 1995. Prior to joining
IBM, Mr. York served in a number of executive positions at Chrysler Corporation,
including Executive Vice President-Finance and Chief Financial Officer from May
1990 to May 1993. He also served as a director of Chrysler Corporation from 1992
to 1993. Mr. York is also a director of Waste Management, Inc., MGM Grand, Inc.
and Metro-Goldwyn-Mayer, Inc.
BOARD MEETINGS AND COMMITTEES
The Board met a total of eight times during fiscal year 1998. The Board has
a standing Audit and Finance Committee and a Compensation Committee.
The current members of the Board's Audit and Finance Committee are Messrs.
York and Campbell, neither of whom is an employee of the Company. The Audit and
Finance Committee is primarily responsible for reviewing the services performed
by the Company's independent auditors and internal audit department, evaluating
the Company's accounting policies and its system of internal controls and
reviewing significant financial transactions. The Audit and Finance Committee
met five times during fiscal year 1998.
The current members of the Board's Compensation Committee are Messrs.
Woolard and Chang, neither of whom is an employee of the Company. No person who
was an employee of the Company served on the Compensation Committee in fiscal
year 1998. The Compensation Committee is primarily responsible for reviewing
compensation to be paid to officers of the Company and for administering the
Company's equity-based incentive plans. The Compensation Committee met five
times during fiscal year 1998.
During fiscal year 1998, with the exception of Mr. Ellison, no director
attended fewer than 75% of the aggregate of all meetings of the Board and the
committees, if any, upon which such director served and which were held during
the period of time that such person served on the Board or such committee.
3
<PAGE>
DIRECTOR COMPENSATION
In 1997, the Company ended its practice of paying cash retainers and fees to
directors, and approved the Apple Computer, Inc. 1997 Director Stock Option Plan
(the "DIRECTOR PLAN"). The Director Plan was approved by the shareholders in
April 1998 and 400,000 shares have been reserved for issuance under the Director
Plan. Pursuant to the Director Plan, the Company's non-employee directors are
granted an option to acquire 30,000 shares of Common Stock upon their initial
election to the Board ("INITIAL OPTIONS"). On the fourth anniversary of a
non-employee director's initial election to the Board and on each subsequent
anniversary, the director will be entitled to receive an option to acquire
10,000 shares of Common Stock ("ANNUAL OPTIONS"). Initial Options vest and
become exercisable in equal annual installments on each of the first through
third anniversaries of the date of grant. Annual Options are fully vested and
immediately exercisable on their date of grant. As of December 31, 1998, there
were 150,000 shares outstanding under the Director Plan.
EXECUTIVE OFFICERS
The following sets forth certain information regarding executive officers of
the Company. Information pertaining to Mr. Jobs, who is both a director and an
executive officer of the Company, may be found in the section entitled
"DIRECTORS".
FRED D. ANDERSON, Executive Vice President and Chief Financial Officer (age
54) joined the Company in April 1996. Prior to joining the Company, Mr. Anderson
was Corporate Vice President and Chief Financial Officer of Automatic Data
Processing, Inc. ("ADP"), a position he held from August 1992 to March 1996.
Prior to joining ADP, Mr. Anderson held several domestic and international
executive positions at MAI Basic Four, Inc., including President and Chief
Operating Officer.
TIMOTHY D. COOK, Senior Vice President, Worldwide Operations (age 38) joined
the Company in February 1998. Prior to joining the Company, Mr. Cook held the
position of Vice President, Corporate Materials for Compaq Computer Corporation
("COMPAQ"). Previous to his work at Compaq, Mr. Cook was the Chief Operating
Officer of the Reseller Division at Intelligent Electronics. Mr. Cook also spent
12 years with IBM, most recently as Director of North American Fulfillment.
NANCY R. HEINEN, Senior Vice President, General Counsel and Secretary (age
42) joined the Company in September 1997. Prior to joining the Company, Ms.
Heinen held the position of Vice President, General Counsel and Secretary of the
Board of Directors at NeXT from February 1994 until the acquisition of NeXT by
the Company in February 1997. Prior to joining NeXT, Ms. Heinen was Group
Counsel and Assistant Secretary at Tandem Computers Incorporated from 1989 to
1994, and previously had been employed in private legal practice.
MITCHELL MANDICH, Senior Vice President, Worldwide Sales (age 50) joined the
Company in February 1997 upon the Company's acquisition of NeXT. Mr. Mandich has
also served the Company in the position of Vice President, North American
Business Division. Prior to joining the Company, Mr. Mandich held the position
of Vice President, Worldwide Sales and Service with NeXT from December 1995
through February 1997. Before joining NeXT, Mr. Mandich served in the position
of Senior Vice President, Americas Sales and Marketing with Pyramid Technology
Corporation from January 1993 to November 1995.
