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What Does U.S. Bancorp CEO's 2014 Salary Hike Indicate? - Analyst Blog

U.S. BancorpUSB President and Chief Executive Officer (CEO) Richard Davis' total compensation package was hiked by over 79% on a year-over-year basis, according to a Securities and Exchange Commission (SEC) filing on Thursday. The annual salary of $19.4 million came on the heels of improved growth throughout 2014.

Salary Plus Perks

Davis, also the chairman of U.S. Bancorp, received an increased base salary of $1.2 million compared with $1.1 million in 2013. Moreover, stock awards of $5.6 million remunerated to him reflected a year-over-year rise of over 7%. His pay package also included $1.9 million as option awards and $2.5 million as non-equity incentive plan compensation.

Notably, Davis's pay increased substantially owing to a change in the value of his pension driven by appreciably higher discount rates. The sum awarded to him as change in pension value and non-qualified deferred compensation earnings as well as other compensations totaled $8.2 million, considerably higher than the previous year's amount of $0.09 million.

Davis' last year pay package had plunged 41% on a year-over-year basis primarily due to the lower value of his future retirement benefits. Davis has been acting as the CEO since 2006. Focusing on traditional banking services, he helped U.S. Bancorp navigate through the financial crisis.

Our Take

While an increased CEO compensation indicates better fundamental growth in U.S. Bancorp, the recent clearance of the 2015 stress test further signals enhanced capital strength. The company received the green signal from the Federal Reserve to augment its capital distributions over the next five fiscal quarters, boosting investors' confidence.

Among other banking giants, Bank of America Corp. BAC and Citigroup Inc. C cutback executive compensation on the back of dismal earnings in 2014 while JPMorgan Chase &Co. JPM shelled out salary equivalent to the prior year's amount.

Currently, U.S. Bancorp has a Zacks Rank #3 (Hold).

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


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

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