Compensation strategy that apple corporation uses

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Reference no: EM132167446

Paraphrase the below sections.

Compensation strategy in Apple

From the perspective of Apple Company, the money it pays to its employees in return for the work that they do is something that the company needs to focus on to ensure efficient operations. Unless the company and employees are in a broad agreement, the net result will be frustration from employees standpoint and friction in the bond. Apple can thus use compensation strategy as a way of binding effectively with its large pool of both permanently and temporally employed workers. This can further be outlined in a mutually binding legal document or contract that spells out exactly how much compensation each employee in the company will get. The binding document should also elaborate on the components of the compensation package.

Apple company's objective for its executive or employee compensation platform is to attract and retain a gifted, entrepreneurial, and an imaginative team of executives. These officials will help in providing leadership to ensure company’s success in competitive and dynamic markets. The company pursues to achieve this objective in a manner that is allied with the long-term welfares of company’s stakeholders. The compensation committee oversees the compensation program and determines the compensation for company's top officials. Apple company believes that compensation strategy for the named executive officers and other stakeholders can help the company improve its financial performance in the challenging macroeconomic environment.

In the year 2009, Apple company's revenues grew to 36.5 billion USD. This was a positive increase of 4.1 billion USD in comparison to the previous year. This was a 12% increase. Net income increased to 5.7 billion USD in the year 2009. This was an 18% or 870 billion USD increase prior to 2009. Additionally, the number of company’s total stakeholders increased drastically by 857%. These changes can be said to have resulted from the compensation strategies employed by the corporation.

The corporation has confidence in that the executive compensation strategy has been the critical tool towards its achievement. This has made executive compensation strategy remain the mostly desired by the compensation committee. This compensation strategy involves three basic elements: long-term equity rewards, base salaries, and yearly performance based money bonus awards. An example to this was that Mr. Jobs, who was company’s pioneer, received a total compensation salary of 1 million USD every year.

Apple Corporation continues to rely primarily on long-term equity awards in the form of RSUs. This ensures retention and attraction of outstanding executive team. It also ensures a strong connection between compensation strategy and financial performance of the company. Company’s committee, which is solely dedicated to compensation matters, once a year analyzes remaining unvested equity rewards of the named employees. This is aimed to determine whether supplementary rewards are necessary to stimulate employees' performance. In general, Apple's RSU awards to the named employee were given after two years. This was done without any shares vest formerly to the end of an estimated 4 year conferring or vesting periodTop of Form

Apple Corporation puts less emphasis on the total monetary compensation than on extended term equity rewards. Consequently, this shapes company’s annual performance based cash bonus platform from the named executive employee. In the year 2009, company’s compensation committee altered performance criteria used in company’s bonus program from revenue and operating income. This was done in accordance with the United States GAAP to adjust to sales and operating income. Adjusted operating income and adjusted sales differ from United States in that they dismiss the effects of payment related to total sales, that is Apples’ television and iPhones.

Performance-based cash incentive is also another compensation strategy that Apple Corporation uses. This compensation strategy has been instrumental in helping Apple attain its business goals, objectives and fair in light of company’s robust financial performance comparative to that of its peer group.

Reference no: EM132167446

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