PRESS RELEASE
March 20, 2003
Apple Enhances Corporate Governance
Board Approves Plans to Add Directors, Expand Committee Roles & Reduce Stock Option Overhang
CUPERTINO, California—March 20, 2003—Apple® today announced that its Boardof Directors yesterday approved several measures to enhance corporategovernance, including adding two additional independent directors to itsboard, increasing the use of independent committees on the board andreducing issued stock option overhang from 23 percent to 16 percent.
As part of its plan to add two additional independent directors, Appleannounced the addition of former United States Vice President Albert GoreJr. to its board. Mr. Gore was elected at Apple's board meeting yesterday.Apple has commenced a formal search for a second independent director, whichthe Company hopes to add before the end of the summer. With the addition ofthe second independent director, five out of seven Apple directors will beindependent under SEC and NASDAQ rules.
Apple's Board of Directors has expanded the role of its independentNominating Committee to include corporate governance as the new Nominatingand Corporate Governance Committee, and has expanded the role of its AuditCommittee in accordance with the Sarbanes-Oxley Act and proposed SEC andNASDAQ regulations. These two committees are chaired by independentdirectors and staffed by a majority of independent directors.
Apple's Board of Directors also approved two measures to reduce theCompany's issued stock options as a percentage of total options and sharesoutstanding from the current level of 23 percent to 16 percent. The firstmeasure is a voluntary employee stock option exchange program which allowsthe Company's employees who are not executive officers and hold options withexercise prices at or above $25.00 to exchange them for a lesser number ofnew stock options priced at fair market value six months and one day aftertheir existing options are cancelled. The second measure is for Apple CEOSteve Jobs to voluntarily exchange his 27.5 million stock options for a newgrant of 5 million restricted shares that will vest on the third anniversaryof the grant. Together these measures are expected to return a net total ofover 32 million options back to the Company, which represent almost 7percent of the total options and shares currently outstanding.
In addition, the Board approved cancelling the Company's non-shareholderapproved option plan upon the completion of the employee exchange programand shareholder approval to amend the remaining shareholder-approvedexecutive officer stock plan so it can be used to grant options to all employees.
“This is a good day for Apple's shareholders—they will have even moreindependent representation on their Board, the addition of a terrific newdirector in former Vice President Al Gore and a reduction in issued stockoption overhang from 23 percent to 16 percent,” said Steve Jobs, Apple'sCEO. “Apple makes the best personal computers in the world and there is noreason why it shouldn't be among those companies with the best corporategovernance in the world.”
More information on Apple's corporate governance standards can be found at102.p.syniva.es/investor. Terms and conditions of the Employee Stock OptionExchange program are contained in a Tender Offer Statement on Schedule TOthat Apple filed with the SEC today.
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