UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

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Apple Inc.

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Attending the Annual Meeting

We are pleased to welcome shareholders to the 2023 Annual Meeting, to be held virtually on March 10, 2023, at 9:00 A.M. Pacific Time.

To attend, vote, and submit questions during the Annual Meeting visit www.virtualshareholdermeeting.com/AAPL2023 and enter the control number included in your Notice of Internet Availability of Proxy Materials, voting instruction form, or proxy card. Online access to the webcast will open approximately 15 minutes prior to the start of the Annual Meeting. Attendance at the Annual Meeting is subject to capacity limits set by the virtual meeting platform provider. To submit questions in advance of the Annual Meeting, visit proxyvote.com before 8:59 P.M. Pacific Time on March 9, 2023, and enter your control number.

Your vote is important to us. Even if you plan on attending the Annual Meeting, we encourage you to vote your shares in advance to ensure that your vote will be represented at the Annual Meeting. To vote in advance online, visit proxyvote.com and enter the control number included in your Notice of Internet Availability of Proxy Materials, or, if you requested printed copies of the proxy materials, you may vote by phone or by mail. For more detailed information, see the section entitled “Voting Procedures” beginning on page 105 of the Proxy Statement.

This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our environmental, social, and governance goals, commitments, and strategies, our executive compensation program, and our intent to publish reports in relation to our civil rights audit and workers’ rights assessment. These statements involve risks and uncertainties. Actual results could differ materially from any future results expressed or implied by the forward-looking statements for a variety of reasons, including due to the risks, uncertainties, and other important factors that are discussed in our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.

These materials were first sent or made available to shareholders on January 12, 2023.

Table of Contents

Apple Inc.

Notice of 2023 Annual Meeting of Shareholders

Items of Business and Board Voting Recommendation

Sincerely,

Katherine Adams

Senior Vice President, General Counsel and Secretary Cupertino, California January 12, 2023

Important notice regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on March 10, 2023. The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are available free of charge at proxyvote.com and at investor.apple.com.

Message from our Chief Executive Officer

To our shareholders,

Over the past year, teams across Apple came together in service of our timeless mission: creating technology that empowers people and enriches their lives. And the result was another record year — one defined by innovation, and by the bedrock values that have long defined our company.

There is a lot more to say about Apple’s year, and in that spirit, I’d like to invite you to join our 2023 Annual Meeting of Shareholders on Friday, March 10th. I hope you’ll join us.

The global challenges with us all today — from inflation, to war in Eastern Europe, to the enduring impacts of the pandemic — make this a time for deliberate and thoughtful action. But it is not a time to retreat from the future. We’ve always run Apple for the long-term, and that means continuing to invest in innovation, in people, and in the positive difference we can make in the world.

Today, we have the strongest lineup of products and services we’ve ever had, and our technology has never shown up for our users in more ways. And our latest innovations are helping so many of us harness our creativity, connect with loved ones, find entertainment and joy, and live safer, healthier lives.

Across this work, our values remain a driving force behind our innovations. And I’m so inspired by people across Apple working to make our technology even more accessible, more private, and more empowering for all who use it. That kind of teamwork is made possible by people with a diversity of ideas and backgrounds. And this year, we’ve continued to make important progress improving representation within Apple — while fostering a welcoming, inclusive culture where everyone belongs.

Our teams are also pressing forward in the fight against climate change. Our corporate operations have been carbon neutral for three years, and today, we’re working to become carbon neutral for our global supply chain and product use by 2030. We continue to bring new renewable energy online, protect forests that sequester carbon, and innovate to use more recycled and sustainable materials across our products.

Progress like this makes me profoundly confident about the future of Apple, and technology’s potential to solve problems and improve lives. And I remain grateful to everyone at Apple for the work they do each and every day — and to our shareholders for their trust and investment in our company.

Tim Cook
CEO

Apple Values

We are committed to demonstrating that 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.

Proxy
Statement
Summary

Our Business

Despite the many challenges in 2022, teams across Apple continued to innovate, focus on our users, and create the best products and services in the world — resulting in another record year.

 

2022 Highlights

Overall	Products	Services
• All-time net sales records in Americas, Europe, Greater China, and Rest of APAC   • All-time net income, earnings per share, and operating cash flow records   • Double-digit growth and an all-time record in net sales in emerging markets	• All-time net sales records for iPhone, Mac, and Wearables, Home & Accessories   • All-time record for installed base of active devices across all major product categories and each geographic segment   • Major updates across our product portfolio, including iPhone 14 Pro and Pro Max, Apple Watch Ultra, and M2 for Mac	• All-time services net sales and gross margin records   • Size of Fortune 50 company, nearly doubling net sales during the past four years   • 900 million paid subscriptions across the services on our platform, a 155 million increase year-over-year

Executive Compensation

Motivating and retaining a talented and experienced leadership team is a key component of Apple’s long-term success. We are committed to an effective executive compensation program that incorporates sound policies and best practices, and delivers a majority of our named executive officers’ annual compensation through performance-based incentives.

2022 Compensation Highlights

The 2022 performance-based incentives paid to our named executive officers reflect our strong net sales and operating income and outstanding total shareholder return (“TSR”) over the applicable performance periods.

 

2023 Compensation Changes

The Compensation Committee evaluates and makes compensation decisions prior to the start of each fiscal year. The results of the 2022 Say on Pay advisory vote led to broader shareholder engagement on executive compensation in 2022 of approximately 53% of institutional shares held. The Compensation Committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received. The Compensation Committee then approved the target annual compensation of our named executive officers for 2023, including the following changes to CEO compensation, which Mr. Cook supported, and that the Compensation Committee believes are responsive to shareholder feedback, while continuing both to align pay with performance and to recognize Mr. Cook’s outstanding leadership.

