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Committee
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Primary responsibilities and membership
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Governance
Held 5 meetings during 2019
|
|
▶
Evaluating and making recommendations to the Board with respect to the size, composition and leadership of the Board and its committees;
▶
discharging the
Board's responsibilities relating to corporate governance matters, including developing and recommending to the Board a set of corporate governance guidelines;
▶
overseeing
succession planning for our CEO;
▶
identifying and recommending to the Board individuals qualified to become directors;
▶
evaluating
related person transactions;
▶
conducting an annual performance evaluation of the Board, its committees and its members;
▶
overseeing our
engagement with shareholders and other interested parties concerning corporate governance and other matters; and
▶
making recommendations to the Board regarding any shareholder proposals.
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Current members: Arthur D. Collins, Jr. (Chair), Marc N. Casper,
Kimberly J. Harris, Olivia F. Kirtley, David B. O'Maley and Craig D. Schnuck
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Public Responsibility
Held 4 meetings during
2019
|
|
▶
Overseeing our management of reputation risk and reviewing our company's reputation and brand management activities;
▶
reviewing and
considering our position and practices on matters of public interest and public responsibility and similar social issues involving our relationship with the community at large;
▶
reviewing our
community reinvestment and fair and responsible banking activities and performance; and
▶
overseeing our policies and programs related to other corporate social responsibility matters, including environmental
sustainability.
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Current members: Kimberly J. Harris (Chair), Dorothy J.
Bridges, Marc N. Casper, Karen S. Lynch, Richard P. McKenney, Yusuf I. Mehdi and John P. Wiehoff
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Risk Management
Held 6 meetings during
2019
|
|
▶
Overseeing our overall risk management function, which governs the management of credit, interest rate, liquidity, market, operational, compliance and strategic risk and the management of key risks in those
areas, including cybersecurity;
▶
reviewing and approving our company's Risk Management Framework and Risk Appetite Statement;
▶
monitoring our
company's risk profile relative to its risk appetite; and
▶
reviewing and evaluating significant capital expenditures and potential mergers and acquisitions.
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Current members Richard P. McKenney (Chair), Dorothy J. Bridges,
Andrew Cecere, Doreen Woo Ho, Olivia F. Kirtley, Yusuf I. Mehdi, Craig D. Schnuck and John P. Wiehoff
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Executive
No meetings were necessary in
2019
|
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▶
The Executive Committee has authority to exercise all powers of the Board of Directors, as permitted by law and our bylaws, between regularly scheduled Board meetings.
Current members: Andrew Cecere (Chair), Warner L. Baxter, Arthur D. Collins, Jr., Kimberly J. Harris, Roland A. Hernandez, Richard P. McKenney, David
B. O'Maley and Scott W. Wine
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Corporate governance
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Risk oversight by the Board of Directors
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Board-level oversight of risk management structure
As part of its responsibility to oversee the management, business and strategy of our company, the Board of Directors has approved a Risk Management Framework
that establishes governance and risk management requirements for all risk-taking activities. This framework includes company-level and business unit Risk Appetite Statements that set boundaries for
the types and amount of risk that may be undertaken in pursuing business objectives and initiatives.
The
Board of Directors oversees management's performance relative to the Risk Management Framework, Risk Appetite Statements, and other policy requirements. While management is responsible for
defining the various risks facing our company, formulating risk management policies and procedures, and managing risk exposures on a day-to-day basis, the Board's responsibility is to oversee our
company's risk management processes by informing itself about our material risks and evaluating whether management has reasonable risk management and control processes in place to address those
material risks.
The
Board's risk oversight responsibility is primarily carried out through its standing committees, as follows:
The
Risk Management, Audit, and Capital Planning Committees meet annually in joint session to give each committee the opportunity to review the risk areas primarily overseen by the other, and all
Board members attend this meeting to benefit from the discussion. Finally, at each meeting of the full Board of Directors, each committee gives a detailed review of the matters it discussed and
conclusions it reached during its recent meetings.
