Exhibit 10.3

APPLE INC.

1997 DIRECTOR STOCK OPTION PLAN

(Effective as of May 10, 2007)

On April 9, 2007 the Board adopted this amended 1997 Director Stock Option Plan
(the “Plan”), which shall govern all grants of Options made after this amendment
and restatement, and which shall become effective upon its approval by the
Company’s shareholders (the “Effective Date”). For the terms and conditions of
the Plan applicable to Options granted before the Effective Date, refer to the
version of the Plan in effect as of the date such Option was granted.

1.     PURPOSES.   The purposes of the Plan are to retain the services of
qualified individuals who are not employees of the Company to serve as members
of the Board and to secure for the Company the benefits of the incentives
inherent in increased Common Stock ownership by such individuals by granting
such individuals Options to purchase shares of Common Stock.

2.     ADMINISTRATION.   The Administrator will be responsible for administering
the Plan. The Administrator will have authority to adopt such rules as it may
deem appropriate to carry out the purposes of the Plan, and shall have authority
to interpret and construe the provisions of the Plan and any agreements and
notices under the Plan and to make determinations pursuant to any Plan
provision. Each interpretation, determination or other action made or taken by
the Administrator pursuant to the Plan shall be final and binding on all
persons. The Administrator shall not be liable for any action or determination
made in good faith, and shall be entitled to indemnification and reimbursement
in the manner provided in the Company’s Articles of Incorporation and By-Laws as
such documents may be amended from time to time.

3.     SHARES AVAILABLE.   Subject to the provisions of Section 7(b) of the
Plan, the maximum number of shares of Common Stock which may be issued under the
Plan shall not exceed 1,600,000 shares (the “SECTION 3 LIMIT”). Either
authorized and unissued shares of Common Stock or treasury shares may be
delivered pursuant to the Plan. If Options are forfeited or are terminated for
any reason before vesting or being exercised, then the shares underlying such
Options shall again become available for Options under the Plan. Shares that are
exchanged by a Non-Employee Director or withheld by the Company as full or
partial payment in connection with any Option under the Plan shall not be
available for subsequent Options under the Plan.

4.     OPTIONS.   Each Non-Employee Director shall receive grants of Options
under the Plan as follows:

(a)   OPTION GRANTS.

(i)   INITIAL GRANT.   Non-Employee Directors who were members of the Board on
the day prior to the Effective Date shall be granted an Initial Option to
purchase 15,000 shares of Common Stock as of August 14, 1997 (“INITIAL GRANT
DATE”), PROVIDED that such individual continues to serve as a Non-Employee
Director through the Initial Grant Date. Non-Employee Directors who were elected
or appointed to the Board on the Effective Date shall be granted an Initial
Option to purchase 30,000 shares of Common Stock on the Initial Grant Date,
PROVIDED that such individual continues to serve as a Non-Employee Director
through the Initial Grant Date. Non-Employee Directors who are elected or
appointed to the Board after the Effective Date shall be granted an Initial
Option to purchase 30,000 shares of Common Stock as of the date of their
election or appointment to the Board. The provisions of this
Section 4(a)(i) shall not apply to any member of the Board who first becomes a
Non-Employee Director by reason of such member’s ceasing to be an employee of
the Company and its Subsidiaries.

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(ii)   ANNUAL GRANTS.   Each Non-Employee Director shall receive an Annual
Option to purchase 10,000 shares of Common Stock on the fourth anniversary of
the Non-Employee Director’s initial election or appointment to the Board and on
each subsequent anniversary thereof, PROVIDED that the individual has remained
in continuous service as a director of the Company through such anniversary date
and is a Non-Employee Director on the applicable anniversary date.

(b)   EXERCISE PRICE.   The per share exercise price of each Option shall be the
Fair Market Value of a share of Common Stock as of the date of grant of the
Option determined in accordance with the provisions of the Plan.

(c)   VESTING.   Initial Options shall vest and become exercisable in equal
annual installments on each of the first through third anniversaries of the date
of grant, PROVIDED that the Non-Employee Director has remained in continuous
service as a director of the Company through each such anniversary date. Annual
Options shall be fully vested and immediately exercisable on their date of
grant.