 

Total CEO Pay	Mr. Cook’s 2023 target total compensation is $49 million, a reduction of over 40% from his 2022 target total compensation. Taking into consideration Apple’s comparative size, scope, and performance, the 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.
CEO Equity Mix	The percentage of performance-based RSUs granted to Mr. Cook was increased from 50% to 75% of his 2023 target equity award and the percentage of his performance-based RSUs will be at least 75% of his target equity awards for future years.
CEO Retirement Vesting	The time-based RSUs awarded to Mr. Cook for 2023 provide for pro-rata instead of full vesting in the event of retirement during the term of the award. The Compensation Committee intends to maintain this same structure for future years.

For more information on our executive compensation program and the 2022 compensation of our named executive officers, see the section entitled “Compensation Discussion and Analysis” beginning on page 43.

Apple’s Board of Directors

Apple is overseen by directors with diverse skills, qualities, attributes, and experiences that effectively address the Company’s evolving needs and represent the best interests of Apple’s shareholders.

Name	Occupation	Independent	Age	Director Since	Audit Committee	Compensation Committee	Nominating Committee
Art Levinson Chair	Founder and CEO, Calico	✓	72	2000
Tim Cook	CEO, Apple		62	2011
James Bell	Former CFO and Corporate President, The Boeing Company	✓	74	2015
Al Gore	Former Vice President of the United States	✓	74	2003
Alex Gorsky	Executive Chair, Johnson & Johnson	✓	62	2021
Andrea Jung	President and CEO, Grameen America	✓	64	2008
Monica Lozano	Former President and CEO, College Futures Foundation	✓	66	2021
Ron Sugar	Former Chair and CEO, Northrop Grumman Corporation	✓	74	2010
Sue Wagner	Co-founder and Director, BlackRock	✓	61	2014

 

Chair

Member

Shareholder Engagement

We proactively engage with shareholders throughout the year to better understand their priorities and perspectives on significant issues, including company performance and strategy, executive compensation, corporate governance, shareholder proposals, and environmental and social matters. Engagement participants include members of senior management and our Board. Apple and its Board consider feedback and insights from shareholders and other stakeholders as we review our practices and disclosures.

Shareholder Engagement in Calendar Year 2022

				Comprehensive Engagement Program

 

Key responsive actions

Executive Compensation	The Compensation Committee made changes to the equity component of Mr. Cook’s 2023 total target compensation and provided additional disclosures regarding their decision-making process.
Majority-Supported Shareholder Proposals	Following our 2022 Annual Meeting of Shareholders, Apple: • engaged Covington & Burling LLP to conduct a civil rights audit; and • released a public report assessing the potential risks to Apple associated with “its use of concealment clauses in the context of harassment, discrimination, and other unlawful acts.”
Time Commitment Policy	The Board amended its Corporate Governance Guidelines to require an annual review by the Nominating and Corporate Governance Committee of each director’s various time commitments.
Board Oversight	The Board amended its committee charters to formalize its practice of overseeing Apple’s strategies, policies, and practices relating to environmental and social matters, and its people and teams.
Workers’ Rights Assessment	At Apple, we have long been committed to respecting human rights. We view this commitment as a fundamental part of who we are and our mission to enrich people’s lives. We plan to conduct an assessment on Apple’s efforts to comply with its Human Rights Policy as it relates to workers’ freedom of association and collective bargaining rights in the United States by the end of calendar year 2023.

 

Voting Matters and Vote Recommendations

Corporate
Governance

Our Corporate Governance Framework

Apple operates under a corporate governance framework designed to be a flexible working structure for principled actions, effective decision-making, and appropriate monitoring of both compliance and performance. Apple’s key governance documents, including our Corporate Governance Guidelines, are available at investor.apple.com/leadership-and-governance.

Role of the Board of Directors

Apple’s Board oversees the chief executive officer and other senior management in the competent and ethical operation of Apple and seeks to ensure that the long-term interests of shareholders are being served. Directors are expected to take a proactive, focused approach to their position to ensure Apple is committed to business success through the maintenance of high standards of responsibility and ethics.

Board Independence

Apple’s Corporate Governance Guidelines require a majority of Board members to be independent. The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).

Apple’s Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee (the “Compensation Committee”), and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that all committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Board and Committee Structure

Apple regularly reviews the Board’s leadership structure and the responsibilities and composition of its standing committees. The structure and composition of Apple’s Board and its committees are intended to leverage the diverse perspectives of the Board members and promote effective oversight.

The Board believes its current leadership structure, in which the roles of Chair and CEO are separated, best serves Apple’s overall corporate structure and the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, including its oversight of management and corporate governance matters. The Board also believes that the current structure allows our CEO to focus on managing Apple, while leveraging our independent Chair’s experience to drive accountability at the Board level.

The current membership and function of each standing committee is described on the following page. Each committee operates under a written charter adopted by the Board, which is available at investor.apple.com/leadership-and-governance. Each committee reviews and assesses its charter annually.

 

 

New for 2022

Oversight of People and Teams	The Board formalized the Compensation Committee’s oversight of Apple’s strategies, policies, and practices relating to our people and teams.
Oversight of Environmental and Social Matters	The Board formalized the Nominating Committee’s oversight of Apple’s strategies, policies, and practices relating to environmental and social matters.
Time Commitment Policy	The Board amended its Corporate Governance Guidelines to require an annual review by the Nominating Committee of each director’s various time commitments. 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.

Board Oversight

The Board takes an active role in overseeing corporate and product strategy and seeks to ensure the long-term interests of Apple and its shareholders are being served. The Board believes that evaluating the executive team’s management of the risks confronting Apple is one of its most important areas of oversight. In carrying out this responsibility, the Board is assisted by its committees, each of which considers risks within its areas of primary responsibility and expertise and apprises the full Board of significant matters and management’s response.