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Corporate governance
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Focus on cybersecurity risk
The Board is very focused on the risks that cybersecurity threats pose to our company as a major financial
services institution. The Board has established a comprehensive oversight framework to address those increasing
risks:
-
▶
-
a Cybersecurity
Subcommittee of the Risk Management Committee was formed in January 2019 to provide dedicated oversight of the following
matters:
-
-
our programs and practices for identifying cybersecurity
risks;
-
-
our controls to prevent, detect and respond to cyber attacks or data
breaches;
-
-
our cyber resiliency, including cybersecurity risk preparedness, incident
response plans, and disaster recovery capabilities; and
-
-
our investments in cybersecurity
infrastructure;
-
▶
-
the Risk Management
Committee receives regular reports from management on cybersecurity issues and maintains primary oversight of risks arising from the related areas of data privacy and information
security;
-
▶
-
the annual joint
session of the Risk Management, Audit, and Capital Planning Committees includes a report from our company's Chief Information Security Officer on the cybersecurity threats facing our company and
our company's preparedness to meet and respond to those threats; and
-
▶
-
the full Board
dedicates an hour of its January meeting each year to a cybersecurity session, which includes presentations from our company's information security and risk management functions about our
cybersecurity program and features a presentation from an outside expert on a current cybersecurity topic.
Management-level risk structure underlying Board oversight
Each Board committee carries out its risk management responsibilities using reports from management containing information relevant to the risk areas under
that committee's oversight. The committees must therefore be confident that an appropriate risk monitoring structure is in place at the management level in order to be provided accurate and useful
informational reports. The management-level risk oversight structure is robust. Our company relies on comprehensive risk management processes to identify, aggregate and measure, manage, and monitor
risks. This system enables the Board of Directors to establish a mutual understanding with management of the effectiveness of our company's risk management practices and capabilities, to review our
company's risk exposure and to elevate certain key risks for discussion at the Board level. A framework exists to account for the introduction of emerging risks or any increase in risks routinely
taken, which would either be largely controlled by the risk limits in place or identified through the frequent risk reporting that occurs throughout our company.
The Executive Risk Committee, which is chaired by our Chief Risk Officer and which includes the CEO and other
members of the executive management team, oversees execution against the Risk Management Framework and company-level Risk Appetite Statement. The Executive Risk Committee meets monthly, and more
frequently when circumstances merit, to provide executive management oversight of our Risk Management Framework, assess appropriate levels of risk exposure and actions that may be required for
identified risks to be adequately mitigated, promote effective management of all risk categories, and foster the establishment and maintenance of an effective risk culture. The Executive Risk
Committee members manage large, sophisticated groups within our company that are dedicated to controlling and monitoring risk to the levels deemed appropriate by the Board of Directors and executive
management. These individuals, together with our company's Controller, Treasurer and others, also provide the Board's committees with the information the committees need and request in order to carry
out their oversight responsibilities.
The
Executive Risk Committee focuses on current and emerging risks, including strategic and reputational risks, directing timely and comprehensive actions. The following senior operating committees
have also been established, each responsible for overseeing a specified category of risk:
-
▶
-
the Asset and Liability Management
Committee ensures that the policies, guidelines and practices established to manage our funding and investment activities, interest rate risk, market risk,
and liquidity risk are followed;
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-
▶
-
the Capital Management Operating
Committee provides oversight of our programs related to stress testing, capital planning and capital adequacy, and resolution and recovery, as well as
oversight of our compliance with capital regulation;
-
▶
-
the Compliance Risk Management
Committee provides direction regarding the management of compliance risk to our company's business lines and risk management programs and shares institutional
knowledge regarding compliance risk management and mitigation across our company;
-
▶
-
the Conduct Risk Committee is
dedicated to oversight of risks associated with employee conduct at our company, including ethics complaints, employee misconduct, internal fraud, and sales practices conduct;
-
▶
-
the Disclosure Committee assists
the CEO and the CFO in fulfilling their responsibilities for oversight of the accuracy and timeliness of the disclosures made by our company;
-
▶
-
the Enterprise Financial Crimes Compliance Operating
Committee is responsible for the management and implementation of our company's enterprise financial crimes program across business lines to ensure a
consistent control infrastructure and culture of compliance throughout our company;
-
▶
-
the Enterprise IT Governance
Committee oversees the distributed enterprise information technology environment and ensures that delivery of the company's information technology services is
aligned with our priorities and risk appetite;
-
▶
-
the Executive Credit Management Group
Committee ensures that products that have credit risk are supported by sound credit practices; reviews asset quality, trends, portfolio performance statistics
and loss forecasts; and reviews and adjusts credit policies accordingly;
-
▶
-
the Incentive Review Committee
reviews and evaluates our company's incentive compensation programs and policies for risk sensitivity and mitigation;
-
▶
-
the International Risk Oversight
Committee, in coordination with our company's other operating committees, is responsible for oversight of risks associated with our company's activities
outside of the U.S.;
-
▶
-
the Mergers & Acquisitions
Committee is responsible for the consideration and approval of all mergers, acquisitions and divestitures of our company;
-
▶
-
the Operational Risk Committee
provides direction and oversight of our company's operational risk management framework and corporate control programs, including cybersecurity and other significant operational risk events;
-
▶
-
the Reputation Risk Oversight
Committee is dedicated to the oversight of risk associated with activities and issues that may negatively impact the reputation of our company;
-
▶
-
the Strategic Investment
Committee is responsible for our company's strategic investments, including capital expenditures, corporate real estate, and our company's organic growth
initiatives; and
-
▶
-
the Trust Management Committee
provides oversight of the fiduciary activities of several of our subsidiaries.