(d)   TERM OF OPTIONS.

(i)    TEN-YEAR TERM.   Each Option shall expire ten (10) years from its date of
grant, subject to earlier termination as provided herein.

(ii)   EXERCISE FOLLOWING TERMINATION OF SERVICE DUE TO DEATH.   If a
Non-Employee Director ceases to be a member of the Board by reason of such
Non-Employee Director’s death, the Options granted to such Non-Employee Director
may be exercised by such Non-Employee Director’s Beneficiary, but only to the
extent the Option was exercisable at the time of the Non-Employee Director’s
death, at any time within three (3) years after the date of such termination of
service, subject to the earlier expiration of such Options as provided for in
Section 4(d)(i) above. At the end of such three-year period, the vested portion
of the Option shall expire. The unvested portion of the Option shall expire on
the date of the Non-Employee Director’s death.

(iii)  TERMINATION OF OPTIONS IF A NON-EMPLOYEE DIRECTOR IS REMOVED FROM THE
BOARD FOR CAUSE.   In the event a Non-Employee Director is removed from the
Board for “cause,” all Options granted to such Non-Employee Director (whether or
not then vested and exercisable) shall immediately terminate and be of no
further force and effect as of the effective date of such removal from the
Board. Whether a Non-Employee Director is removed by the Board for “cause” shall
be determined by the Board in accordance with the By-Laws of the Company.

(iv)  EXERCISE FOLLOWING OTHER TERMINATIONS OF SERVICE.   If a Non-Employee
Director ceases to be a member of the Board for any reason other than death or
removal from the Board for cause, the Options granted to such Non-Employee
Director may be exercised by such Non-Employee Director, but only to the extent
the Option was exercisable at the time of the Non-Employee Director’s
termination, at any time within ninety (90) days after the date of such
termination of service, subject to the earlier expiration of such Options as
provided for in Section 4(d)(i) above. At the end of such ninety-day period, the
vested portion of the Option shall expire. The unvested portion of the Option
shall expire on the date of the Non-Employee Director’s termination of service
with the Board.

(e)   TIME AND MANNER OF EXERCISE OF OPTIONS.

(i)   NOTICE OF EXERCISE.   Subject to the other terms and conditions hereof, a
Non-Employee Director may exercise any Option, to the extent such Option is
vested, by giving

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written notice of exercise to the Company; PROVIDED, HOWEVER, that in no event
shall an Option be exercisable for a fractional share. The date of exercise of
an Option shall be the later of (A) the date on which the Company receives such
written notice and (B) the date on which the conditions provided in
Section 4(e)(ii) are satisfied.

(ii)   METHOD OF PAYMENT.   The consideration to be paid for the shares to be
issued upon exercise of an Option may consist of (A) cash, (B) check, (C) other
shares which have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the shares as to which the Option shall be exercised
and which have been owned by the Non-Employee Director for at least six
(6) months at the time of exercise, (D) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of proceeds required to pay the exercise price, or
(E) any combination of the foregoing methods of payment.

(iii)  STOCKHOLDER RIGHTS.   A Non-Employee Director shall have no rights as a
stockholder with respect to any shares of Common Stock issuable upon exercise of
an Option until a certificate evidencing such shares shall have been issued to
the Non-Employee Director pursuant to Section 4(e)(v), and no adjustment shall
be made for dividends or distributions or other rights in respect of any share
for which the record date is prior to the date upon which the Non-Employee
Director shall become the holder of record thereof.

(iv)  LIMITATION ON EXERCISE.   No Option shall be exercisable unless the Common
Stock subject thereto has been registered under the Securities Act and qualified
under applicable state “blue sky” laws in connection with the offer and sale
thereof, or the Company has determined that an exemption from registration under
the Securities Act and from qualification under such state “blue sky” laws is
available.

