What is the primary purpose of this 8-K filing?

The primary purpose of this filing is to disclose Apple's approval and details of its Performance Bonus Plan for the fiscal year 2006, as determined by its Compensation Committee. This includes setting performance targets and bonus structures for its key employees.

How will executive bonuses be determined for fiscal year 2006?

Executive bonuses for fiscal year 2006 will be based on Apple achieving specific targets for annual revenue and operating margin. The target bonus is set at 50% of an executive's base salary, with a maximum potential bonus of 100% of their base salary, contingent on meeting or exceeding these performance goals.

Are there any limitations on the total bonus payouts?

Yes, the Compensation Committee has approved a maximum total bonus pool of approximately $6 million for all participants in the fiscal year 2006 Performance Bonus Plan. Additionally, the committee retains the discretion to reduce or eliminate bonuses based on performance, though not to increase them.

What is the significance of the performance metrics chosen (revenue and operating margin)?

The selection of revenue and operating margin as performance metrics indicates Apple's strategic focus on top-line growth and profitability. These are key indicators of the company's financial health and operational efficiency, directly impacting shareholder value.

AAPL 8-K: Material Agreements

Summary

This Form 8-K filing by Apple Computer, Inc. on December 19, 2005, details the Compensation Committee's approval of the Performance Bonus Plan for fiscal year 2006. The plan outlines performance metrics, participant eligibility, and bonus structures for executive officers (excluding the CEO) and other key employees. The focus is on incentivizing the achievement of specific revenue and operating margin targets, with potential bonuses tied directly to the company's financial performance.

Key Highlights

1Apple's Compensation Committee approved the Performance Bonus Plan for fiscal year 2006.
2Executive officers (excluding the CEO) and other key employees are designated as participants.
3Performance goals for fiscal year 2006 are based on achieving specific levels of annual revenue and operating margin, weighted equally.
4Target bonuses for executive officers are 50% of their annual base salary, with a maximum of 100%.
5The maximum total bonus pool approved for all participants is approximately $6 million.
6Actual bonus payouts will depend on the extent to which performance goals are met, with the Committee retaining discretion to adjust payouts.
7Participants must remain employed for the entire fiscal year 2006 to be eligible for any bonus.

Apple Inc. 8-K Report, Material Agreement (Dec 19, 2005)

Summary

Key Highlights

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