JONATHAN RUBINSTEIN, Senior Vice President, Hardware Engineering (age 42),
joined the Company in February 1997. Before joining the Company, Mr. Rubinstein
was Executive Vice President and Chief Operating Officer of FirePower Systems
Incorporated ("FIREPOWER"), from May 1993 to August 1996. Before joining
FirePower, Mr. Rubinstein was Vice President and General Manager, Hardware and
Vice President, Hardware Engineering at NeXT.
4
<PAGE>
AVADIS TEVANIAN, JR., PH.D., Senior Vice President, Software Engineering
(age 37), joined the Company in February 1997 upon the Company's acquisition of
NeXT. With NeXT, Dr. Tevanian held several positions, including Vice President,
Engineering, from April 1995 to February 1997. Prior to April 1995, Dr. Tevanian
worked as an engineer with NeXT and held several management positions.
SINA TAMADDON, Senior Vice President, Service & Support (age 41) joined the
Company in September 1997. Mr. Tamaddon has also served with the Company in the
position of Vice President and General Manager, Newton Group. Before joining the
Company, Mr. Tamaddon held the position of Vice President, Europe with NeXT from
September 1996 through March 1997. From August 1994 to August 1996, Mr. Tamaddon
held the position of Vice President, Professional Services with NeXT. Prior to
joining NeXT, Mr. Tamaddon served as Vice President, Advanced Technology for
Software Alliance Incorporated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 31, 1998
(the "TABLE DATE") with respect to the beneficial ownership of the Company's
Common Stock by (i) each person the Company believes beneficially holds more
than 5% of the outstanding shares of Common Stock; (ii) each director; (iii)
each Named Executive Officer listed in the Summary Compensation Table under the
heading "EXECUTIVE COMPENSATION" and (iv) all directors and executive officers
as a group. On the Table Date, 135,637,884 shares of Common Stock were issued
and outstanding. Unless otherwise indicated, all persons named as beneficial
owners of Common Stock have sole voting power and sole investment power with
respect to the shares indicated as beneficially owned.
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK OUTSTANDING
- ------------------------------------------- ----------------------- -------------------------
<S> <C> <C>
Fred D. Anderson........................... 97,170(1) *
William V. Campbell........................ 10,251(2) *
Gareth C. C. Chang......................... 12,000(2) *
Timothy D. Cook............................ 175,000(3) *
Lawrence J. Ellison........................ 10,000(2) *
Steven P. Jobs............................. 10,001(2) *
Mitchell Mandich........................... 179,463(4) *
Jonathan Rubinstein........................ 76,853(5) *
Edgar S. Woolard, Jr....................... 18,000(2) *
Jerome B. York............................. 20,000(2) *
All executive officers and directors as a
group (13 persons)........................ 863,324(6) *
</TABLE>
- --------------------------
(1) Includes 95,834 shares of Common Stock which Mr. Anderson has the right to
acquire by exercise of stock options.
(2) Includes 10,000 shares of Common Stock which Messrs. Campbell, Chang,
Ellison, Jobs, Woolard and York have the right to acquire by exercise of
stock options.
(3) Constitutes 175,000 shares of Common Stock which Mr. Cook has the right to
acquire by exercise of stock options.
(4) Constitutes 179,463 shares of Common Stock which Mr. Mandich has the right
to acquire by exercise of stock options.
(5) Includes 75,000 shares of Common Stock which Mr. Rubinstein has the right to
acquire by exercise of stock options.
(6) Represents shares of Common Stock held by 13 executive officers and
directors and options held by such individuals that were exercisable at the
Table Date or within 60 days thereafter.
* Amount represents less than 1% of the issued and outstanding shares of
Common Stock on the Table Date.
5
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent shareholders also are required by rules promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, the absence of a Form 3 or Form 5 or written representations that no
Forms 5 were required, the Company believes that, during fiscal year 1998, its
officers, directors and greater than ten percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "COMMITTEE"). The role of
the Committee, which is comprised of two outside non-employee directors, is to
review and approve the base salaries, bonuses, stock options and other
compensation of the executive officers and management-level employees of the
Company. The Committee also administers the Company's stock option plans and
makes grants to executive officers under the 1998 Executive Officer Stock Plan.
The Company's executive compensation program utilizes Company performance,
individual performance and an increase in stockholder value over time as
determinants of executive pay levels. These principles are intended to motivate
executive officers to improve the financial position of the Company, to hold
executives accountable for the performance of the organizations for which they
are responsible, to attract key executives into the service of the Company and
to create value for the Company's shareholders. The compensation for executive
officers is based on two elements: Cash compensation and equity-based
compensation.
CASH COMPENSATION
The Company reviews executive compensation surveys in both the computer
industry and general industry to ensure that the total cash compensation
provided to executive officers and senior management remains at a competitive
level to enable the Company to attract and retain management personnel with the
talents and skills required to meet the challenges of a highly competitive
industry. The compensation of executive officers, other than Mr. Jobs, interim
Chief Executive Officer, is reviewed annually by the Committee.
