BB&T Cuts CEO's Pay - Analyst Blog


North Carolina-based BB&T Corporation ( BBT ) announced a reduction in Chief Executive Officer (CEO) Kelly King's remuneration for 2013. King received $7.84 million as compensation package, which marked an 8.3% decline from 2012.

The CEO's annual incentive award as offered by BB&T for 2013 declined 29% to $2.0 million, which resulted in the lower pay. However, other salary components showed an improvement of up to 2%.

While the base salary increased 1.7% to $996,250, restricted stock and options award were up 1.7% to $2.79 million. Moreover, long-term incentive package was $2.06 million, rising 2.0% from 2012.

What could have prompted the pay cut?

Looking at the break-up of the remuneration, we find that the base salary was just 13% of the total compensation. The remaining 87% is variable and is a function of the company's performance, which highly depends on the CEO's efficiency.

For full-year 2013, BB&T earnings declined on a year-over-year basis. Moreover, the parameters like net income and return on average assets that determine the annual incentive award witnessed a downturn.

BB&T's 2013 net income came in at $1.6 billion, declining 15.8% from $1.9 billion in 2012. Return on average assets slipped 19 bps to 0.96% in 2013.

Should this weak performance be a concern for the shareholders?

Though BB&T's performance for 2013 was not particularly encouraging, its fourth-quarter results were impressive. Moreover, BB&T maintained an average positive surprise of 2.4% in the trailing four quarters.

The Zacks Consensus Estimate for 2014 increased 1.0% over the last 60 days with 10 estimates revising upward. Moreover, for 2015, the Zacks Consensus Estimate advanced 1.2% with 11 estimates moving north over the same time frame.

However, we remain skeptical about the persistent pressure on BB&T's top line, given the sluggish economic recovery, considerable exposure to problem assets and various regulatory issues.

BB&T currently carries a Zacks Rank #3 (Hold). Some better-ranked banks include Fifth Third Bancorp ( FITB ) and The PNC Financial Services Group, Inc. ( PNC ). Both these stocks have a Zacks Rank #2 (Buy).

Notably, BB&T is not the only bank that reduced its chairperson's pay. Among other major regional banks, U.S. Bancorp ( USB ) also announced a 41% cut in CEO Richard Davis' total compensation package on a year-over-year basis. Davis' salary fell primarily due to the lower value of his future retirement benefits.

BB&T CORP (BBT): Free Stock Analysis Report

FIFTH THIRD BK (FITB): Free Stock Analysis Report

PNC FINL SVC CP (PNC): Free Stock Analysis Report

US BANCORP (USB): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CEO , BBT , FITB , PNC , USB

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