Our
Board and management-level committees are supported by a "three lines of defense" model for establishing effective checks and balances. The first line of defense, primarily the revenue-generating
business lines, manages risks in conformity with established limits and policy requirements. In turn, business leaders and their risk officers establish programs to ensure conformity with these limits
and policy requirements. The second line of defense, primarily the Chief Risk Officer's organization, but also including the policy and oversight activities of corporate support functions, translates
risk appetite and strategy into actionable risk limits and policies. The second line of defense monitors the first line of defense's compliance with limits and policies, and provides reporting and
escalation of emerging risks and other concerns to senior management and the Risk Management Committee of the Board of Directors. The third line of defense, internal audit, is responsible for
providing the Audit Committee and senior management with independent assessment and assurance regarding the effectiveness of our company's governance, risk management and control processes.
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Corporate governance
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Board leadership structure
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Board leadership policies and practices
Our Board believes that a strong, independent Board of Directors is critical to effective oversight of management. The Board regularly and carefully considers
the critical issue of the best independent leadership structure for the Board, and maintains a flexible policy regarding the issue of whether the position of Chairman should be held by an independent
director. At least annually, the Board reviews the Board's and company's needs and the leadership attributes of its directors and executives to determine whether our company is best served at that
particular time by having the CEO or another director hold the position of Chairman.
In
order to ensure strong independent Board leadership, the independent directors elect a Lead Director with the substantial leadership responsibilities detailed below when the position of Chairman is
not held by an independent director. The Lead Director is elected annually upon the recommendation of the Governance Committee, with the expectation that he or she will generally serve three, and may
serve up to five, consecutive terms.
In
addition to strong independent leadership of the full Board, each of the Audit Committee, Governance Committee, and Compensation and Human Resources Committee is composed solely of independent
directors. Independent directors, therefore, oversee critical, risk-sensitive matters such as the quality and integrity of our financial statements;
the compensation of our executive officers, including the CEO; the nomination of directors; and the evaluation of the Board, its committees, and its members. Each of the remaining committees (aside
from the Executive Committee) is chaired by an independent director. The full Board and each of its committees meet in executive session on a regular basis.
Current leadership structure
Andrew Cecere, our President and Chief Executive Officer, became Chairman of the Board on the date of the 2018 annual meeting. David B. O'Maley has served as
the Board's independent Lead Director since January 2017. Mr. O'Maley will retire from the Board at the upcoming annual meeting, and Olivia F. Kirtley has been elected to serve as Lead Director
at that point.
Chairman
The independent directors believe that Mr. Cecere is the member of the Board best suited to contribute to long-term shareholder value by serving as
Chairman, because he has the knowledge, expertise and experience to understand and clearly articulate to the Board the opportunities and risks facing our company and to lead discussions on important
matters affecting our business.
Role of Chairman
When the Chairman is also the CEO, that person's primary responsibilities as Chairman are as
follows:
-
▶
-
set Board meeting
agendas in collaboration with the Lead Director, who has final approval authority over them;
-
▶
-
preside at Board
meetings, guiding discussion and ensuring that decisions are made;
-
▶
-
ensure that the
Board is provided with full information on our company and its industry;
-
▶
-
set shareholder
meeting agendas, subject to approval by the Board, and preside at meetings of the shareholders; and
-
▶
-
chair the Board's
Executive Committee.
Lead Director
Ms. Kirtley will bring a wealth of business and board leadership experience to her upcoming role as Lead Director of our Board. As a corporate
governance consultant and faculty member of The Conference Board Directors' Institute, she has a particular strength in understanding current corporate governance issues. She has served as Chair of
the Audit and Risk Management Committees, and she is currently a member of the Compensation and Human Resources, Governance, and Risk Management Committees.
