On November 3, 2008, Tony Fadell, Senior Vice President, iPod Division of Apple became Special Advisor to the Company’s Chief Executive Officer. In this new position, Mr. Fadell no longer will be an executive officer of the Company. In connection therewith, Mr. Fadell and the Company have entered into a Transition Agreement and a Settlement Agreement and Release (the “Transition Agreement” and the “Settlement Agreement,” respectively), under which Mr. Fadell will receive a salary of three hundred thousand dollars annually, and will be entitled to bonus and other health and welfare benefits generally available to other senior managers for the duration of the Transition Agreement, which remains in effect until March 24, 2010. The Transition Agreement also provides for the cancellation of outstanding and unvested 155,000 restricted stock units held by Mr. Fadell. Upon approval by the Compensation Committee of the Company’s Board of Directors, Mr. Fadell will be granted 77,500 restricted stock units that will vest in full on March 24, 2010, subject to his continued employment with the Company through the vesting date and further subject to accelerated vesting if the Company terminates his employment without cause. The restricted stock units are payable upon vesting in shares of the Company’s common stock on a one-for-one basis. The Settlement Agreement includes Mr. Fadell’s release of claims against the Company and agreement not to solicit the Company’s employees for one year following the termination of his employment.”

Fadell is one of Apple’s key technology executives, and the company is spinning the hell out of his departure, which frankly can’t be viewed as anything other than bad news. Fadell is not leaving Apple, so much as he is “reducing” his role, the company tells us. And he will, of course, remain a trusted adviser to Steve Jobs, which I suppose means he’s still on the Apple CEO’s Christmas card list.

Fadell, it should be noted, has on occasion been mentioned as one of Jobs’s potential successors, given his deep involvement in some of Apple’s marquee product lines. That said, he was nowhere to be seen at either of the company’s last two public events, which were clearly intended to show off the depth of Apple’s executive bench. And obviously his name is no longer on the short list for the CEO seat. Perhaps, it hasn’t been for some time, and that’s what inspired this new focus on family life.

Below is the full text of Apple’s release on the personnel changes.

Mark Papermaster Joins Apple as Senior Vice President of Devices Hardware Engineering

CUPERTINO, California—November 4, 2008—Apple today announced that Mark Papermaster is joining the Company as senior vice president of Devices Hardware Engineering, reporting to Apple CEO Steve Jobs. Papermaster, who comes to Apple from IBM, will lead Apple’s iPod and iPhone hardware engineering teams. Papermaster has 25 years of product and technology experience, and was previously a vice president at IBM.

Apple also announced that Tony Fadell, Apple’s senior vice president of the iPod Division, and his wife Danielle Lambert, vice president of Human Resources, are reducing their roles within the company as they devote more time to their young family. Fadell will remain at Apple as an advisor to the CEO. Lambert will depart the company at the end of this year after a successor is in place.

‘Mark is a seasoned leader and is going to be an excellent addition to our senior management team,’ said Steve Jobs, Apple’s CEO. ‘Tony and Dani have each made important contributions to Apple over the past eight years. We’re sorry to see Dani go, and are looking forward to working with Tony in his new capacity.’

Papermaster has a Bachelors of Science in Electrical Engineering degree from the University of Texas, and Masters of Science in Electrical Engineering from the University of Vermont in 1988. He is active with the University of Texas where he is a member of the Electrical and Computer Engineering Advisory Council.”