Tim Cook slashed his annual take-home by $4 million in an acknowledgement of Apple's underperforming stock this year.
This year, Apple's board made the decision to align the CEO's pay with the overall performance of the company relative to the rest of the S&P 500 index. At Cook's own urging, the company's compensation committee set half of his stock grants -- 40,000 shares, worth nearly $4 million -- at risk, a preliminary proxy filing with the SEC said.
The Compensation Committee considered what percentage of Mr. Cook’s unvested RSUs to place at risk under the new performance criteria. Because Mr. Cook faces only downside risk from the modification, the Compensation Committee believed that less than 50% of the annual tranches should be placed at risk. Mr. Cook, however, expressed a strong desire to set a leadership example in the area of CEO compensation and governance and requested a larger at-risk percentage. Accordingly, the Compensation Committee placed 50% of the RSUs at risk in each future annual tranche.
Apple's stock fell 26 percent on the year, from August 2012 to August 2013, even though the S&P 500 rose 18 percent.
The agreement did not touch his $1.4 million salary, $2.8 million cash bonus or $36.4 million in stock grants.