Selected Areas of Oversight

Shareholder Engagement

We proactively engage with shareholders and other stakeholders throughout the year to learn their perspectives on significant issues. This engagement helps us better understand shareholder priorities and perspectives, gives us an opportunity to elaborate upon our initiatives with Apple subject matter experts, and fosters constructive dialogue with our community of shareholders. The Board and our management teams carefully consider the feedback from these meetings, as well as shareholder support and feedback at our annual meetings, when reviewing our business practices, corporate governance framework, and executive compensation program.

In the summer of 2022, following our annual meeting, we reached out to investors owning approximately 53% of institutional shares held to better understand their voting, particularly around our executive compensation program and majority-supported shareholder proposals to help inform the Board’s discussions on these topics.

In the late summer and fall of 2022, we then engaged with shareholders owning approximately 56% of institutional shares held to follow up on the Compensation Committee’s decisions regarding executive compensation, and have a broader conversation related to Apple’s environmental, social, and governance practices, implementation of majority-supported shareholder proposals, and the Board’s oversight role.

Throughout calendar year 2022, we engaged with more than 60% of institutional shares held and directors participated in meetings with shareholders representing over 50% of institutional shares engaged.

 

 

Key responsive actions

1	Executive Compensation	The Compensation Committee made changes to the equity component of Mr. Cook’s 2023 total target compensation and provided additional disclosures regarding their decision-making process. For detailed information on our engagement with shareholders on our executive compensation program and actions taken in response, see the section entitled “Compensation Discussion and Analysis” beginning on page 43.
2	Civil Rights Audit	Apple’s Civil Rights Audit is currently underway. We have engaged a team from Covington & Burling LLP, led by former U.S. Attorney General Eric Holder, to conduct the audit, which will examine civil rights impacts on our business in the areas of our people, our products and services, customer connections, and communities. The Covington team is assessing the Company’s policies, controls, and initiatives in these areas, and we expect to publish a report regarding their assessment in 2023.
3	Report on Our Commitment to an Open and Collaborative Workplace	Under the oversight of our Nominating Committee, we prepared a report “assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts.” To assist with the preparation of the report, Apple engaged outside counsel to review and evaluate relevant Apple policies and documentation. Based on that review, we have concluded that the risks to Apple, including legal, brand, financial, and human capital risks, are low. The report has been published in the Leadership and Governance section of our investor relations website.
4	Workers’ Rights Assessment	At Apple, we have long been committed to respecting human rights. We view this commitment as a fundamental part of who we are and our mission to enrich people’s lives. We plan to conduct an assessment on Apple’s efforts to comply with its Human Rights Policy as it relates to workers’ freedom of association and collective bargaining rights in the United States by the end of calendar year 2023.

Board Meetings and Attendance

The Board met five times during 2022. Each member of the Board who served during 2022 attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board held during 2022, and (ii) the total number of meetings held by each committee of the Board on which the member served during 2022.

Apple expects all of its directors to attend the Annual Meeting. All directors attended the 2022 annual meeting of shareholders (the “2022 Annual Meeting”).

Annual Board and Committee Self-Evaluations

The Board conducts an annual self-evaluation to assess whether the Board, its committees, and each member of the Board are working effectively, and to provide an opportunity to reflect upon and improve processes and effectiveness.

The Nominating Committee designs and establishes the overall evaluation framework, and Dr. Levinson, the independent Chair of the Board, leads the evaluation interviews and feedback sessions. Dr. Levinson conducts one-on-one discussions with each director to obtain their assessment of the effectiveness and performance of the Board and its committees. Additional discussion topics include Board and committee composition and refreshment; timing, agenda, and content of Board and committee meetings; Board dynamics and function; peer reviews of other members; and executive succession planning. Board members are also invited to discuss the performance of Dr. Levinson directly with the Chair of the Nominating Committee. A summary identifying any themes or issues that have emerged is presented to the Board on an anonymous basis.

Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter.

Related Party Policy and Transactions

The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is reasonably expected to exceed $120,000 in a single fiscal year and the related party has or will have a direct or indirect interest in the transaction (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available at investor.apple.com/leadership-and-governance. The policy provides that the Audit Committee must review transactions subject to the policy and determine whether to approve or ratify those transactions. Certain types of transactions are deemed pre-approved pursuant to standing pre-approval guidelines established by the Audit Committee. In addition, the Audit Committee has delegated authority to its Chair to pre-approve or ratify transactions under certain circumstances. A summary of new transactions covered by standing pre-approvals or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.

In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers (as it deems appropriate for the circumstances):

Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any relationships during 2022 and through the date of this Proxy Statement.

Business Conduct Policy

Apple seeks to conduct business ethically, honestly, and in compliance with laws. Apple’s code of ethics, titled “Business Conduct: The way we do business,” set outs the principles that guide Apple’s business practices — honesty, respect, confidentiality, and compliance. The code applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer. Relevant sections of the code also apply to the Board. Apple expects its suppliers, contractors, consultants, and other business partners to follow the principles set forth in the code when providing goods and services to Apple or acting on its behalf. The code is available at apple.com/compliance/pdfs/Business-Conduct-Policy.pdf. Apple intends to disclose any changes to or waivers from this code by posting to our website if disclosure is required by SEC or Nasdaq rules.

Apple’s code is managed by the Business Conduct organization, under the oversight of Apple’s Chief Compliance Officer. Employees are required to complete training on the code upon joining Apple and annually thereafter. With input from relevant stakeholders and executive leadership, we regularly review and update Apple’s code and related policies to ensure they provide clear, actionable guidance to our employees, executive officers, and directors.

Communications with the Board

Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. Apple reserves the right to not forward to Board members any abusive, threatening, or otherwise inappropriate materials.

Directors

Board Composition and Refreshment	28

Board Composition and Refreshment

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 long-term interests of Apple’s shareholders.

The Board considers its composition and refreshment on an annual basis as part of its self-evaluation process. Most recently, in calendar year 2021, the Board added two new members, Monica Lozano and Alex Gorsky, to complement its existing skills, qualities, attributes, and experiences.