BONUSES
For fiscal year 1998, the Compensation Committee approved the FY98 Vice
Presidents and Directors Incentive Bonus Plan (the "BONUS PLAN"), under which
cash bonuses for employees at the level of director and above were determined
based on specified revenue and profit targets for the Company. Executive
officers and members of the Board of Directors are not eligible to participate
in the Bonus Plan.
6
<PAGE>
EQUITY-BASED COMPENSATION
In fiscal year 1998, the Compensation Committee emphasized equity-based
compensation, principally in the form of options, as the cornerstone of the
Company's executive compensation program. Equity awards are typically set by the
Compensation Committee based on industry surveys, each officer's individual
performance and achievements, market factors and the recommendations of
management. In fiscal year 1998, executive officers were eligible to receive
grants of stock options under the Apple Computer, Inc. 1998 Executive Officer
Stock Plan and its predecessor plan, the 1990 Stock Option Plan. In addition,
executive officers were eligible to participate in the Company's Employee Stock
Purchase Plan.
During fiscal year 1998, four executive officers of the Company received new
option grants under the 1990 Stock Option Plan. No executive officers received
options under the 1998 Executive Officer Stock Plan. The Options granted under
the 1990 Stock Option Plan were at an exercise price equal to the fair market
value of the Common Stock and generally vest in equal increments over a
four-year period after grant, subject to the participant's continued employment
with the Company. All options granted under the 1990 Stock Option Plan expire
ten years from the date of grant, unless a shorter term is provided in the
option agreement or the participant's employment with the Company ends before
the end of such ten-year period.
In December 1997, the Compensation Committee also reviewed the employees'
outstanding options and determined that many employees of the Company held
options at exercise prices that limited their effectiveness as a tool for
employee retention and as a long-term incentive. To address this problem, the
Compensation Committee consulted with an independent benefits consultant and,
after considering various methods of dealing with this problem, recommended to
the Board of Directors the stock option exchange program (the "EXCHANGE
PROGRAM"). Under the Exchange Program, current employees of the Company were
permitted to exchange all of their options with an exercise price of greater
than $13.6875 on a one-for-one basis for new stock options with an exercise
price of $13.6875, the fair market value of the Common Stock on December 19,
1997, and a new four year vesting schedule. Six executive officers elected to
participate in the Exchange Program.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Jobs, the Company's interim Chief Executive Officer, received $1 for the
services he performed for the Company in fiscal year 1998.
SECTION 162(m)
The Company intends that options granted under the Company's stock option
plans be deductible by the Company under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
MEMBERS OF THE COMPENSATION COMMITTEE
Edgar S. Woolard, Jr. (Chairman) Gareth C.C. Chang
7
<PAGE>
INFORMATION REGARDING EXECUTIVE COMPENSATION
The following table summarizes compensation information for the last three
fiscal years for (i) Mr. Jobs, interim Chief Executive Officer and (ii) the four
most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers of the Company at the end of the
fiscal year (collectively, the "NAMED EXECUTIVE OFFICERS").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------
SECURITIES
------------------------ RESTRICTED UNDERLYING
NAME AND PRINCIPAL FISCAL SALARY BONUS STOCK AWARDS OPTIONS
POSITION (1)(2) YEAR ($) ($) ($) (#)
- ------------------------------ ------ -------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Steven P. Jobs................ 1998 1 -- -- --
Interim Chief Executive
Officer 1997 -- -- -- 30,000(1)
1996 -- -- -- --
Fred D. Anderson.............. 1998 604,283 -- -- 250,000(2)
Executive Vice President 1997 520,311 -- 40,748(4) 850,000(5)
and Chief Financial Officer 1996 252,156 1,275,000 -- 400,000
Timothy D. Cook............... 1998 223,953 500,000(8) -- 700,000
Senior Vice President, 1997 -- -- -- --
Worldwide Operations 1996 -- -- -- --
Mitchell Mandich.............. 1998 402,253 -- -- 424,250(2)
Senior Vice President, 1997 174,348 104,000 -- 565,050(5)(11)
Worldwide Sales 1996 -- -- -- --
Jonathan Rubinstein........... 1998 402,095 -- -- 300,000(2)
Senior Vice President, 1997 250,262 100,000 19,108(4) 700,000(5)
Hardware Engineering 1996 -- -- -- --
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION (1)(2) ($)
- ------------------------------ ------------------
<S> <C>
Steven P. Jobs................ --
Interim Chief Executive
Officer --
--
Fred D. Anderson.............. 60,123(3)
Executive Vice President 250,489(6)
and Chief Financial Officer 141,361(7)
Timothy D. Cook............... 90,849(9)
Senior Vice President, --
Worldwide Operations --
Mitchell Mandich.............. 8,118(10)
Senior Vice President, 1,730(10)
Worldwide Sales --
Jonathan Rubinstein........... 4,804(10)
Senior Vice President, 1,864(10)
Hardware Engineering --
</TABLE>
- --------------------------
(1) Mr. Jobs was granted 30,000 stock options in his capacity as a director of
the Company pursuant to the 1997 Director Stock Option Plan.
