In a memo addressed to Apple Computer Inc. employees and posted on the company's Web site, Steve Jobs on has announced new steps aimed at making Apple "a more egalitarian, entrepreneurial company."
The cost-cutting moves - directed at employees - include elimination of Apple's sabbatical program; revamped stock options and severance plans; constraints on corporate travel; and consolidation of employees onto the R&D Campus, which has been renamed the "Apple Campus," according to the memo.
"During this difficult time period we need to make tough decisions," says Apple spokeswoman Katie Cotton. "While individual employees may not be pleased with the discontinuing of certain benefits that affect them personally, there's at the same time a widespread understanding that the company had to take drastic steps to tighten our business where possible."
Employee reaction to the memo has been mixed.
One 10-year veteran of Apple who received the memo hails the measures as a positive move away from executive preferences of the past.
"This is what we've been asking for a long time," the staffer says. "They've asked us to work like we were a start-up, and now they are going to start compensating us."
However, reaction to the announcement that Apple will discontinue its sabbatical program at the end of the fiscal year is negative.
"It's quite disconcerting to see this," says a Claris employee who was a few months from qualifying for his sabbatical. "This was one of the attractive things about joining Claris."
More than 50 messages had been posted on a Claris bulletin board railing against the elimination of the sabbatical program, which granted employees six weeks of full pay and benefits after five years of service, the Claris employee says.
One message said: "Wow! The sabbaticals are gone! May the next wave of exodus begin. It seems contradictory to have an Employee Referral Program to try to attract new employees, and at the same time take away one of the key incentives for current employees to stay."
Employees eligible for sabbatical as of September 26, 1997, will be allowed to take the leave in fiscal year 1998, the memo said.
Stock options will be the company's primary form of "beyond-salary" compensation, Jobs wrote in the memo. In addition, he said that the executive team had agreed to forfeit its current and future cash-bonus plans in exchange for additional stock options. The memo noted that on August 5, the board "approved new stock option grants totaling six million shares at the price of US$19.75," up from the $13.25 level previously set on July 11.
"All the options have been going to the guys at the top," the Apple employee says, noting that he had not received any options in five years.
The new severance plan - which will apply to all Apple, Claris, and Newton employees, executives included - will provide a 60-day notice period with full pay and benefits, plus a week's salary for each year of service, according to the memo. "Thank God they are getting rid of the golden parachutes," the Apple veteran says.
Apple's new travel policy specifies coach-class seats for flights lasting less than 10 hours and business class for flights longer than 10 hours, such as flights between San Francisco and Tokyo.
The Apple veteran says that for the past six months corporate travel has been limited to essential trips. One source says it has been common for employees on the same flight to be flying in different sections based on their executive status within the company.
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