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Apple's Compensation and Benefit Strategy Faisal O. Ba SharahilMcDaniel CollegeAuthor NoteThis paper was prepared for Compensation and Benefits Design, HRD 542, taught by Julie Develin.Apple’s Compensation and Benefit StrategyIntroductionMost of people believe that Apple’s success comes from a combination of many factors. These factors include the unusual leadership skills of the CEO, the high-tech products, and the corporate culture of enthusiasm and innovation. Also, Apple focuses more on its employees by giving them the best compensation and benefit programs. These services have empowered and enabled Apple to stay a competitive corporation for a long time. Today, Apple brand embodies quality, innovation, and prestige. Apple is the most valuable brand worldwide. Apple is one of the most challenging places to work at. Apple’s 100,000 workers are dedicated to making the best products on earth, and they are committed to make the world a better place than we found it.The History of AppleApple, Inc. was established and found by two men called Steve Jobs and his friend Steve Wozniak. They were two high school dropouts living in the Silicon Valley. They started making the first Apple computer on April 1, 1976 in Jobs' home. From this date, they have revolutionized the way that many people all over the world use computers, listen to music, search the internet, and even talk on the phone ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . 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Apple’s Vision According to the Apple’s website, its vision is “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings” ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . 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Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . The Innovative Success that is Apple , Inc .", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Scholar et al., 2012)", "manualFormatting" : "(Scholar et al., 2012, p. 3)", "plainTextFormattedCitation" : "(Scholar et al., 2012)", "previouslyFormattedCitation" : "(Scholar et al., 2012)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Scholar et al., 2012, p. 3)Apple’s Values According to the Apple’s website, its values are as follows: We believe that we are on the face of the Earth to make great products, we believe in the simple, not the complex, we believe that we need to own and control the primary technologies behind the products we make, we participate only in markets where we can make a significant contribution, we believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us, We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and courage to change ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . The Innovative Success that is Apple , Inc .", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Scholar et al., 2012)", "manualFormatting" : "(Scholar et al., 2012, p. 3)", "plainTextFormattedCitation" : "(Scholar et al., 2012)", "previouslyFormattedCitation" : "(Scholar et al., 2012)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Scholar et al., 2012, p. 3)Apple’s Organizational StructureUnder Apple’s CEO, there are eleven executives of management, who work directly under Apple’s top leader. Apple’s CEO has the power to control all managements that are headed by the Senior Vice Presidents of CFO, COO, Legal, Design, Operations, iOS software, Retail, Product Marketing, Software Engineering, and Global Communication. The CEO and board of managers of Apple make all the decisions, which will go directly down the line to every worker of the company ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . The Innovative Success that is Apple , Inc .", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Scholar et al., 2012)", "plainTextFormattedCitation" : "(Scholar et al., 2012)", "previouslyFormattedCitation" : "(Scholar et al., 2012)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Scholar et al., 2012). Unfortunately, the company lost the Founder and CEO, Steve Jobs on October 5, 2011, and this left the company looking for a new leader. Now, according to Apple's website, the company hired Tim Cook the new CEO of Apple.Apple's Corporate CultureApple’s transition from a computer to a consumer electronics company is unique and difficult to replicate. Although many people can think about why Apple succeeded highly in the business world, they tend to credit effective leadership abilities, highly skilled employees, and powerful corporate culture ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011). Jobs established two cultural changes: he encouraged discussion on ideas, and created a dream and vision that employees could believe in. By achieving these two aims, employees felt that their contribution was very important, and that they were essential and important members of Apple ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011). The administration has created a sense of loyalty among the employees at Apple. Apple's environment has inspired the creative ideas and innovative technology ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011). Apple's environment has attracted the best employees who fit within its corporate culture ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011). It has supported its employees to provide comprehensive training and better compensation than employees may receive at similar companies ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011).Apple’s Business Strategy and GoalsApple has a clear strategy and a set of goals. According to Apple's report, the company is committed to bring the best user experience to its customers through its innovative software, hardware, peripherals, and services ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . 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Also, Apple’s business strategy influences its unique ability to develop and design its own operating systems, application software, hardware, and services to provide its customers modern products and solutions with superior ease-of-use, seamless integration, and innovative design ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . 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Apple believes constant investment in developing researches, marketing, and advertising is important to the development and sale of innovative products and technologies ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Scholar", "given" : "Marshall Digital", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Johnson", "given" : "Katherine", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Singer", "given" : "Jason", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "title" : "The Innovative Success that is Apple , Inc . 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According to Apple’s website, four prime principles contribute to integrity: respect, honesty, compliance, and confidentiality ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Daniels", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "University of New Mexico", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2011" ] ] }, "title" : "Apple Inc .\u2019 s Ethical Success and Challenges", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Daniels, 2011)", "plainTextFormattedCitation" : "(Daniels, 2011)", "previouslyFormattedCitation" : "(Daniels, 2011)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Daniels, 2011). Apple's ethics includes four elements; these elements are business integrity, disclosure of information, whistleblower protection and anonymous complaints, and protection of intellectual property ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "DOI" : "10.1039/c0ob90042g", "ISSN" : "1477-0539", "PMID" : "20882236", "author" : [ { "dropping-particle" : "", "family" : "Ahmad", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "Apple Supplier Responsibility", "id" : "ITEM-1", "issue" : "sdsdfggggg", "issued" : { "date-parts" : [ [ "2013" ] ] }, "page" : "121", "title" : "Apple Supplier Responsibility", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Ahmad, 2013)", "plainTextFormattedCitation" : "(Ahmad, 2013)", "previouslyFormattedCitation" : "(Ahmad, 2013)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Ahmad, 2013). In Table 1, these are the numbers, which determined the core violations in Apple in 2008 revealed violations in other areas by monitoring program.Table 1.Some Status of Facilities Audited in 2008 ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "February", "given" : "Progress Report", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issue" : "February", "issued" : { "date-parts" : [ [ "2009" ] ] }, "title" : "Contents", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(February, 2009)", "plainTextFormattedCitation" : "(February, 2009)", "previouslyFormattedCitation" : "(February, 2009)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(February, 2009)Compliance OverviewFrequent ViolationsLimited ViolationsIn ComplianceFacilities42%17%41%Work Hours and Days of Rest127%14%59%Wages and Benefits210%2%88%Occupational Illness Prevention34%2%94%Health and Safety Training and Awareness42%1%97%Ethics51%1%98%Fair Treatment6Apple's Pay DesignApple’s code addressed several areas of compensation, including base wages, overtime wages, legally mandated benefits, the manner in which employees are paid, and prohibition of wage deductions for disciplinary purposes ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "February", "given" : "Progress Report", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issue" : "February", "issued" : { "date-parts" : [ [ "2009" ] ] }, "title" : "Contents", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(February, 2009)", "plainTextFormattedCitation" : "(February, 2009)", "previouslyFormattedCitation" : "(February, 2009)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(February, 2009). Apple ensures that all employees receive at least the legally mandated minimum wages and benefits. Also, Apple offers vacation time, leave time off, and periods for legally recognized holidays and compensate employees for overtime hours at the legal premium rate. Moreover, Apple pays structure, periods, and accurate wages to all employees in a timely manner. Wage deductions must not be used as a disciplinary measure ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2012" ] ] }, "page" : "8", "title" : "Apple Supplier Code of Conduct", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2012)", "plainTextFormattedCitation" : "(Apple Inc., 2012)", "previouslyFormattedCitation" : "(Apple Inc., 2012)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2012).Elements of the Compensation ProgramCompensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship (Milkovich, Newman, & Gerhart, 2014). The compensation includes two forms: monetary, such as cash, gift cards, and vouchers; and non-monetary, such as gifts or promotional items, course credit, extra credit, or reward.There were several elements of the compensation program and the company’s executive compensation program was simple in its design. It consists of three components: long-term equity awards in the form of time-based and performance-based Restricted Stock Units (RSUs) under the Company’s shareholder-approved employee incentive plan, annual performance-based cash bonuses, and base salaries ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Apple emphasizes on long-term equity awards and annual performance-based cash bonuses, so that a main portion of each executive’s total compensation opportunity is related directly to the company’s stock price or driven by performance ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). Moreover, all other programs depend on the same basis as other employees ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).The Role of Long-Term Equity AwardsApple emphasizes on RSUs because the company believes that long-term equity awards in the form of RSUs are the most effective way to retain and attract a talented executive team, and to align executives’ interests with those shareholders by tying an important portion of their compensation to shareholder value creation ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). Therefore, the Apple’s executive compensation program in recent years has been weighted considerably toward long-term equity awards rather than cash compensation ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Apple believes that when RSUs maximize retention, it creates more incentives for better performance, and further align executives’ interests with those of shareholders because an