(2) Includes the replacement of 250,000, 224,250 and 300,000 options that were
previously granted to Messrs. Anderson, Mandich and Rubinstein,
respectively, and canceled pursuant to the stock option exchange program.
Other than the replacement options, Messrs. Anderson and Rubinstein were
not granted any options during the fiscal year.
(3) Includes $55,000 in relocation assistance and $5,123 in matching
contributions made by the Company in accordance with the terms of the
401(k) plan.
(4) For fiscal year 1997, these amounts represent the value on February 5, 1997
of the Common Stock underlying the Performance Shares earned by the Named
Executive Officers under the terms of the Senior Officers Restricted
Performance Share Plan.
The amounts of Common Stock earned by participating Named Executive
Officers are as follows: Mr. Anderson--2,672; Mr. Rubinstein--1,253. No
dividends were paid on the Performance Shares. As of the last day of fiscal
year 1997, the Named Executive Officers held no other Performance Shares or
restricted stock.
(5) Includes the replacement of 500,000, 50,000 and 200,000 options that were
previously granted to Messrs. Anderson, Mandich and Rubinstein
respectively, and canceled pursuant to the Exchange Program.
(6) Consists of $245,497 in relocation assistance and $4,992 in matching
contributions made by the Company in accordance with the terms of its
401(k) plan.
(7) Consists of $140,155 in relocation assistance and $1,206 in matching
contributions made by the Company in accordance with the terms of its
401(k) plan.
(8) In connection with his employment, Mr. Cook received a one-time hiring
bonus in the amount of $500,000.
(9) Consists of $86,049 in relocation assistance and $4,800 in matching
contributions made by the Company in accordance with the terms of its
401(k) plan.
(10) Consists of matching contributions made by the Company in accordance with
the terms of its 401(k) plan.
(11) Includes 240,800 NeXT options which were converted into Apple options
during fiscal year 1997 in connection with Apple's acquisition of NeXT.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information about option grants to the Named
Executive Officers during fiscal year 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OR OPTION TERM(3)
OPTIONS GRANTED FISCAL YEAR BASE PRICE EXPIRATION ----------------------
NAME (#) (1) ($/SH)(2) DATE 5% ($) 10% ($)
- ------------------------------------ --------------- --------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Steven P. Jobs...................... -- 0.00% -- -- -- --
Fred D. Anderson.................... 250,000(4) 1.80% 13.6875 12/19/07 2,151,999 5,453,587
Timothy D. Cook..................... 700,000 5.04% 17.6875 2/02/08 7,786,502 19,732,524
Mitchell Mandich.................... 224,250(4) 1.62% 13.6875 12/19/07 1,930,343 4,891,868
200,000 1.44% 13.125 12/29/07 1,650,848 4,183,574
Jonathan Rubinstein................. 300,000(4) 2.16% 13.6875 12/19/07 2,582,399 6,544,305
</TABLE>
- --------------------------
(1) Based on an aggregate of 13,879,349 options granted to all employees during
fiscal year 1998, including 4,707,220 options granted in exchange for the
cancellation of the same number of outstanding options as of December 19,
1997 on a one-for-one basis pursuant to the Exchange Program. Options
typically vest in four equal annual installments commencing on the first
anniversary of the date of grant.
(2) All options were granted at an exercise price equal to the fair market value
based on the closing market value of Common Stock on the Nasdaq National
Market on the date of grant.
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on SEC rules, and do not represent the Company's estimate or
projection of the price of the Company's stock in the future. Actual gains,
if any, on stock option exercises depend upon the actual future price of
Common Stock and the continued employment of the option holders throughout
the vesting period. Accordingly, the potential realizable values set forth
in this table may not be achieved.
(4) Grants of stock options pursuant to the Exchange Program in exchange for the
cancellation of outstanding stock options. Messrs. Anderson and Rubinstein
did not receive any new grants of stock options in fiscal 1998.
9
<PAGE>
OPTIONS EXERCISED AND YEAR-END OPTION HOLDINGS
The following table provides information about stock option exercises by the
Named Executive Officers during fiscal year 1998 and stock options held by each
of them at fiscal year-end.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE (#) FISCAL YEAR-END ($)(2)
EXERCISE REALIZED -------------------------- --------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven P. Jobs....................... -- -- 10,000 20,000 157,500 315,000
Fred D. Anderson..................... 133,334 3,108,349 33,334 583,332 850,017 14,765,591
Timothy Cook......................... -- -- 0 700,000 0 14,743,750
Mitchell Mandich..................... 78,717 1,779,641 13,200 608,083 423,852 16,377,545
Jonathan Rubinstein.................. 66,667 1,552,661 0 433,333 0 10,918,741
</TABLE>
- --------------------------
(1) Market value of underlying securities (based on the fair market value of
Common Stock on the Nasdaq National Market) at the time of exercise, minus
the exercise price.
