On the heals of announcing the appointment of Al Gore to its board of directors, Apple announced today an overhaul of its corporate governance rules. The company also officially announced that two new director positions had been added to the board, including the one already occupied by former vice president Al Gore. The press release says that Apple is looking for another independent director to fill the second spot, as well.

More importantly, Apple has taken steps to overhaul employee stock options. Apple is going to allow employees, including Steve Jobs, to exchange a total of 32 million options -- the vast majority, or 27.5 million of those options, being Mr. Jobsi set at a price above todayis trading value, for fewer options at a lower price. The net effect will be to remove millions of options from circulation, or in finance-speak, to achieve a "reduction in issued stock option overhang." Appleis press release:

Apple today announced that its Board of Directors yesterday approved several measures to enhance corporate governance, including adding two additional independent directors to its board, increasing the use of independent committees on the board and reducing issued stock option overhang from 23 percent to 16 percent.

As part of its plan to add two additional independent directors, Apple announced the addition of former United States Vice President Albert Gore Jr. to its board. Mr. Gore was elected at Appleis board meeting yesterday. Apple has commenced a formal search for a second independent director, which the Company hopes to add before the end of the summer. With the addition of the second independent director, five out of seven Apple directors will be independent under SEC and NASDAQ rules.

Appleis Board of Directors has expanded the role of its independent Nominating Committee to include corporate governance as the new Nominating and Corporate Governance Committee, and has expanded the role of its Audit Committee in accordance with the Sarbanes-Oxley Act and proposed SEC and NASDAQ regulations. These two committees are chaired by independent directors and staffed by a majority of independent directors.

Appleis Board of Directors also approved two measures to reduce the Companyis issued stock options as a percentage of total options and shares outstanding from the current level of 23 percent to 16 percent. The first measure is a voluntary employee stock option exchange program which allows the Companyis employees who are not executive officers and hold options with exercise prices at or above $25.00 to exchange them for a lesser number of new stock options priced at fair market value six months and one day after their existing options are cancelled. The second measure is for Apple CEO Steve Jobs to voluntarily exchange his 27.5 million stock options for a new grant of 5 million restricted shares that will vest on the third anniversary of the grant. Together these measures are expected to return a net total of over 32 million options back to the Company, which represent almost 7 percent of the total options and shares currently outstanding.

In addition, the Board approved cancelling the Companyis non-shareholder approved option plan upon the completion of the employee exchange program and shareholder approval to amend the remaining shareholder-approved executive officer stock plan so it can be used to grant options to all employees.

You can find more information on Appleis corporate governance at the companyis Investor Relations Web site.