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U.S. Bancorp (USB) SEC Filing Reveals Hike in CEO's 2018 Pay

Zacks Equity Research
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U.S. Bancorp’s USB president and chief executive officer (CEO) Andrew Cecere received a hike in his total compensation package for 2018 compared with the prior year. Cecere’s total annual pay increased to $13.4 million in 2018 from $12 million in 2017, according to the Securities and Exchange Commission filing. Notably, he became CEO effective April 2017.

The increase in his compensation was largely driven by 62.2% surge in stock awards to $7.3 million from $4.5 million in 2017. Further, non-equity incentive plan compensation increased to $2.6 million from $1.7 million in 2017. Moreover, the rise in his pay was also attributed to other compensation, which jumped to $44,243 from $31,947 in the prior year.

Additionally, the base salary increased 17% from the previous year to $1.1 million. However, reduced change in Cecere’s pension value and non-qualified deferred compensation earnings, which came in at $2.4 million compared with $3.4 million in 2017 was unfavorable.

Among other banking giants, Bank of America Corp.’s BAC chairman and CEO — Brian Moynihan — is expected to receive $27 million as total compensation for 2018, which reflects a rise of 15% year over year. Among others, JPMorgan JPM and Morgan Stanley MS have also increased their CEOs’ compensation.

Cecere was promoted as the chief operating officer of U.S. Bancorp in January 2015. After a year, he was made the president. In April 2017, he became the CEO, succeeding Richard Davis.

U.S. Bancorp's prospects will likely get support from its solid business model, core franchise, rising interest rate and diverse revenue streams. Also, its organic growth remains solid and will likely benefit from the improving economic scenario. Also, U.S. Bancorp remains well poised to grow through acquisitions. Furthermore, the approval of its 2018 Capital Plan, which included share buyback up to $3 billion and increase in quarterly dividend by 23.3%, reflects the company’s commitment toward enhancing shareholders’ value. Notably, U.S. Bancorp targets a payout ratio of 60-80%.

Though U.S. Bancorp steadily deployed capital in 2018, investors’ concerns prevailed on certain macroeconomic factors. Therefore, the company's share price depreciated roughly 14.7% in the year, following a 4.3% rise in 2017.

Notably, U.S. Bancorp has improved on capital return to shareholders since the financial crisis, investment in core businesses and passed regulatory tests. Cecere has also been adept in strategically evaluating various facets of the bank’s major businesses.

We believe Cecere’s pay hike will prove to be a major morale booster. U.S. Bancorp’s fundamentals remain highly promising with a diverse business model and a strong balance sheet.

U.S. Bancorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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