(2) Market value of securities underlying in-the-money options at the end of
fiscal year 1998 (based on $38.75 per share, the closing price of Common
Stock on the Nasdaq National Market on September 25, 1998), minus the
exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Board's Compensation Committee are Messrs.
Woolard and Chang, neither of whom is an employee of the Company. No person who
was an employee of the Company in fiscal year 1998 served on the Compensation
Committee in fiscal year 1998. During fiscal year 1998, no executive officer of
the Company (i) served as a member of the compensation committee (or other board
committee performing similar functions or, in the absence of any such committee,
the board of directors) of another entity, one of whose executive officers
served on the Company's Compensation Committee, (ii) served as a director of
another entity, one of whose executive officers served on the Company's
Compensation Committee, or (iii) served as a member of the compensation
committee (or other board committee performing similar functions or, in the
absence of any such committee, the board of directors) of another entity, one of
whose executive officers served as a director of the Company.
STOCK OPTION EXCHANGE PROGRAM
The following table sets forth certain information concerning the Exchange
Program, including (i) the name and position of each executive officer who
participated in the exchange program, (ii) the date of any such exchange, (iii)
the number of securities underlying exchanged options, (iv) the per share market
price of the underlying security at the time of the exchange, (v) the original
exercise price or base price of the canceled option at the time of exchange,
(vi) the per share exercise price of the option received in exchange for the
existing option and (vii) the original option term remaining at the date of
exchange.
10
<PAGE>
10-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE EXERCISE LENGTH OF
UNDERLYING OF STOCK AT PRICE AT NEW ORIGINAL OPTION
OPTIONS TIME OF TIME OF EXERCISE TERM REMAINING
DATE OF REPRICED REPRICING REPRICING PRICE AT DATE OF
NAME AND POSITION(1) REPRICING (#) ($) ($) ($) REPRICING
- ------------------------------------ ----------- ----------- ------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Fred D. Anderson.................... 12/19/97 250,000 13.6875 19.75 13.6875 9 years
Executive Vice President 8 months
and Chief Financial Officer 7/11/97 400,000 13.25 24.56 13.25 8 years
9 months
7/11/97 100,000 13.25 18.375 13.25 9 years
9 months
Guerrino De Luca (1)................ 7/11/97 200,000 13.25 17.00 13.25 9 years
Executive Vice President, 7 months
Marketing 7/11/97 28,000 13.25 26.38 13.25 7 years
9 months
7/11/97 20,000 13.25 19.88 13.25 8 years
11 months
7/11/97 15,000 13.25 29.50 13.25 6 years
5 months
7/11/97 8,000 13.25 26.38 13.25 6 years
7 months
7/11/97 8,000 13.25 26.38 13.25 7 years
4 months
7/11/97 7,500 13.25 23.75 13.25 6 years
3 months
7/11/97 5,600 13.25 26.38 13.25 4 years
7 months
7/11/97 5,600 13.25 26.38 13.25 5 years
6 months
7/11/97 5,000 13.25 29.75 13.25 1 year
0 months
7/11/97 2,914 13.25 29.75 13.25 2 years
9 months
7/11/97 2,800 13.25 26.38 13.25 4 years
2 months
7/11/97 1,336 13.25 29.75 13.25 1 year
9 months
John B. Douglas, III (1)............ 7/11/97 100,000 13.25 17.50 13.25 9 years
Senior Vice President, 6 months
General Counsel 7/11/97 40,000 13.25 18.375 13.25 9 years
And Secretary 9 months
7/11/97 25,000 13.25 16.50 13.25 9 years
8 months
Nancy R. Heinen..................... 12/19/97 250,000 13.6875 21.31 13.6875 9 years
Senior Vice President, 9 months
General Counsel and Secretary
Mitchell Mandich.................... 12/19/97 59,200 13.6875 19.75 13.6875 9 years
Senior Vice President, 8 months
Worldwide Sales 12/19/97 165,050 13.6875 22.94 13.6875 9 years
9 months
David Manovich (1).................. 7/11/97 200,000 13.25 16.50 13.25 9 years
Senior Vice President, 8 months
International Sales and Service
Jonathan Rubinstein................. 12/19/97 300,000 13.6875 19.75 13.6875 9 years
Senior Vice President, 8 months
Hardware Engineering 7/11/97 200,000 13.25 17.00 13.25 9 years
7 months
Sina Tamaddon....................... 12/19/97 250,000 13.6875 18.125 13.6875 9 years
Senior Vice President, 11 months
Service and Support
Avadis Tevanian, Jr................. 12/19/97 275,837 13.6875 19.75 13.6875 9 years
Senior Vice President, 8 months
Software Engineering 7/11/97 100,000 13.25 17.00 13.25 9 years
7 months
</TABLE>
- ------------------------------
(1) All options received by Messrs. De Luca, Manovich and Douglas pursuant to
the stock option exchange program were forfeited upon termination of
employment.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON THE STOCK OPTION EXCHANGE PROGRAM
In order to address concerns regarding the retention of the Company's key
employees, the Board of Directors approved the Exchange Program on December 21,
1997. Pursuant to the Exchange Program, all individuals who held stock options
granted under one of the Company's stock option plans, but excluding the
Director Stock Option Plan, were offered the opportunity to exchange all of
their stock options with an exercise price of greater than $13.6875 on a
one-for-one basis for new stock options with an exercise price of $13.6875, the
fair market value of the Common Stock on December 19, 1997, and a new four year
vesting schedule. All stock options issued under the Exchange Program will
expire on December 19, 2007. The Company's employees exchanged approximately 4.7
million stock options.