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Corporate governance
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Role of Lead Director
The independent directors entrust the Lead Director with the following responsibilities and
authority:
-
▶
-
lead executive
sessions of the Board's independent or non-management directors, and preside at any session of the Board where the Chairman is not
present;
-
▶
-
act as a regular
communication channel between the independent directors and the CEO;
-
▶
-
approve the Board
meeting agendas;
-
▶
-
approve Board
meeting schedules to ensure there is sufficient time for discussion of all agenda items;
-
▶
-
approve information
sent from management to the Board;
-
▶
-
as appropriate, be
the representative of the independent directors in discussions with our major shareholders regarding their concerns and
expectations;
-
▶
-
as appropriate, call
special Board meetings or special meetings of the independent directors;
-
▶
-
approve, on behalf
of the Board, the retention of consultants who report directly to the Board;
-
▶
-
assist the Board and
company officers in assuring compliance with and implementation of our Corporate Governance Guidelines;
-
▶
-
advise the
independent Board committee chairs in fulfilling their designated roles and responsibilities to the Board;
-
▶
-
review shareholder
communications addressed to the full Board or to the Lead Director;
-
▶
-
interview all Board
candidates and make recommendations to the Governance Committee and the Board; and
-
▶
-
communicate, as
appropriate, with our regulators.
Majority vote standard for election of directors
|
Our
bylaws provide that in uncontested elections, a nominee for director will be elected to the Board if the number of votes cast "FOR" the nominee's election exceeds the number of
votes cast "AGAINST" that nominee's election. The voting standard for directors in a contested election is a plurality of the votes cast at the meeting.
Our
Corporate Governance Guidelines provide that director nominees must submit a contingent resignation in writing to the Governance Committee, which becomes effective if the director fails to receive
a sufficient number of votes for re-election at the annual meeting of shareholders and the Board accepts the resignation. The Board will nominate for election or re-election as director only
candidates who have tendered such a contingent resignation.
Our
Corporate Governance Guidelines further provide that if an incumbent director fails to receive the required vote for re-election, our Governance Committee will act within 90 days after
certification of the shareholder vote to determine whether to accept the director's resignation, and will submit a recommendation for prompt consideration by the Board. The Board expects the director
whose resignation is under consideration to abstain from participating in any decision regarding his or her resignation. The Governance Committee and the Board may consider any factors they deem
relevant in deciding whether to accept a director's resignation.
If
each member of the Governance Committee fails to receive the required vote in favor of his or her election in the same election, then those independent directors who did receive the required vote
will appoint a committee amongst themselves to consider the resignations and recommend to the Board whether to accept them. However, if the only directors who received the required vote in the same
election constitute three or fewer directors, all directors may participate in the decision regarding whether to accept the resignations.
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Corporate governance
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Each
director nominee named in this proxy statement has tendered an irrevocable, contingent resignation as a director in accordance with our Corporate Governance Guidelines, which resignation will
become effective if he or she fails to receive the required vote for election at the annual meeting and the Board accepts his or her resignation.
Succession planning and management development
|
A
primary responsibility of the Board is planning for succession with respect to our company's CEO, as well as overseeing succession planning for other senior management positions.
The Board's process targets the building of enhanced management depth, considers continuity and stability within our company, and responds to our company's evolving needs and changing circumstances.
To achieve these goals, the executive talent development and succession planning process is integrated into the Board's annual activities.
The
Board works with the Governance Committee to evaluate a number of potential internal and external candidates as successors to the CEO, and considers emergency, temporary scenarios as well as
long-term succession. The CEO makes available to the Board his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for those
individuals. The Compensation and Human Resources Committee is responsible for reviewing succession planning for executive officer positions other than the CEO.
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Certain relationships and related transactions
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Certain relationships and related transactions
Review of related person transactions
|
The
Board has adopted a written Related Person Transactions Policy for the review, evaluation and approval or ratification of transactions between our company and its related
persons. "Related persons" under this policy include our directors, director nominees, executive officers, holders of more than 5% of our common stock, and their respective immediate family members.
"Immediate family members" include children, stepchildren, parents, stepparents, spouses, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and any
person (other than a tenant or employee) sharing the person's household.
