Corporate Governance

Ranganath Jagannath MPE 100409

Objectives
The guidelines, in conjunction with the
Corporation’s articles of incorporation, bylaws,
and the charters of the committees of the Board,
form the framework of governance of the
Corporation.

The governance structure of the Corporation is

designed to be a working structure for principled
actions, effective decision-making and appropriate
monitoring of both compliance and performance.
Roles and Responsibility of the Board
Oversees the Chief Executive Officer and other senior
management in the competent and ethical operation of
the Corporation on a day-to-day basis.
Assures that the long term interests of the shareholders
are being served.
To satisfy its duties, directors are expected to take a
proactive, focused approach to their position, and set
standards to ensure that the Corporation is committed
to business success through the maintenance of high
standards of responsibility and ethics.
Board Committees (1/3)
Standing Committees:
 The Board currently has a Nominating and Corporate Governance
Committee, an Audit and Finance Committee and a Compensation
Committee. From time to time, the Board may form new committees as it
deems appropriate.

Independence and Qualifications of Standing Committee Members

 All of the members of the standing committees will meet the then-effective
criteria for independence established by NASDAQ and, in the case of the
Audit and Finance Committee, the Sarbanes-Oxley Act of 2002 and the
independence definition as set forth in Rule 10A-3(b)(1) of the Securities
Exchange Act of 1934, as amended. The members of these committees also
will meet the other membership criteria specified in the respective charters
for these committees. At least one member of the Compensation Committee
will not serve simultaneously on the Audit and Finance Committee.
Board Committees (2/3)
Standing Committee Member Assignments and
Rotation:
The Nominating and Corporate Governance Committee
makes recommendations to the Board concerning the
structure and composition of the Board committees. The
Board will designate the chair, committee members and,
where applicable, alternate standing committee members,
by the vote of a majority of the directors. From time to
time, there will be occasions on which the Board may
want to rotate standing committee members, but the
Board does not believe that it should establish a formal
policy of rotation.
Board Committees (3/3)
Standing Committee Charters:
 Each standing committee will have its own charter. The charter will set
forth the purpose, authority and responsibilities of the standing committee
in addition to the qualifications for standing committee membership.

Meeting and Agenda:

 The chair of each standing committee will determine, in consultation with
the appropriate standing committee members and members of
management, and in accordance with the standing committee’s charter,
the frequency and length of standing committee meetings and the
standing committee’s agenda. Each standing committee will establish, to
the extent foreseeable and practical, a schedule of agenda items to be
discussed during the year. The schedule for each standing committee will
be furnished to the full Board.
Director Compensation
The Compensation Committee will review the form
and amount of director compensation annually and
recommend any changes to the Board. Non-employee
directors are expected to receive a substantial portion
of their annual retainer in the form of equity.
Employee directors are not paid additional
compensation for their services as directors.
Board Evaluation
The Board should undertake an evaluation of the
Board, its Committees and each member at least
annually to determine whether it and its members and
committees are functioning effectively. The
Nominating and Corporate Governance Committee is
responsible for coordinating and overseeing the annual
Board evaluation process in accordance with the
charter and principles of that committee.
Management Review and Succession Planning
The Compensation Committee should conduct, and review
with the Board, an annual evaluation of the performance of
all executive officers, including the CEO. The
Compensation Committee is expected to use this review in
the course of its deliberations when considering the
compensation of the CEO and senior management. The
Board also reviews the CEO performance evaluation to
ensure that the CEO is providing effective leadership of the
Corporation. As part of the annual evaluation, the Board
and the CEO should conduct an annual review of
management development and succession planning for
senior management, including the CEO.
Audit and Finance Committee
Purpose
Assist the Board in oversight and monitoring of:
The Corporation’s financial statements and other financial information
provided by the Corporation to its shareholders and others
Compliance with legal, regulatory and public disclosure requirements
Enterprise risk management
The independent auditors, including their qualifications and
independence
The Corporation’s systems of internal controls, including the Internal
Audit function
The auditing, accounting, and financial reporting process generally
Prepare the report required by the rules of the Securities and Exchange
Commission (the “SEC”) to be included in the Corporation’s annual
proxy statement.
Compensation Committee
Purpose
Establish and modify compensation and incentive plans
and programs
Review and approve compensation and awards under
compensation and incentive plans and programs for
elected officers of the Corporation
Act as the administering committee for equity
compensation plans as designated by the Board.
Nominating and Corporate Governance Committee
Purpose

Consider and report periodically to the Board on matters

relating to the identification, selection and qualification
of Board members and candidates nominated to the
Board

Advise and make recommendations to the Board of

Directors with respect to corporate governance matters.
Business Conduct Ethics
Apple’s success is based on creating innovative, high-quality products
and services and on demonstrating integrity in every business
interaction. Apple’s principles of business conduct define the way it
does business worldwide. These principles are:
 Honesty. Demonstrate honesty and high ethical standards in all business
dealings.
 Respect. Treat customers, suppliers, employees, and others with respect
and courtesy.
 Confidentiality. Protect the confidentiality of Apple’s information and the
information of it’s customers, suppliers, and employees.
 Compliance. Ensure that business decisions comply with all applicable
laws and regulations.
 A complete listing of Apple’s Business Conduct Ethics is available at
http://files.shareholder.com/downloads/AAPL/1250487002x0x443008/5f38b1e6-2f9c-
4518-b691-13a29ac90501/business_conduct_policy.pdf
Compliance
To ensure compliance in all its business conduct, Apple
has well constituted committees and policies to oversee
the effectiveness of compliance worldwide. Some of the
visible mechanisms that it enforces compliance is by the
formation of various committees and policies. Examples:
Business Conduct Policy for Employees and Vendors
Corporate Governance Guidelines
Guidelines regarding Director conflicts of interest
Political Contributions and Expenditure Policy
Related Party transactions policy
Reporting Questionable Accounting or Auditing Matters
Enterprise Risk Management
It is the Audit Committee’s charter to review and
discuss with management :
The management’s enterprise risk management program
and policies, including financial risk assessment and risk
management policies
The Corporation’s major financial risk exposures and the
steps management has taken to monitor and control such
exposures, and ,
Major legislative and regulatory developments that could
materially impact the Corporation’s contingent liabilities
and risks.
Tone at the top
It is not whether someday Apple shareholders will wish they had a more robust
corporate governance regime.  It is only a matter of when this will occur, and at
what price.
Apple's Chairmanship, which is informally held by Steve Jobs, has never been
properly documented.
The board meets infrequently and there is no reasonable way such a small number
of directors could properly discharge their duties serving on Apple’s various
committees, especially on top of the other outside roles most board members have.
Three of Apple’s five outside directors serve as either chairman or CEO of other
companies and sit on additional boards as well.
Steve Jobs remains synonymous with Apple and a key to its success. Despite much
ballyhoo about having others who could fill his shoes when he took his medical
leave a few years ago, this is widely viewed as wishful thinking. The board has
done little to show that an active succession plan is in place.
Source: http://finlayongovernance.com/?p=2168