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. 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.

Starting in 2022, the Board amended its Corporate Governance Guidelines to 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, 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.

Nominees for Election

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 31.

Director Skills and Demographic Matrix

	Levinson	Cook	Bell	Gore	Gorsky	Jung	Lozano	Sugar	Wagner
Core
Leadership
Corporate Governance
Risk Management
Financial
Strategic
Global Business and Operations
Brand and Marketing
People and Culture
Innovation and Technology
Environment and Climate
Public Policy and Government
Privacy and Security
Identity
Gender Expression	Male	Male	Male	Male	Male	Female	Female	Male	Female
LGBTQ+	No	Yes	No	No	No	No	No	No	No
Race/Ethnicity	White	White	Black	White	White	Asian	Latino Multiracial	White	White

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 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 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 Compensation Committee’s recommendation. The Apple Inc. Non-Employee Director Stock Plan (“Director Stock Plan”) provides for an annual limit of $1.5 million for all compensation paid to a Non-Employee Director.

Cash Retainers

Our Non-Employee Directors receive an annual cash retainer of $100,000. In 2022, the Chair of the Board, Dr. Levinson, received an additional cash retainer of $175,000; the Chair of the Audit Committee, Dr. Sugar, received an additional cash retainer of $35,000; the Chair of the Compensation Committee, Ms. Jung, received an additional cash retainer of $30,000; and the Chair of the Nominating Committee, Ms. Wagner, received an additional cash retainer of $25,000. All retainers are paid in quarterly installments.

Equity-Based Awards

A substantial portion of each Non-Employee Director’s annual retainer is in the form of equity awards. Under the Director Stock Plan, Non-Employee Directors are granted RSUs on the date of each annual meeting of shareholders (each, an “Annual Director Award”). All Annual Director Awards vest on February 1 of the following year, subject to continued service on the Board through the vesting date. For 2022, the number of RSUs underlying each Annual Director Award was 1,685, which was determined by dividing $275,000 by the per share closing price of Apple’s common stock on the date of grant.

A Non-Employee Director who is newly appointed to the Board other than in connection with an annual meeting of shareholders will receive a grant of RSUs upon appointment (an “Initial Director Award”), except that a Non-Employee Director who first joins the Board on or after February 1 of a particular year and prior to the annual meeting for that year, or a director who was an employee of Apple immediately prior to first becoming a Non-Employee Director, will not receive an Initial Director Award. The number of RSUs subject to each Initial Director Award is determined in the same manner as described above for Annual Director Awards, but the award is pro-rated based on the portion of the period that has passed since the last annual meeting. Initial Director Awards are scheduled to vest on the next February 1 following the grant of the award. 

Each RSU award granted under the Director Stock Plan will be credited with an amount equal to any ordinary dividend paid by Apple, multiplied by the total number of RSUs subject to the award that are outstanding immediately prior to the record date for the dividend. The amounts credited to each RSU are referred to as “dividend equivalents.” Any dividend equivalents credited to RSUs granted under the Director Stock Plan will be subject to the same vesting, payment, and other terms and conditions as the RSUs to which the dividend equivalents relate. The dividend equivalents are meant to treat the RSU award holders consistently with shareholders. 

Equipment and Matching Gifts Programs

Apple has an equipment program for the Board under which each Non-Employee Director is eligible to receive, upon request and free of charge, one of each new product introduced by Apple, and is eligible to purchase additional equipment at a discount. Additionally, each Non-Employee Director is eligible to participate in Apple’s matching gifts program to the same extent as Apple employees.

Deferred Compensation Plan

We adopted the Apple Inc. Deferred Compensation Plan (“Deferred Compensation Plan”) in 2018, effective for deferrals beginning in 2019. The Deferred Compensation Plan allows eligible participants, including our Non-Employee Directors, to defer a portion of their eligible compensation, subject to the terms of the Deferred Compensation Plan. The Deferred Compensation Plan is unfunded and unsecured. We do not provide any matching contributions under the Deferred Compensation Plan or allow for deferral of RSUs. In 2022, Ms. Lozano participated in the Deferred Compensation Plan and deferred a portion of her annual cash retainer.

Stock Ownership Guidelines

Apple has stock ownership guidelines for our CEO, executive officers, and Non-Employee Directors. Under the guidelines, each Non-Employee Director is expected, within five years after joining the Board, to own shares of Apple’s common stock that have a value equal to five times their annual cash retainer for serving as a director. Shares may be owned directly by the individual, owned jointly with, or separately by, the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse, or the individual’s children. Other than Ms. Lozano and Mr. Gorsky, who joined the Board in calendar year 2021, each Non-Employee Director currently owns shares of Apple’s common stock that have a value at least equal to five times their annual cash retainer.

Director Compensation—2022

The following table shows information regarding the compensation earned or paid during 2022 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—2022, 2021, and 2020” and the related tables under the section entitled “Executive Compensation.”

Kate Adams

Senior Vice President, General Counsel and Secretary

Ms. Adams, 58, oversees all legal matters, including corporate governance, intellectual property, litigation, compliance, global security, and privacy.

Kate joined Apple as General Counsel in November 2017. Prior to joining Apple, Kate served as General Counsel of Honeywell International Inc., a diversified technology and manufacturing company, from September 2008. Prior to joining Honeywell in 2003, Kate was a partner at the law firm of Sidley Austin LLP.

Luca Maestri

Senior Vice President, Chief Financial Officer

Mr. Maestri, 59, oversees Apple’s accounting, business support, financial planning and analysis, treasury, real estate, investor relations, internal audit, and tax functions.

Luca joined Apple in March 2013 and assumed his current position in May 2014, after previously serving as Apple’s Vice President and Corporate Controller. Prior to joining Apple, Luca was Executive Vice President, Chief Financial Officer of Xerox Corporation, a business services and technology company, from February 2011 to February 2013; Chief Financial Officer at Nokia Siemens Networks; and had a 20-year career with General Motors Corporation, including serving as Chief Financial Officer of GM Europe and GM Brazil.

