Apple CEO Tim Cook introduces the new iPad during an event in San Francisco.
NEW YORK (CNNMoney) - Tim Cook gave himself a sizable slap on the wrist this past summer, docking himself $4 million in pay for Apple's underperforming stock price.
Apple's board decided this past year to align its CEO's pay with the company's performance. If the company performs better than the other stocks in the S&P 500 stock index, the CEO takes home more. If Apple's stock performs worse than the index, Cook takes home less. And if Apple (AAPL, Fortune 500) performs much worse, Cook would take home much less.
In a preliminary proxy statement filed on Sunday, Apple said its compensation committee didn't want to place too heavy a burden on Cook. The committee only wanted less than half of Cook's annual stock grants to be subject to the new performance-based metric. At Cook's urging, however, the committee placed half of his stock grants at risk.
His decision was made out of a "strong desire to set a leadership example in the area of CEO compensation and governance," Apple said in its filing.
Since Apple's shares performed so poorly last year, Cook lost the entire 50% that was at risk. Apple's stock fell 26% between August 2012 and August 2013 (Cook's stocks vest each August), but the S&P 500 rose 18% during that same period.
That 50% that Cook forfeited was worth nearly $4 million.
But Cook still took home quite a bit of money last year. He collected $1.4 million in salary, a $2.8 million cash bonus and another $36.4 million in stock grants. So the $4 million pay cut represented just 10% of his overall compensation last year.
Apple's stock has rebounded lately, actually outperforming the S&P 500 since August. If the stock keeps up its pace, Cook will likely keep all 40,000 shares that are scheduled to vest in August 2014. At today's value, those shares will be worth $22.4 million.
Check out some of our most read stories from 2013:
#shortyellows: Florida quietly shortened yellow lights
Terrorism Warning: Memo says terrorists practicing dry-runs on Florida flights
Kittens shot: Officer shoots kittens in front of children
Courtroom apology: Woman apologizes for flipping off judge
Weird ice: Strange, giant circles appear on frozen pond
Controversial Club: College student organizes "White Student Union"
CFO Trouble: School administrative chief in trouble over her porn sex blog
Warning Shot Wife: Mother gets 20 years for firing warning shots at abusive husband
Science Arrest: Teen girl arrested over science project explosion
Wait, WHAT?? Dog shoots man in the leg with a handgun
Popular photo galleries:
Faces of Meth: Devastating before and after photos of meth abusers
Trayvon Martin Shooting: Trayvon Martin crime scene photos and George Zimmerman injury photos
Hooters Winners: Winners of the 2013 Hooters swimsuit pageant
Rejected: Funny Florida license plates rejected by the DMV***warning graphic***
Deadly sinkhole: Home collapses, man dies in giant sinkhole
Florida Sex Offenders: Look up sex offenders in any Florida neighborhood here
Restaurant Inspections: Look up inspection reports for any Florida restaurant here