(v)   ISSUANCE OF SHARES.   Subject to the foregoing conditions, as soon as is
reasonably practicable after its receipt of a proper notice of exercise and
payment of the exercise price of the Option for the number of shares with
respect to which the Option is exercised, the Company shall deliver to the
Non-Employee Director (or following the Non-Employee Director’s death, the
Beneficiary entitled to exercise the Option), at the principal office of the
Company or at such other location as may be acceptable to the Company and the
Non-Employee Director (or such Beneficiary), one or more stock certificates for
the appropriate number of shares of Common Stock issued in connection with such
exercise. Shares sold in connection with a “cashless exercise” described in
clause C of Section 4(e)(ii) shall be delivered to the broker referred to
therein in accordance with the procedures established by the Company from time
to time.

(f)    RESTRICTIONS ON TRANSFER.   An Option may not be transferred, pledged,
assigned, or otherwise disposed of, except by will or by the laws of descent and
distribution; PROVIDED, HOWEVER, that an Option may be, with the approval of the
Administrator, transferred to a Non-Employee Director’s family members or to one
or more trusts established in whole or in part for the benefit of one or more of
such family members. The Option shall be exercisable, during the Non-Employee
Director’s lifetime, only by the Non-Employee Director or by the individual or
entity to whom the Option has been transferred in accordance with the previous
sentence. No assignment or transfer of the Option, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise,
except by will or the laws of descent and distribution, shall vest in the
assignee or transferee any interest or right in the Option, but immediately upon
any attempt to assign or transfer the Option the same shall terminate and be of
no force or effect.

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5.     DESIGNATION OF BENEFICIARY.

(a)   BENEFICIARY DESIGNATIONS.   Each Non-Employee Director may designate a
Beneficiary to exercise an Option upon the Non-Employee Director’s death by
executing a Beneficiary Designation Form.

(b)  CHANGE OF BENEFICIARY DESIGNATION.   A Non-Employee Director may change an
earlier Beneficiary designation by executing a later Beneficiary Designation
Form and delivering it to the Administrator. The execution of a Beneficiary
Designation Form and its receipt by the Administrator will revoke and rescind
any prior Beneficiary Designation Form.

6.     ADJUSTMENTS.

(a)   Subject to Section 7, upon (or, as may be necessary to effect the
adjustment, immediately prior to): any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend) or reverse stock
split; any merger, combination, consolidation, or other reorganization; any
spin-off, split-up, or similar extraordinary dividend distribution in respect of
the Common Stock; or any exchange of Common Stock or other securities of the
Company, or any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; then the Committee shall equitably and
proportionately adjust (1) the number and type of shares of Common Stock (or
other securities) that thereafter may be made the subject of Options (including
the Section 3 Limit), (2) the number, amount and type of shares of Common Stock
(or other securities or property) subject to any outstanding Options, (3) the
exercise price of any outstanding Options, and/or (4) the securities, cash or
other property deliverable upon exercise or payment of any outstanding Options,
in each case to the extent necessary to preserve (but not increase) the level of
incentives intended by the Plan and the then-outstanding Options. Any good faith
determination by the Administrator as to whether an adjustment is required in
the circumstances pursuant to this Section 6(a), and the extent and nature of
any such adjustment, shall be conclusive and binding on all persons.

(b)   It is intended that, if possible, any adjustments contemplated by the
preceding two paragraphs be made in a manner that satisfies applicable legal,
tax (including, without limitation and as applicable in the circumstances,
Section 409A of the Code) and accounting (so as to not trigger any charge to
earnings with respect to such adjustment) requirements.

7.     CORPORATE TRANSACTIONS.

(a)   Upon the occurrence of any of the following: any merger, combination,
consolidation, or other reorganization; any exchange of Common Stock or other
securities of the Company; a sale of all or substantially all the business,
stock or assets of the Company; a dissolution of the Company; or any other event
in which the Company does not survive (or does not survive as a public company
in respect of its Common Stock); then the Administrator may make provision for a
cash payment in settlement of, or for the assumption, substitution or exchange
of any or all outstanding Options or the cash, securities or property
deliverable to the holder of any or all outstanding Options, based upon, to the
extent relevant under the circumstances, the distribution or consideration
payable to holders of the Common Stock upon or in respect of such event. Upon
the occurrence of any event described in the preceding sentence, then, unless
the Administrator has made a provision for the substitution, assumption,
exchange or other continuation or settlement of the Option or the Option would
otherwise continue in accordance with its terms in the circumstances, each
Option shall terminate upon the related event; provided that the holders of such
Options shall be given reasonable advance notice of the impending termination
and a reasonable opportunity to exercise their outstanding vested Options in
accordance with their terms before the termination of such Options (except that
in no case shall more than ten days’ notice of the impending termination be
required.