Deirdre O’Brien

Senior Vice President, Retail + People

Ms. O’Brien, 56, oversees Apple’s retail stores and online teams, and Apple’s People team. As the leader of Apple’s retail teams, Deirdre supports their work to enrich the lives of millions of Apple customers every year. In her role leading the People team, Deirdre works to help Apple connect, develop, and care for its employees—and to help those employees do the best work of their lives.

Deirdre joined Apple in July 1988 and assumed her current position in February 2019. Deirdre’s previous positions with Apple include Vice President, People and Vice President, Operations.

Jeff Williams

Chief Operating Officer

Mr. Williams, 59, oversees Apple’s entire worldwide operations, as well as customer service and support. He leads Apple’s renowned design team and the software and hardware engineering for Apple Watch. Mr. Williams also drives the Company’s health initiatives.

Jeff joined Apple in June 1998 and assumed his current position in December 2015. Jeff’s previous positions with Apple include Senior Vice President, Operations and Head of Worldwide Procurement. Prior to joining Apple, Jeff worked in a number of operations and engineering roles at IBM from 1985 to 1998.

Peer Groups

The 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. The Compensation Committee reviews compensation practices and program design at peer companies with their independent compensation consultant to inform their decision-making process and to set total compensation levels that it believes are competitive and commensurate with Apple’s relative size, scope, performance, and profitability. Apple remains significantly larger than other companies and the Compensation Committee generally does not set compensation components to meet specific benchmarks as compared to peer companies, such as targeting salaries. However, as noted above, the Compensation Committee intends to set the total target compensation for Mr. Cook between the 80th and 90th percentiles of CEO pay at companies in our primary peer group in future years.

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 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 2022 were $15 billion and $100 billion, respectively. Based on the above criteria, the Compensation Committee added Salesforce, Inc. to the primary peer group for 2022. The 2022 primary group includes Alphabet, Amazon, AT&T, Charter Communications, Cisco, Comcast, Disney, IBM, Intel, Meta, Microsoft, Netflix, Oracle, Qualcomm, Salesforce, Verizon, and Visa.

 

 

 

 

Revenue shown is based on the trailing 12 months revenue for Apple and each of our primary peers ending closest to our 2022 fiscal year-end. Market capitalization for our primary peers is the amount provided by Bloomberg L.P. as of September 23, 2022, the last trading day of 2022.

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 benchmark pay practices. Based on these criteria, Boeing was removed and AbbVie was added to the secondary peer group for 2022. The 2022 secondary peer group includes 3M, AbbVie, American Express, General Electric, Johnson & Johnson, PepsiCo, Procter & Gamble, Tesla, and UnitedHealth Group.

Summary of CEO Compensation

With input from the Board and the Compensation Committee’s independent compensation consultant, the Compensation Committee makes CEO compensation decisions prior to the start of each fiscal year. In determining the appropriate amount of each compensation component for 2022, the Compensation Committee discussed numerous factors with the Board and its independent compensation consultant, including Mr. Cook’s outstanding leadership, the immense scope and complexity of his role as Apple’s CEO, the Board’s confidence in his long-term strategic decisions, the Company’s exceptional financial results delivered during 2021, shareholder feedback, and the value of his prior equity awards as compared to the value of his current outstanding equity awards. Balancing shareholder feedback, a desire to continue to create meaningful performance and retention incentives, and Mr. Cook’s support for changes to his compensation to reflect the feedback received, the Compensation Committee maintained the cash components of Mr. Cook’s 2023 compensation and reduced his target equity award grant value.

Tim Cook

Chief Executive Officer Role: 11 years Apple Tenure: 24 years

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 over time align with Apple’s growth and success and the tremendous value delivered to our shareholders under his leadership. As of the end of 2022, Apple’s Relative TSR increased approximately 1,212% during Mr. Cook’s tenure as CEO, significantly outpacing the S&P 500 which increased approximately 290% over the same time period, and Apple’s market capitalization grew by more than $2 trillion.

CEO Equity Award Decisions

The design of Mr. Cook’s first RSU award as CEO (the “2011 Award”) demonstrated the full support of Apple’s Board for his long-term leadership. The 2011 Award had a unique 10-year structure that the Compensation Committee determined was appropriate for the first phase of Mr. Cook’s tenure as CEO. At Mr. Cook’s request and in response to shareholder feedback, the 2011 Award was subsequently modified in 2013 to include performance conditions. As the final vesting tranches of the 2011 Award approached, the Compensation Committee evaluated Mr. Cook’s equity compensation structure in light of current circumstances, including the rapid growth and unparalleled success that Apple had achieved under Mr. Cook’s leadership. The Compensation Committee 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 annually, since 2014, to our other named executive officers. These differences included different performance periods, vesting schedules and criteria, performance and time-based equity mix, and TSR measurements.

Taking these factors into consideration, Mr. Cook was granted an equity award in 2021 for the first time since he was promoted to CEO. Following Apple’s record 2021 financial results, a second award, identical in size and structure, was granted for 2022. The 2021 and 2022 awards also were intended to better align Mr. Cook’s long-term equity incentives with the annual timing and structure of the equity awards granted to our other named executive officers but at a higher value commensurate with the scope and complexity of his role as Apple’s CEO. The Compensation Committee considered $75 million to be the appropriate grant value for each of the 2021 and 2022 awards, after taking into account the considerations noted above, as well as evaluating the competitive positioning of CEO compensation at our direct technology peers. These equity awards are intended to create a meaningful foundation of outstanding long-term equity incentives aligned with the long-term interests of our shareholders, and to be realized over multiple years, as Mr. Cook’s compensation structure transitions to include annual equity awards.