MEMBERS OF THE COMPENSATION COMMITTEE
Edgar S. Woolard, Jr. (Chairman) Gareth C.C. Chang
COMPANY STOCK PERFORMANCE
The following graph shows a five-year comparison of cumulative total
shareholder return, calculated on a dividend reinvested basis, for the Company,
the S&P 500 Composite Index (the "S&P 500") and the S&P Computers (Hardware)
Index (the "INDUSTRY INDEX"). The graph assumes $100 was invested in each of the
Common Stock, the S&P 500 and the Industry Index on September 24, 1993. Data
points on the graph are annual. Note that historic stock price performance is
not necessarily indicative of future stock price performance.
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON SEPTEMBER 24, 1993
WITH DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
24-SEP-93 30-SEP-94 29-SEP-95 27-SEP-96 26-SEP-97 25-SEP-98
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Apple Computer Inc. $ 100 $ 137 $ 153 $ 92 $ 88 $ 160
S&P 500 $ 100 $ 104 $ 135 $ 162 $ 228 $ 255
S&P Computers (Hardware) $ 100 $ 145 $ 208 $ 251 $ 467 $ 568
</TABLE>
12
<PAGE>
ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company has from time to time entered into employment, retention and
severance arrangements with certain of its Named Executive Officers. A summary
of the terms of such arrangements is set forth in the following paragraphs.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company entered into an employment agreement with Mr. Anderson effective
April 1, 1996, pursuant to which he serves as Executive Vice President and Chief
Financial Officer of the Company. Pursuant to his agreement, Mr. Anderson is
entitled to an annual base salary of no less than $500,000. If Mr. Anderson's
employment is terminated by the Company without "Cause" at any time during the
five-year period following April 1, 1996, he will be entitled to receive a lump
sum severance payment equal to the sum of his annual base salary and target
bonus, if any. Mr. Anderson's agreement generally defines "Cause" to include a
felony conviction, willful disclosure of confidential information or willful and
continued failure to perform his employment duties.
In February 1998, Mr. Cook joined the Company as Senior Vice President,
Worldwide Operations. Under the terms of his employment, he is entitled to an
annual base salary of no less than $400,000. In addition, Mr. Cook received a
one-time hiring bonus in the amount of $500,000 and a stock option grant with a
sell-back provision. The sell-back provision provides that during the five-day
period starting on the second anniversary of his commencement of employment, he
may elect to sell all of his remaining vested and unvested options and shares
(obtained through the exercise of such options) back to the Company for the sum
of $3 million less any profits Mr. Cook has realized to date through the
exercise and sale of such options. If Mr. Cook's employment is terminated by the
Company without "Cause" during the first two years of his employment, he will be
entitled to receive an amount equal to $800,000 minus the total base salary he
has received since the start of his employment. In addition, he will be allowed
to immediately exercise the stock option sell-back provision described above.
CHANGE IN CONTROL ARRANGEMENTS--STOCK OPTIONS
In the event of a "change in control" of the Company, all outstanding
options under the Company's stock option plans, except the Director Stock Option
Plan, will, unless otherwise determined by the plan administrator, become
exercisable in full, and will be cashed out at an amount equal to the difference
between the applicable "change in control price" and the exercise price. The
Director Stock Option Plan provides that upon a "change in control" of the
Company, all unvested options held by non-employee directors will automatically
become fully vested and exercisable and will be cashed out at an amount equal to
the difference between the applicable "change in control price" and the exercise
price of the options. A "change in control" under these plans is generally
defined as (i) the acquisition by any person of 50% or more of the combined
voting power of the Company's outstanding securities or (ii) the occurrence of a
transaction requiring shareholder approval and involving the sale of all or
substantially all of the assets of the Company or the merger of the Company with
or into another corporation.
