STT State Street Corporation

Fifth Third Bancorp’s (FITB) Chief Executive Officer (CEO), Kevin Kabat, received a 25% pay hike in his total compensation package. His annual salary had been increased to $8.9 million in 2012 from $7.1 million, according to a Securities and Exchange Commission filing last week.

CEO’s pay package includes salary of $1.0 million and stock awards of $3.3 million for the year 2012. He has also received $2.3 million in stock options, up by $0.5 million. Furthermore, the CEO’s non-equity incentive plan surged $1.3 million to $2.1 million in 2012.

In addition to this, Fifth Third’s President, Greg Carmichael, received a pay hike of 35% to $5 million in 2012. Moreover, Chief Financial Officer (CFO) - Dan Poston’s salary increased 41% to $3 million.

The pay hike of executives at Fifth Third came on the back of certain factors, including the company’s financial performance in 2012. The company’s net income climbed 21% to $1.6 billion in 2012. Moreover, Fifth Third generated a 22% total return for shareholders in 2012.

Notably, during 2011, Fifth Third exited the federal government’s Troubled Asset Relief Program and returned to its pay-for-performance structure.

After Kabat’s appointment as CEO in 2007, Fifth Third reported an increase in total revenue to $6.6 billion as of Dec 2012 from $5.5 billion in 2007. Moreover, for full year 2012, the company recorded a 9.7% year-over-year rise in total revenue.

Going forward, with a diversified traditional banking platform, Fifth Third remains well poised to benefit from a recovering economy along with its footprints. Its traditional commercial banking franchise, diverse revenue mix, improved credit quality and enhanced capital position serve as positive catalysts for the stock.

Furthermore, we believe that its capital deployment activities will boost shareholders’ confidence. However, a low interest rate environment, regulatory issues as well as competitive pressures are the headwinds.

Currently, Fifth Third holds a Zacks Rank #2 (Buy). Among peers, BankUnited Inc. (BKU) holds a Zacks Rank #1 (Strong Buy), while Comerica Incorporated (CMA) and State Street Corporation (STT) retain a Zacks Rank #2.

 
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