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(c)   The Administrator may adopt such valuation methodologies for outstanding
Options as it deems reasonable in the event of a cash or property settlement
and, without limitation on other methodologies, may base such settlement solely
upon the excess if any of the per share amount payable upon or in respect of
such event over the exercise price of the Option. In any of the events referred
to in this Section 7, the Administrator may take such action contemplated by
this Section 7 prior to such event (as opposed to on the occurrence of such
event) to the extent that the Administrator deems the action necessary to permit
the Non-Employee Director to realize the benefits intended to be conveyed with
respect to the underlying shares. Without limiting the generality of Section 2,
any good faith determination by the Administrator pursuant to its authority
under this Section 7 shall be conclusive and binding on all persons.

8.     TERMINATION AND AMENDMENT OF THE PLAN.

(a)   TERMINATION.   Unless earlier terminated by the Board, the Plan shall
terminate on May 10, 2012. Following such date, no further grants of Options
shall be made pursuant to the Plan.

(b)   GENERAL POWER OF BOARD.   Notwithstanding anything herein to the contrary,
the Board may at any time and from time to time terminate, modify, suspend or
amend the Plan in whole or in part or, subject to Sections 8(c) and 8(d), amend
the terms of any outstanding Option; PROVIDED, HOWEVER, that no such
termination, modification, suspension or amendment shall be effective without
shareholder approval if such approval is required to comply with any applicable
law or stock exchange rule; and PROVIDED FURTHER that the Board may not, without
shareholder approval, increase the maximum number of shares issuable under the
Plan except as provided in Section 6 above.

(c)   WHEN NON-EMPLOYEE DIRECTORS’ CONSENTS REQUIRED.   The Board may not alter,
amend, suspend, or terminate the Plan or amend the terms of any outstanding
Option without the consent of any Non-Employee Director to the extent that such
action would adversely affect his or her rights with respect to Options that
have previously been granted.

(d)   NO REPRICING.   Notwithstanding any other provision herein or in any
agreement evidencing any Option, in no case (except due to an adjustment
contemplated by Section 6 or any repricing that may be approved by shareholders)
shall any action be taken with respect to the Plan or any Option hereunder that
would constitute a repricing (by amendment, substitution, cancellation and
regrant, exchange or other means) of the per share exercise price of any Option.

9.     MISCELLANEOUS.

(a)   NO RIGHT TO REELECTION.   Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any of its members for
reelection by the Company’s shareholders, nor confer upon any Non-Employee
Director the right to remain a member of the Board for any period of time, or at
any particular rate of compensation.

(b)   SECURITIES LAW RESTRICTIONS.   The Administrator may require each
Non-Employee Director or any other person purchasing or acquiring shares of
Common Stock pursuant to the Plan to agree with the Company in writing that such
Non-Employee Director is acquiring the shares for investment and not with a view
to the distribution thereof or provide such other assurances and representations
to the Company as the Administrator may deem necessary or desirable to assure
compliance with all applicable legal and accounting requirements. All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission or any exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law, and the Administrator may cause a legend or legends to be put on
any such certificates to make appropriate reference to such

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restrictions. No shares of Common Stock shall be issued hereunder unless the
Company shall have determined that such issuance is in compliance with, or
pursuant to an exemption from, all applicable federal and state securities laws.

(c)   EXPENSES.   The costs and expenses of administering the Plan shall be
borne by the Company.

(d)   APPLICABLE LAW.   Except as to matters of federal law, the Plan and all
actions taken thereunder shall be governed by and construed in accordance with
the laws of the State of California without giving effect to conflicts of law
principles.

