Apple to Set Aside 17 Million Shares For Top - Executive Compensation Plan By Jim Carlton

03/17/1998 The Wall Street Journal Page B6 (Copyright (c) 1998, Dow Jones & Company, Inc.) Apple Computer Inc. plans to set aside 17 million common shares, or 13% of its shares outstanding, for top executives and key employees under a move by Steve Jobs, the company's interim chief executive officer, to tie pay to performance. The allotment -- one of the largest that executive-compensation experts can remember -- is aimed at attracting and keeping managerial talent as the computer maker struggles to recover from a downward spiral. Approved by the board and subject to a shareholders' vote at the company's annual meeting April 22, the plan reverses Apple 's longstanding policy of rewarding its executives primarily with salaries and bonuses. "Steve is convinced that instead of having your compensation handed to you on a platter, you need to work for it," said Tim Bajarin, an industry consultant in San Jose, Calif. Stock allocations are increasingly being used by corporations to provide added incentive for their executives to enhance shareholder value. Fast-growing start-ups in the high-technology sector, for example, have been giving away as much as 4% of their stock each year to executives and employees, in lieu of high salaries. The Apple plan is ambitious by even those standards, however, and appears to reflect Mr. Jobs's determination to take whatever steps are necessary to revive the company he co-founded. Apple 's sales have been sliding for two years, although the company returned to modest profitability in the latest quarter and its stock has been on an upward trajectory. "If you are in a classic turnaround, survival situation such as this, what you use is stock," said Alan Johnson, managing director of Johnson Associates, an executive-pay consulting firm in New York. "They are using the only currency they have." Apple officials were not available for comment on the plan, which was disclosed yesterday in a proxy filing with the Securities and Exchange Commission. As adopted by the board, it calls for as many as 17 million shares to be handed out in options, stock-appreciation rights and stock-purchase rights to certain key employees and executives beginning at the rank of senior vice president. The company chairman would also receive this windfall, as would the chief executive officer. While Apple 's search for a new CEO continues, months after former Chairman and CEO Gilbert F. Amelio was ousted last summer, many people close to the company believe that Mr. Jobs will soon take the job permanently. Indeed, Apple 's proxy statement addresses that possibility, saying "in the event that Mr. Jobs continues in this position" of interim CEO, the board intends to grant him an unspecified number of options and other stock acquisition rights.