In addition, options granted to Timothy D. Cook, Nancy R. Heinen, Mitchell
Mandich and Sina Tamaddon provide that in the event there is a "change in
control", as defined in the Company's stock option plans, and if in connection
with or following such "change in control", their employment is terminated
without "Cause" or if they should resign for "Good Reason", those options
outstanding that are not yet vested and exercisable as of the date of such
"change in control", shall become fully vested and exercisable. Generally,
"Cause" is defined to include a felony conviction, willful disclosure of
confidential information or willful and continued failure to perform his or her
employment duties. "Good Reason" includes resignation of employment as a result
of a substantial diminution in position or duties, or an adverse change in title
or reduction in annual base salary.
13
<PAGE>
CHANGE IN CONTROL ARRANGEMENTS--RETENTION AGREEMENTS
The Company is currently party to retention agreements (the "RETENTION
AGREEMENTS") with three executive officers (Messrs. Anderson, Rubinstein and
Tevanian) providing for certain cash payments in the event of a termination of
an executive's employment following a change in control of the Company. For
purposes of the Retention Agreements, a "change in control" is defined as (i) a
reorganization, merger, consolidation or other corporate transaction in which
the holders of voting stock of the Company immediately before the corporate
transaction will not own more than 50% of the voting shares of the continuing or
surviving corporation immediately after such corporate transaction, (ii) the
acquisition of 30% or more of the combined voting power of the Company's
then-outstanding securities, (iii) a change of 50% in the membership of the
Board within a two-year period, unless the election or nomination for election
by shareholders of an adequate number of directors within such period was
approved by the vote of at least three-fourths of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, (iv) all or
substantially all of the assets of the Company are sold, liquidated or
distributed, or (v) a "change in control" or a "change in the effective control"
of the Company within the meaning of Section 280G of the Code.
In the event of an Involuntary Termination (as defined in the Retention
Agreements) of any executive officer who is a party to a Retention Agreement
within two years following a change in control, such executive officer will
receive a cash payment equal to the sum of (i) three times his annual base
salary immediately prior to the date of his termination or, if greater, the
highest annualized base salary in effect during the three-year period ending on
the change in control, and (ii) three times his target bonus for the year in
which the termination occurs or, if greater, the highest target annual bonus
applicable to the executive officer in any of the three years ending prior to
the change in control. In addition, the executive officer would be eligible to
participate in the medical, dental, health, life and other fringe benefit plans
and arrangements applicable to him until the second anniversary of his date of
termination.
The Retention Agreements further provide that, in the event of an
Involuntary Termination of an executive officer on or following a change in
control, such executive officer's equity awards granted to him under the
Company's equity-based incentive plans (the "EQUITY PLANS") will vest and become
exercisable. All equity awards also will vest and become exercisable as of the
date of a change in control as defined in the Equity Plans, regardless of
whether the executive officer's employment has then terminated. Subject to
certain limits on payments, the Retention Agreements also require tax gross-up
payments to the executive officers to mitigate any excise tax imposed on the
executive officers under Section 4999 of the Code in connection with a change in
control.
14
<PAGE>
OVERVIEW OF PROPOSALS
This Proxy Statement contains three proposals requiring shareholder action.
Proposal No. 1 requests the election of three directors to the Company's Board.
Proposal No. 2 requests that the shareholders approve an amendment to the
Company's Restated Articles of Incorporation which would, if approved,
declassify the Board and ensure that each director will stand for election
annually. Proposal No. 3 requests ratification of the Company's independent
auditors. Each of the proposals is discussed in more detail in the pages that
follow.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. The Board has
nominated the three current Class I directors to be re-elected. 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 three nominees below. If any nominee is unable or declines to serve
as a director at the time of the Annual Meeting, the proxy holders will vote for
a nominee designated by the present Board to fill the vacancy. It is not
presently expected that any nominee will be unable or will decline to serve as a
director.
The Board's nominees for re-election at this Annual Meeting are Messrs.
Chang, Campbell and York.
VOTE REQUIRED
The three nominees for director receiving the highest number of affirmative
votes of the shares entitled to be voted for them shall be elected as directors.
Votes withheld from any director are counted for purposes of determining the
presence or absence of the Quorum, but have no other legal effect under
California law.
RECOMMENDATION
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR RE-ELECTION OF MESSRS.
CHANG, CAMPBELL AND YORK.
15
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
TO ELIMINATE CLASSIFICATION OF THE BOARD OF DIRECTORS
PROPOSED ACTION
The Board is proposing an amendment (the "AMENDMENT") to the Company's
Restated Articles of Incorporation (the "RESTATED ARTICLES") to eliminate the
classification of the Board and thereby ensure that each director will stand for
election annually.
DESCRIPTION OF PROPOSAL
Article VII of the Restated Articles currently provides that the Board shall
be divided into two classes, Class I and Class II, each class consisting of
one-half of the total number of directors or as close an approximation as
possible. The Restated Articles further provide that each director shall be
elected for a term running until the second annual meeting of shareholders of
the Company next succeeding his or her election. An amendment to the Restated
Articles instituting classification of the Board was approved by the
shareholders of the Company in January 1990.
