Page 39 - Apple Supply Chain Co-op Inc. 2016 Annual Report.

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2016 and 2015

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 twenty-one
month period. The awards are not funded until they have vested 100%.

Awards granted for 2016, 2015, and 2014 are as follows:

Award 100%
Plan Year Grant Vesting Award
End Date Date Amount
12/31/2013 3/31/2014 1/1/2016 $ 446,568
12/31/2014 3/31/2015 1/1/2017 434,332
12/31/2015 3/31/2016 1/1/2018 255,956

The deferred compensation liability, deferred compensation expense, and payments made to participants
as of December 31, 2016 and 2015 and the years then ended is as follows:

Deferred Compensation Liability
2013 2014 2015 2016
Awards Awards Awards Awards Total

Balance January 1, 2015 $ 415,199 $ 191,850 $ - $ - $ 607,049

2015 payments (415,199) - - (415,199)
2015 compensation expense - 254,718 191,850 - 446,568

Balance December 31, 2015 - 446,568 191,850 - 638,418

2016 payments - (446,568) - (446,568)
2016 compensation expense - - 242,482 109,695 352,177

Balance December 31, 2016 $ - $ - $ 434,332 $ 109,695 $ 544,027

The deferred compensation expense is included in fringe benefits in the statements of operations. The
related liability is recorded in accrued payroll and related liabilities in the balance sheets. The 2016
Contribution Credit award will be fully vested by December 31, 2017. The 2017 deferred compensation
expense for the 2016 Contribution Credit is expected to be $146,261, assuming no forfeitures.

(Continued)

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