RSU’s value increases or decreases with the company’s stock price. Therefore, this way leads to enhance the relationship between executive officers’ and shareholders’ interests ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Apple has reviews and redesigns the executive compensation program every two fiscal years with its independent compensation consultant about market practices and peer company data. The Compensation Committee decided to transition from biennial equity grants to annual grants starting in 2014 ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). This committee gave the awards granted in 2014 between 60% time-based and 40% performance-based awards ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).The Role of Cash CompensationBase Salaries. Base salaries offered by Apple are formal, help to attract the best executives and employees, and retain them for a long time in organizations. According to Apple Inc. (2015): “In February 2014, after reviewing peer company market data provided by its independent compensation consultant, the compensation committee increased Mr. Cook’s base salary from $1.4 million to $2 million and the base salaries of the other executive officers from $875,000 to $1 million” ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015, p. 34). The change was the first increase to Mr. Cook’s salary since November 2011.Performance-Based Cash Bonuses. The compensation committee established goal performance-based cash bonus awards on an annual basis to provide the executive officers with the opportunity to gain compensation for achieving the company’s annual performance goals ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). The goal and maximum bonus levels for the executive officers grew in February 2014 to 200% and 400%, respectively, of each officer’s base salary ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). The compensation committee thought that the officers’ total cash compensation opportunities compared to the total cash compensation opportunities for executives at peer organizations was reasonable and fair ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). Also, Apple emphasizes on long-term equity awards and the preference for emphasizing long-term shareholder value creation over annual operating results. In addition, Apple has no long-term cash bonus program. All long term incentives are delivered through equity awards ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Performance Criteria. Performance criteria used to choose the annual bonuses for the named executive officers were net sales and operating income as determined in accordance with accepted accounting rules. These standards were determined because they reflect recognized measures of overall company performance and are associated with shareholder value creation.Performance Goals. Performance goals are set at targeted and maximum levels based on objectives in the Company’s internal business plan. The maximum net sales performance goals for 2014 in Apple were approximately 5% and 6% higher than the target in 2013. Also, the target and maximum operating income performance goals for 2014 were set approximately 4% and 6%, which was higher than the target in 2013 ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). In 2014, the goals and the company’s actual performance, net sales, and operating income were both 7%, which was higher than the company’s net sales and operating income in 2013 ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Payout Structure. The payout structure depends on an equal weighting of operating income and net sales because each measure is considered equally important in the Apple’s internal business plan. The performance-based cash bonuses are determined as a percentage of the executive base salary, and payouts are interpolated for accomplishment of performance between the maximum goals and target .No payout is made relative to a particular performance standard unless the targeted performance goal is accomplished with respect to that standard ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015). At the end of the year, the compensation committee decides the amount of the bonus to be paid to each executive officer by comparing the Apple’s financial results to the performance goals ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc.", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "SEC Filings", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "title" : "Form Def 14A / Proxy Statement (definite)", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc., 2015)", "plainTextFormattedCitation" : "(Apple Inc., 2015)", "previouslyFormattedCitation" : "(Apple Inc., 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2015).Apple's Employee Benefits ProgramsEmployee benefits refer to compensation other than an hourly wage or salary. Employee benefits include paid vacation, medical insurance coverage, and tuition reimbursement (Martocchio, 2014). Apple's employee benefits programs which include more value programs are 401(k) plan (with company match), organic ingredients, café featuring local, commuter programs, including free shuttle to Cupertino (WiFi equipped), employee stock purchase plan, flexible spending, accounts (for health care or dependent day care needs), fitness center, health insurance, holiday/vacation pay, long-term care insurance, life insurance, long-term disability insurance, personal/family counseling, product discounts, short-term disability insurance, financial education seminars, tuition assistance, and wellness programs.This paper will address the most important Apple's employee benefits. Apple offers many employee benefits programs such as longer parental leave, education reimbursements for all classes taken by employee, subsidized student loan refinancing, a broader donation-matching program, and full acceleration of stock in the event of the employee's death.Parental Leave. Apple addressed its parental leave policy. Apple's employees in US have a few more weeks of paid parental leave. Also, expectant mothers can take up to four weeks before a delivery and upwards of 14 weeks after and expectant fathers (and other non-birth parents) can take six-week parental vacation (Ram, 2014).Discounts on Tech. Each year, employees can gain a 25% discount on an iPod, iPad, or