If this proposal is approved by the shareholders, the Restated Articles will
be amended to eliminate the classification of the Board, such that all directors
will stand for election annually. The Board believes that elimination of the
classification of the Board is in the best interest of the Company and its
shareholders in that it will allow shareholders to review and express their
views on the performance of all directors each year. This proposal is not being
presented in response to any shareholder demand.
The Board has determined that the declassification of the Board should
become effective commencing with the annual meeting of shareholders of the
Company in fiscal year 2000, so as not to shorten the term of the Class II
directors. Accordingly, if this proposal is approved by the shareholders, the
terms of all directors will end at the annual meeting of shareholders of the
Company in fiscal year 2000, and all directors elected at that annual meeting
will have one-year terms.
If the Amendment is approved by the shareholders, Article VII of the
Restated Articles will be amended as set forth in Appendix A hereto.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Common Stock of the
Company outstanding as of the Record Date will be required to approve the
Amendment.
RECOMMENDATION
THE BOARD HAS UNANIMOUSLY APPROVED THE AMENDMENT AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE AMENDMENT.
16
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed KPMG LLP ("KPMG"), independent
auditors, to audit Apple's consolidated financial statements for fiscal year
1999. KPMG served as the Company's independent auditors for fiscal year 1998. At
the Annual Meeting, the shareholders are being asked to ratify the appointment
of KPMG as the Company's independent auditors for fiscal year 1999. In the event
of a negative vote on such ratification, the Board of Directors will reconsider
its selection. Representatives of KPMG are expected to be present at the Annual
Meeting and will have the opportunity to respond to appropriate questions and to
make a statement if they so desire.
VOTE REQUIRED
The affirmative vote of (i) a majority of the Votes Cast and (ii) a majority
of the Quorum will be required to approve this Proposal.
RECOMMENDATION
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
The Company knows of no other matters to be submitted to the shareholders at
the Annual Meeting. If any other matters properly come before the shareholders
at the Annual Meeting, it is the intention of the persons named on the enclosed
proxy card to vote the shares they represent as the Board may recommend.
SHAREHOLDER PROPOSALS
Shareholders who intend to present proposals at the next annual meeting of
shareholders must send such proposals to the Company for receipt no later than
September 30, 1999 in order for such proposals to be considered for inclusion in
the proxy statement and form of proxy relating to such meeting.
THE BOARD OF DIRECTORS
Dated: February 9, 1999
17
<PAGE>
APPENDIX A
SECTION VII OF THE COMPANY'S RESTATED ARTICLES OF INCORPORATION,
AS PROPOSED TO BE AMENDED
"VII.
Through and until immediately prior to the annual meeting of shareholders to
be held in fiscal year 2000, the directors shall be divided into two classes,
designated Class I and Class II, each consisting of one-half of the directors or
as close an approximation as possible, and each director shall serve for a term
running until the second annual meeting of shareholders succeeding his or her
election and until his or her successor shall have been duly elected and
qualified; provided, however, that the terms of all directors shall expire at
the annual meeting of shareholders to be held in fiscal year 2000. Commencing at
the annual meeting of shareholders to be held in fiscal year 2000, each director
shall be elected to serve until the annual meeting of shareholders held in the
following fiscal year or until his or her successor shall have been duly elected
and qualified."
<PAGE>
[APPLE COMPUTER LOGO]
[LOGO]
PRINTED ON RECYCLED PAPER
0748-PS-99
<PAGE>
[MAP]
In the interest of saving time and money, Apple has opted to provide you with
the enclosed Form 10-K for fiscal 1998 in lieu of producing a glossy annual
report.
/X/ Please mark
votes as in this
example.
PLEASE VOTE, SIGN, DATE AND PROMPTLY
RETURN THIS CARD.
1. To elect three directors to Class I of the
Company's Board of Directors.
NOMINEES: Gareth C.C. Chang, William V. Campbell
and Jerome B. York
WITHHELD
FOR ALL FROM ALL
NOMINEES NOMINEES
/ / / /
/ /
---------------------------------------
For all nominees except as noted above
MARK HERE FOR / /
ADDRESS
CHANGE AND
NOTE BELOW
FOR AGAINST ABSTAIN
/ / / / / /
2. To approve an amendment to the Company's
Restated Articles of Incorporation to eliminate
the classification of the Company's Board of
Directors and thereby ensure that each director
will stand for election annually.
3. To ratify the appointment of KPMG Peat / / / / / /
Marwick LLP as independent auditors of the
Company for fiscal year 1998.
4. To transact such other business as may / / / / / /
properly come before the meeting or any
adjournment(s) thereof.
This proxy card should be signed by the shareholder(s) exactly as his or her
name(s) appear(s) hereon, dated and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate.If
shares are held by joint tenants or as community property, both persons
should sign.
Signature_____________ Date_________ Signature_________________Date_________