Summary of Other Named Executive Officer Compensation

The target compensation of our four other named executive officers similarly reflects the three basic components of our executive compensation program in a straightforward and effective way.

The Compensation Committee reviews our executive compensation program each year. Following our record 2021 financial results, and taking into account shareholder feedback which confirmed shareholders’ continued support for the amount and structure of our other named executive officers’ compensation, the Compensation Committee decided to maintain the same level of base salary, annual cash incentive opportunity, and equity award value for each of our named executive officers for 2022. The Compensation Committee determined that the target compensation of our named executive officers remains competitive and continues to be commensurate with Apple’s performance and significantly larger size compared to other companies, and appropriately aligned with our guiding principles and the scope of each named executive officer’s role within Apple.

Luca Maestri

SVP, Chief Financial Officer Role: 8 years Apple Tenure: 9 years

 

Deirdre O’Brien

SVP, Retail + People Role: 3 years Apple Tenure: 34 years

Kate Adams

SVP, General Counsel and Secretary Role: 5 years Apple Tenure: 5 years

 

Jeff Williams

Chief Operating Officer Role: 7 years Apple Tenure: 24 years

Additional details regarding our named executive officers’ 2022 compensation can be found below in the sections entitled “2022 Annual Cash Incentive Financial Performance Measures and Payout Opportunities” and “2022 Long-Term Equity Awards and Results.”

Guiding Compensation Principles

Our executive compensation program is designed to motivate and reward outstanding performance, retain strong leadership, and promote teamwork in a straightforward and consistent way. Our clear guiding principles and sound compensation policies and practices align the pay of our named executive officers with company performance, taking into consideration the size, scope, and success of Apple’s business.

Team-Based Approach

We apply a unique team-based approach to the compensation of our named executive officers to emphasize their shared responsibility for Apple’s overall success. This approach recognizes the exceptional experience, leadership, and value each of our named executive officers contributes to Apple’s leadership team, with CEO compensation awarded at a higher level to reflect the additional scope and complexity of that role.

Performance Expectations

The vast majority of our executive pay is tied to performance to ensure the alignment with the long-term interests of shareholders. We establish clear, quantitative financial goals and values-driven performance expectations for our named executive officers each year that focus on Apple’s overall success.

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 outperformance relative to other companies. Time-based RSUs also are an important component of long-term equity awards because they balance performance with stability and retention of an exceptional leadership team.

Components of Named Executive Officer Compensation

The compensation of our named executive officers has three basic components: annual base salary, annual cash incentive, and long-term equity awards.

2022 Annual Cash Incentive Financial Performance Measures and Payout Opportunities

As in prior years, the Compensation Committee chose net sales and operating income, calculated in accordance with generally accepted accounting principles, as the financial performance measures for the 2022 annual cash incentive program. 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 annual cash incentive program 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. If the threshold performance level is reached for a financial performance measure, the total payout opportunity for that financial performance measure is 50% of the target payout opportunity. If the maximum performance level is reached for a financial performance measure,

the total payout opportunity for that financial performance measure is capped at 200% of the target payout opportunity. If the threshold goal is not achieved for a financial performance measure, there is no payout for that financial performance measure. Payouts for our named executive officers are linearly interpolated for achievement between threshold, target, and maximum performance goal levels.

The Compensation Committee considers factors relevant to the current fiscal year when it sets the financial goals for the annual cash incentive awards. Financial results from prior years may be used as a reference point, but the annual goals are set to align pay with performance that reflects strong financial results for the current fiscal year. To set financial performance measures under the annual cash incentive program for 2022, the Compensation Committee considered the likelihood of a range of business scenarios that could impact net sales and operating income results for the year. These scenarios took into consideration an increasingly complex macroeconomic and socio-political environment and the continuing effects of the prolonged uncertainty caused by the COVID-19 pandemic on global business conditions. The Compensation Committee recognized that sustaining the same level of net sales and operating income achieved during the prior fiscal year under current business conditions would be difficult and would require significant effort by Apple’s named executive officers. To create payout opportunities that required a sustained level of high performance year-over-year, the Compensation Committee set the target net sales and maximum net sales and operating income goals at levels that required year-over-year growth representing strong financial performance and the threshold net sales and operating income goals at levels deserving of minimum payouts.

2022 Financial Performance Goals and Results

For 2022, we reported net sales of $394.3 billion and operating income of $119.4 billion, representing a year-over-year increase of $28.5 billion and $10.5 billion respectively. These achievements resulted in a maximum payout opportunity for each of the financial performance measures.

Annual Assessment of Apple Values and Key Community Initiatives

We included a modifier in the annual cash incentive program beginning in 2021 as a measure to evaluate the actions taken during the year to advance our Apple values and key community initiatives. Apple values and key community initiatives were chosen because they reflect our long-standing commitment to incorporate values-driven leadership and responded to shareholder feedback encouraging us to incorporate business-relevant environmental, social, and governance principles into our executive compensation program.

After the Compensation Committee determines the payout opportunity based on our financial performance measures, the Compensation Committee may choose to adjust the named executive officers’ payout opportunity upwards or downwards by up to 10% or determine not to make any adjustments. However, the Compensation Committee set an overall cap on annual cash incentive payouts of 200% of the total target payout opportunity for each named executive officer and will not increase a payout above that cap, regardless of the results of its assessment.

For 2022, the Compensation Committee reviewed an extensive scorecard for each Apple value and key community initiative to inform its overall assessment. Each scorecard included the long-term vision, 2022 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.

Scorecard Focus and Highlights:

Accessibility

Education

Environment

Inclusion & Diversity

Privacy

Supplier Responsibility

Key Community Initiatives

2022 Annual Cash Incentive Payouts

Our 2022 net sales and operating income results exceeded the maximum financial goals resulting in a maximum payout opportunity. The Compensation Committee awarded cash incentive payouts equal to 200% of the total target payout opportunity to each of our named executive officers. The Compensation Committee did not modify the payout based on its assessment of the actions taken to advance our Apple values and key community initiatives in 2022.

