Page 33 - 2019 Apple Supply Chain Co-op, Inc. Annual Report

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2019 and 2018

NOTE 2 - DEFERRED COMPENSATION

Effective January 1, 2010, the Company initiated a Long Term Incentive Plan with an unfunded Contribution
Credit on the behalf of certain officers to be considered deferred portions of their compensation. Awards
are to be 0% to 100% of Target based on performance against objectives identified by the Company’s
Board of Directors. Awards are granted each March for the preceding plan year ending on December 31.
The awards vest 100% on January 1 of the third plan year after the plan year for which the award was
granted. Accordingly, the awards are amortized into compensation expense evenly over a thirty-six month
period. The awards are not funded until they have vested 100%.

Awards granted for 2019, 2018, and 2017 are as follows:

Award 100%
Plan Year Grant Vesting Award
End Date Date Amount
12/31/2017 3/31/2018 1/1/2020 297,347
12/31/2018 3/31/2019 1/1/2021 619,885
12/31/2019 3/31/2020 1/1/2022 784,954

The deferred compensation liability, deferred compensation expense, and payments made to participants
as of December 31, 2019 and 2018 and the years then ended is as follows:

Deferred Compensation Liability
2016 2017 2018 2019
Awards Awards Awards Awards Total
Balance January 1, 2018 $ 173,717 $ 86,859 $ - $ - $ 260,576

2018 compensation expense 86,859 111,372 206,628 - 404,859

Balance December 31, 2018 260,576 198,231 206,628 - 665,435

2019 payments (260,576) - - - (260,576)
2019 compensation expense - 99,116 206,628 261,651 567,395

Balance December 31, 2019 $ - $ 297,347 $ 413,256 $ 261,651 $ 972,254

The deferred compensation expense is included in fringe benefits in the statements of operations. The
Company has recorded the current portion of the deferred compensation liability in accrued payroll and
related liabilities in the balance sheets. The current portion of the liability was $297,347 and $260,576 at
December 31, 2019 and 2018, respectively. The long-term portion of the liability is recorded in deferred
compensation in the balance sheets. The long-term portion of the liability was $674,907 and $404,859 at
December 31, 2019 and 2018, respectively. The 2018 and 2019 Contribution Credit awards will be fully
vested by December 31, 2021 and December 31, 2022, respectively. The 2020 deferred compensation
expense for the 2018 and 2019 Contribution Credits is expected to be $468,279, assuming no forfeitures.

(Continued)

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