computer. Most Apple software can be purchased at a 50% discount, and Apple Care comes with a 25% discount. After 90 days on the job, workers can choose either $500 off the price of a Mac (excluding the Mini) or $250 off an iPad, this offer can be repeated again every 3 years. Moreover, Apple offers 15% off products for friends and family.Health Insurance. Apple offers health insurance and flexible spending accounts that can be used for health care or dependent day care. Also, Apple provides insurance coverage for employees and their spouse, domestic, or same-sex partner. Apple covers 65% of each full-time employee, and the same policy will reportedly be extended to part-time workers.Wellness Center. The Human Resource (HR) department at Apple offers the corporate wellness center at the campus in Cupertino, California. More than 43,000 workers have already visited for physician facility. This center includes seven primary care clinicians with whom workers can schedule check-ups and other routine medical procedures. Also, Apple plans to open similar clinics elsewhere throughout its empire (Cook, 2014).Education Reimbursements. At Apple, educational assistance is available to all full-time workers and part-time retail workers worldwide. This educational assistance covers courses related to any job at Apple, including English language courses at any institution.Refinancing Program. Apple offers a student loan refinancing program for U.S. employees. This program can help employees pay future expenses for their college-aged children.Donation Program. Since the Apple Matching Gifts Program began, it has matched over $25 million of employees’ charitable contributions. This program is important for all Apple employees around the world, and anyone can donate money or time. Apple is matching philanthropic donations from workers, not just by matching the money employees donate. Moreover, Apple matches hours spent on charitable endeavors; usually Apple matches up to $25 per hour of non-profit work, with a cap of $10,000 per employee.Apple is always looking for people who are very smart, creative, and adaptable to join their team. Denise Young Smith, who is Apple's head of human resources retains and attracts top-notch employees by giving them expanded benefits. Overall, based on hundreds of reviews on Glassdoor and a few Quora posts written by former employees, it sounds like Apple treats its employees extremely well.Apple's Growth and CompetitivenessApple has increased extraordinary success and growth between 2006 and 2012. For example, “The company’s net sales increased more than six-fold between 2006 and 2012, from $24.6 billion to $156.6 billion, with an average annual growth rate in excess of 36%. Apple is among the largest publicly traded companies in the world by market capitalization and is one of the largest technology companies in the world by revenue and profit” ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issue" : "May", "issued" : { "date-parts" : [ [ "2013" ] ] }, "title" : "Economic and Fiscal Impacts Generated by Apple in Cupertino \u2013 Current Facilities and Apple Campus 2", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc, 2013)", "plainTextFormattedCitation" : "(Apple Inc, 2013)", "previouslyFormattedCitation" : "(Apple Inc, 2013)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc, 2013, p. 3). For example, the number of Apple’s employees based in Cupertino has increased at an average annual rate of 18% over the past five years. Also, around 7,400 employees will be hired between June 2013 and 2016 in Apple Campus 2, resulting in a projected total employee of 23,400 ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Apple Inc", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issue" : "May", "issued" : { "date-parts" : [ [ "2013" ] ] }, "title" : "Economic and Fiscal Impacts Generated by Apple in Cupertino \u2013 Current Facilities and Apple Campus 2", "type" : "article-journal" }, "uris" : [ "" ] } ], "mendeley" : { "formattedCitation" : "(Apple Inc, 2013)", "manualFormatting" : "(Apple Inc., 2013)", "plainTextFormattedCitation" : "(Apple Inc, 2013)", "previouslyFormattedCitation" : "(Apple Inc, 2013)" }, "properties" : { "noteIndex" : 0 }, "schema" : "" }(Apple Inc., 2013).According to a report from Distimo, “In 2013, Google Play’s revenue share has been growing at Apple’s expense; in November 2013, the Apple App Store was still leading-though with 63% relative to 37% for Google Play. In June 2013, Google Play was only responsible for 30%, and accordingly, Apple’s share was at 70%” (Nielson, 2014, p. 1). ConclusionApple's success is due to the attractive advertisements and the new products that are getting wider publically. Also, Apple decides to focus more on people, not just products by giving its employees more and new compensation and benefits programs. These factors enabled Apple to stay a competitive and lead corporation for a long time. Apple has earned first place among Fortune magazine’s World’s Most Admired Companies. Most of people in the world seem optimistic about Apple's future because of its protocols, strategies, and plans.ReferencesADDIN Mendeley Bibliography CSL_BIBLIOGRAPHY Ahmad. (2013). Apple supplier responsibility. Apple Supplier Responsibility, 121. Inc. (2013). Economic and fiscal impacts generated by Apple in Cupertino - current facilities and Apple Campus 2, (May). Retrieved from Inc. (2012). Apple supplier code of conduct, 8. Retrieved from \n Inc. (2015). Form def 14A / proxy statement (definite). SEC Filings.Cook, D (2014). Apple bolsters, expands employee benefits. BenefitsPro. Retrieved from:. (2011). Apple inc ’s ethical success and challenges. University of New Mexico.February, P. R. (2009). Contents, (February).Martocchio, J. (2014). Employee benefits (5th ed). Introduction to employee benefits (p.5). New York, NY: McGraw-Hill Irwin.Milkovich, G., & Newman, J., & Gerhart,B. (2014). Compensation (11th ed). The pay model (p.13). New York, NY: McGraw-Hill Irwin.Nielson, S.(2014). Why innovation could be the key to Apple’s growth. Market Realist. Retrieved from: , M. (2014). Apple unveils new perks to attract talent. Fortune. Retrieved from: , M. D., Johnson, K., & Singer, J. (2012). The innovative success that is Apple , Inc. ................
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