2022 Long-Term Equity Awards and Results

Each named executive officer was granted a long-term equity award on September 26, 2021 with 50% performance-based and 50% time-based RSUs. When setting the value of equity awards for our named executive officers, the Compensation Committee considers the size and performance of Apple relative to peer companies, and the scope of our named executive officers’ roles.

2022 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 26, 2021 will vest in three equal annual installments over approximately four and one-half years, commencing on April 1, 2024 (approximately two and one-half years following the grant date), subject to the award agreements.

The number of time-based RSUs granted to Mr. Cook was determined by dividing $37.5 million by the closing stock price on the date of grant. The number of time-based RSUs granted to Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams was determined by dividing $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—2022, 2021, and 2020.”

2022 Performance-Based RSUs

The Compensation Committee chose 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 that 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 the other companies 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.

The performance-based RSUs granted on September 26, 2021 have a three-fiscal-year performance period from the beginning of 2022 through the end of 2024. 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, 2024, depending on Apple’s Relative TSR percentile ranking for the performance period, as follows:

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 $37.5 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 $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—2022, 2021, and 2020.”

Dividend Equivalents

All equity awards granted to our employees in 2022 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 2022 Results

During 2022, Ms. Adams, Mr. Maestri, and Mr. Williams each vested in performance-based RSUs that were granted on September 30, 2018. 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.

For the three-year performance period from the beginning of 2018 through the end of 2021, Ms. Adams, Mr. Maestri, and Mr. Williams each vested in 354,392 performance-based RSUs, representing 200% of the target number of performance-based RSUs. Apple’s Relative TSR was at the 96th percentile of the companies that were included in the S&P 500, and Apple’s TSR during this period was 178.96%.

During 2022, Ms. O’Brien vested in performance-based RSUs granted in connection with her promotion on February 5, 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.

For the performance period from February 5, 2019 through the end of 2021, Ms. O’Brien vested in 191,376 performance-based RSUs, representing 200% of the target number of performance-based RSUs. Apple’s Relative TSR was at the 99th percentile of the companies that were included in the S&P 500, and Apple’s TSR during this period was 255.92%.

Other Benefits

Our named executive officers are eligible to participate in our health and welfare programs, Employee Stock Purchase Plan, 401(k) plan, and matching gifts, vacation cash-out, product discount, and other benefit programs on the same basis as other employees. Items or services provided to our named executive officers that may be considered perquisites are limited and generally do not have an associated incremental cost to the Company, except as discussed below and reported in “Summary Compensation Table—2022, 2021, and 2020.”

Deferred Compensation Plan

Our named executive officers are eligible to defer a portion of their base salary and annual cash incentive payout opportunity under the terms of the Deferred Compensation Plan.

Security and Private Aircraft

We provide risk-based, business-related, and personal security services for our employees, including our named executive officers, as determined to be appropriate by our security team. We consider the security measures provided to our named executive officers to be reasonable and necessary expenses for the benefit of Apple and not a personal benefit. In the interests of security and efficiency based on our global profile and the highly visible nature of Mr. Cook’s role as CEO, the Board also requires that Mr. Cook use private aircraft for all business and personal travel. Mr. Cook recognizes imputed taxable income and is not provided a tax reimbursement for personal use of private aircraft. In accordance with SEC disclosure rules, the aggregate incremental cost of these services is reported in the “Summary Compensation Table—2022, 2021, and 2020.”

Compensation Upon Termination of Employment

Our named executive officers do not have employment contracts or 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 of our employees, other than Mr. Cook, provide for full vesting upon a termination due to death and pro-rata 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 vesting upon a termination due to death or disability.

The Compensation Committee approved a retirement vesting provision in Mr. Cook’s RSU award agreements to recognize the unique impact of his leadership decisions on the long-term growth and success of Apple. The RSU award agreements for Mr. Cook’s RSUs granted in 2021, 2022, and 2023 include the retirement vesting provision which applies if he terminates employment due to retirement on or after the first anniversary of the applicable equity award grant date. 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. Mr. Cook now meets the age and service requirements.

Unless otherwise determined by the Compensation Committee, Mr. Cook’s 2021 and 2022 time-based RSU award agreements provide for accelerated vesting of any unvested time-based RSUs in full upon a termination of employment due to death, and a continued right to receive the full number of unvested shares underlying the time-based RSUs on the original vesting dates upon a termination of employment due to disability or retirement if retirement occurs on or after the first anniversary of the grant date. Unless otherwise determined by the Compensation Committee, Mr. Cook’s 2021, 2022, and 2023 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, if retirement 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 award will be released on the original vesting dates, subject to the attainment of the performance goals for the performance-based RSUs. The delivery of the vested shares underlying Mr. Cook’s 2021 and 2022 RSU awards and any dividend equivalents that have accrued on such RSUs are not accelerated upon retirement.

During shareholder outreach and engagement, shareholders expressed a desire to better understand the Compensation Committee’s rationale for including a retirement vesting provision in Mr. Cook’s RSU award agreements. The Compensation Committee included the retirement vesting provision for several reasons. First, this is a common provision in equity awards for CEOs

and long-tenured executives to maintain focus on long-term decision-making and to ensure successful leadership transitions occur at the appropriate time without regard to short-term business conditions or significant outstanding equity award values. Second, the Compensation Committee recognized the growth and success Apple has enjoyed for more than a decade with Mr. Cook as CEO, and understands that the effects of his leadership will influence the direction of the Company for many years to come. Therefore, aligned with the philosophy of managing Apple for the long term, the Compensation Committee created an incentive and reward for Mr. Cook to encourage him to drive towards continued success without regard to when he may choose to retire. Nonetheless, the Compensation Committee considered shareholder feedback provided in recent engagements that the primary purpose of time-based RSUs should be retention. Thus, starting in 2023, the time-based RSUs granted to Mr. Cook will only vest pro rata upon a termination of employment due to retirement on or after the first anniversary of the grant date, subject to the terms of the award agreement. The pro rata vesting is determined based on Mr. Cook’s dates of employment during the vesting period and the shares underlying the vested RSUs and accrued dividend equivalents will continue to be released on the original vesting dates, unless otherwise set forth in the award agreement.