(e)   AUTHORITY OF THE COMPANY AND SHAREHOLDERS.   The existence of the Plan
shall not affect or restrict in any way the right or power of the Company or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

10.   DEFINITIONS.   Capitalized words not otherwise defined in the Plan have
the meanings set forth below:

“ADMINISTRATOR” means the Board. The Board may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of the
Company or any of its Subsidiaries or to third parties.

“ANNUAL MEETING” means an annual meeting of the Company’s shareholders.

“ANNUAL OPTION” means an Option granted to a Non-Employee Director pursuant to
Section 4(a)(ii) of the Plan.

“BENEFICIARY” or “BENEFICIARIES” means an individual or entity designated by a
Non-Employee Director on a Beneficiary Designation Form to exercise Options in
the event of the Non-Employee Director’s death; PROVIDED, HOWEVER, that, if no
such individual or entity is designated or if no such designated individual is
alive at the time of the Non-Employee Director’s death, Beneficiary shall mean
the Non-Employee Director’s estate.

“BENEFICIARY DESIGNATION FORM” means a document, in a form approved by the
Administrator to be used by Non-Employee Directors to name their respective
Beneficiaries. No Beneficiary Designation Form shall be effective unless it is
signed by the Non-Employee Director and received by the Administrator prior to
the date of death of the Non-Employee Director.

“BOARD” means the Board of Directors of the Company.

“CODE” means the Internal Revenue Code of 1986, as amended, and the applicable
rules and regulations promulgated thereunder.

“COMMON STOCK” means the common stock of the Company, no par value per share.

“COMPANY” means Apple Inc., a California corporation, or any successor to
substantially all of its business.

“EFFECTIVE DATE” has the meaning given to such term in the preamble.

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“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations promulgated thereunder.

“FAIR MARKET VALUE” means, unless otherwise determined or provided by the
Administrator in the circumstances, the last price (in regular trading) for a
share of Common Stock as furnished by the National Association of Securities
Dealers, Inc. (the “NASD”) through the NASDAQ Global Market Reporting System
(the “GLOBAL MARKET”) for the date in question or, if no sales of Common Stock
were reported by the NASD on the Global Market on that date, the last price (in
regular trading) for a share of Common Stock as furnished by the NASD through
the Global Market for the next preceding day on which sales of Common Stock were
reported by the NASD. The Administrator may, however, provide with respect to
one or more Options that the Fair Market Value shall equal the last price for a
share of Common Stock as furnished by the NASD through the Global Market on the
last trading day preceding the date in question or the average of the high and
low trading prices of a share of Common Stock as furnished by the NASD through
the Global Market for the date in question or the most recent trading day. If
the Common Stock is no longer listed or is no longer actively traded on the
Global Market as of the applicable date, the Fair Market Value of the Common
Stock shall be the value as reasonably determined by the Administrator for
purposes of the Option in the circumstances. The Administrator also may adopt a
different methodology for determining Fair Market Value with respect to one or
more Options if a different methodology is necessary or advisable to secure any
intended favorable tax, legal or other treatment for the particular
Option(s) (for example, and without limitation, the Administrator may provide
that Fair Market Value for purposes of one or more Options will be based on an
average of closing prices (or the average of high and low daily trading prices)
for a specified period preceding the relevant date).

“INITIAL OPTION” means an Option granted to a Non-Employee Director pursuant to
Section 4(a)(i) of the Plan.

“NON-EMPLOYEE DIRECTOR” means a member of the Board who is not an employee of
the Company or any of its Subsidiaries.

“OPTION” means an option to purchase shares of Common Stock awarded to a
Non-Employee Director pursuant to the Plan and includes Initial Options and
Annual Options.

“PLAN” has the meaning given to such term in the preamble.

“SECTION 3 LIMIT” shall have the meaning set forth in Section 3 of the Plan.

“SUBSIDIARY” means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company. An entity that attains the status of a Subsidiary on
a date after the adoption of the Plan shall be considered a Subsidiary
commencing as of such date.

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