Governance and Other Considerations

Tax Deductibility of Compensation Expense

Section 162(m) of the Internal Revenue Code generally places a $1 million annual deduction limit on compensation paid to “covered employees,” which includes our named executive officers. Our Compensation Committee makes compensation decisions based on our guiding compensation principles and the interests of shareholders, even if such compensation is non-deductible by Apple.

Compensation Clawback

The terms of all outstanding RSU awards held by our named executive officers 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 annual cash incentives awarded to our named 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.

Prohibition on Hedging, Pledging, and Short Sales

We prohibit short sales, hedging, and transactions in derivatives of Apple securities for all Apple personnel, including directors, officers, employees, independent contractors, and consultants. In addition, we prohibit pledging of Apple stock as collateral by directors and executive officers of Apple. We allow for certain portfolio diversification transactions, such as investments in exchange funds.

Stock Ownership Guidelines

Under our stock ownership guidelines, Mr. Cook is expected to own shares of Apple stock that have a value equal to 10 times his annual base salary. All other executive officers are expected to own shares that have a value equal to three times their annual base salary within five years of the officer first becoming subject to the guidelines. Shares may be owned directly by the individual, owned jointly with or separately by the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse, or the individual’s children. Each executive officer currently holds shares in excess of these guidelines.

Risk Considerations

In establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. See the section entitled “Corporate Governance–Board Oversight” above for an additional discussion of risk considerations.

Compensation Committee Process

Setting appropriate compensation for our named executive officers is a core responsibility of the Compensation Committee. The Compensation Committee consists entirely of independent directors who review and approve the compensation of Apple’s named executive officers prior to the start of each fiscal year. The Compensation Committee also administers Apple’s employee equity compensation plans. 

The Compensation Committee reviews Apple’s executive compensation program each year and considers a variety of factors, including shareholder interests; the size, performance and profitability of Apple; the scope of its business; evolving compensation trends; and Apple’s financial goals. The Compensation Committee also evaluates shareholder feedback, as well as the views of its independent compensation consultant and management. However, the Compensation Committee makes final decisions regarding the compensation paid to our named executive officers and any changes to our executive compensation program based on its own business judgment. 

Compensation Committee Priorities when Setting Compensation

The Role of the Compensation Consultant

The 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 Compensation Committee considers the independence of the consultant in accordance with SEC and Nasdaq rules.

During 2022, the Compensation Committee’s independent compensation consultant, Pay Governance, provided no services to Apple other than services for the Compensation Committee, and worked with Apple’s management, as directed by the Compensation Committee, only on matters for which the Compensation Committee is responsible.

At the Compensation Committee’s request, Pay Governance regularly attends Compensation Committee meetings. Pay Governance also communicates with the Compensation Committee or the Chair of the Compensation Committee outside committee meetings regarding matters related to the Compensation Committee’s responsibilities. In 2022, the Compensation Committee generally sought input from Pay Governance on a range of external market factors related to Apple’s compensation programs; CEO pay; shareholder engagement and feedback; environmental, social, and governance performance metrics; 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 the Chief Executive Officer

At the Compensation Committee’s request, Mr. Cook provides input regarding the performance and compensation of the other named executive officers. The Compensation Committee considers Mr. Cook’s evaluation and his direct knowledge of each named executive officer’s performance and contributions when making compensation decisions. Mr. Cook is not present during Compensation Committee voting or deliberations regarding his own compensation.

Executive Compensation Policies and Practices

We are committed to sound executive compensation policies and practices, as highlighted in the following table.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the disclosures contained in the “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting.

Members of the Compensation Committee
Andrea Jung (Chair) | Al Gore | Art Levinson

Executive Compensation Tables

Summary Compensation Table—2022, 2021, and 2020

The following table, footnotes, and related narrative show information regarding the total compensation of each named executive officer for 2022, 2021, and 2020.

The amounts in the salary, bonus, and non-equity incentive plan compensation columns of the “Summary Compensation Table—2022, 2021, and 2020” reflect actual amounts earned 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—2022” and “Stock Vested—2022” 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—2022, 2021, and 2020” should be read in conjunction with the Compensation Discussion and Analysis and the subsequent tables and narrative descriptions.

Grants of Plan-Based Awards—2022

The following table shows information regarding the incentive awards granted to the named executive officers for 2022.

Description of Plan-Based Awards

Non-Equity Incentive Plan Awards. Each of the non-equity incentive plan awards shown in the table entitled “Grants of Plan-Based Awards—2022” was granted under the Apple Inc. 2014 Employee Stock Plan (the “2014 Plan”). The material terms of the 2022 non-equity incentive plan awards granted under the 2014 Plan are described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “2022 Annual Cash Incentive Financial Performance Measures and Payout Opportunities.”

Equity Incentive Plan Awards. Each of the time-based and performance-based RSUs shown in the table entitled “Grants of Plan-Based Awards—2022” was granted under, and is subject to, the terms of the 2014 Plan. The Compensation Committee administers the 2014 Plan.

Time-Based RSUs. The material terms of the time-based RSUs granted to our named executive officers are described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “2022 Long-Term Equity Awards and Results.”

Performance-Based RSUs. The material terms of the performance-based RSUs granted to our named executive officers are described under “Executive Compensation—Compensation Discussion and Analysis” in the section entitled “2022 Long-Term Equity Awards and Results.”

Outstanding Equity Awards—2022

The following table shows information regarding the outstanding equity awards held by each of the named executive officers as of September 24, 2022.