Except
as described below, the policy requires the Governance Committee of the Board to review and evaluate and either approve or disapprove all transactions or series of transactions in
which:
-
▶
-
the amount involved will, or may be expected to, exceed $120,000 in any fiscal year;
-
▶
-
our company is or will be a participant; and
-
▶
-
a related person has a direct or indirect interest.
The
Board has determined that the Governance Committee does not need to review or approve certain transactions even if the amount involved will exceed $120,000, including the following
transactions:
-
▶
-
lending and other financial services transactions or relationships that are in the ordinary course of business and
non-preferential, and comply with applicable laws;
-
▶
-
transactions in which the related person's interest derives solely from his or her services as a director of, and/or
his or her ownership of less than ten percent of the equity interest (other than a general partner interest) in, another corporation or organization that is a party to the transaction;
-
▶
-
transactions in which the related person's interest derives solely from his or her ownership of a class of equity
securities of our company and all holders of that class of equity securities received the same benefit on a pro rata basis;
-
▶
-
transactions where the rates or charges involved are determined by competitive bids, or that involve the rendering of
services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; and
-
▶
-
employment and compensation arrangements for any executive officer and compensation arrangements for any director,
provided that such arrangements have been approved by the Compensation and Human Resources Committee.
When
considering whether to approve or ratify a transaction, the Governance Committee will consider facts and circumstances that it deems relevant to its determination,
including:
-
▶
-
the nature and extent of the related person's interest in the transaction;
-
▶
-
whether the transaction is on substantially the same terms as those prevailing at the time for comparable transactions
with persons not affiliated with our company;
-
▶
-
the materiality of the transaction to each party;
-
▶
-
whether our company's Code of Ethics and Business Conduct could be implicated, including whether the transaction would
create a conflict of interest or appearance of a conflict of interest;
-
▶
-
whether the transaction is in the best interest of our company; and
-
▶
-
in the case of a non-employee director, whether the transaction would impair his or her independence.
No
director is allowed to participate in the deliberations or vote on the approval or ratification of a transaction if that director is a related person with respect to the transaction under review.
On an annual basis, the Governance Committee assesses all ongoing relationships with related persons to confirm that the transactions are still appropriate.
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Certain relationships and related transactions
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Related person transactions
|
Lending transactions
During 2019, U.S. Bancorp and our banking and investment subsidiaries engaged in transactions in the ordinary course of business with some of our directors,
executive officers and the persons that we know beneficially owned more than 5% of our common stock on December 31, 2019, and the entities with which they are associated. All loans and loan
commitments and any transactions involving other financial products and services in connection with these transactions were made in the ordinary course of business, on substantially the same terms,
including current interest rates and collateral, as those prevailing at the time for comparable transactions with others not related to our banking and investment subsidiaries and did not involve more
than the normal risk of collectability or present other unfavorable features.
Transactions with entities affiliated with directors
During 2019, U.S. Bank operated 32 branches and 80 ATMs in grocery stores owned by Schnuck Markets, Inc., of which Craig D. Schnuck, one of our
directors, beneficially owns approximately 13% of the outstanding capital stock. Mr. Schnuck's sister, Nancy A. Diemer, and his four brothers, Scott C. Schnuck, Todd R. Schnuck, Mark J. Schnuck
and Terry E. Schnuck, each beneficially own approximately 13% of the outstanding capital stock of Schnuck Markets as well. In addition, each of Mr. Schnuck's brothers is a director of Schnuck
Markets, and three of his brothers hold officer positions: Todd R. Schnuck is the Chairman and Chief Executive Officer; Mark J. Schnuck is the Vice President; and Terry E. Schnuck is the Assistant
Secretary. Rent and fee payments by U.S. Bank to Schnuck Markets were approximately $2.8 million in 2019. Additionally, U.S. Bank paid Schnuck Markets approximately $1 million in 2019 to
be released from certain future rent obligations to Schnuck Markets. The consolidated gross revenues of Schnuck Markets in 2019 were approximately $3.1 billion.
Our
director Yusuf I. Mehdi currently serves as a Corporate Vice President of Microsoft Corporation. During 2019, we paid $42 million to Microsoft for software and services in the ordinary
course of business, including desktop software, server and cloud enrollment services, and support and development of products. Microsoft's annual revenue was approximately $126 billion for
fiscal year 2019.
These
transactions were conducted at arm's length in the ordinary course of business by each party to the transactions. As discussed above under the heading "Corporate Governance
Director Independence," the Board of
Directors has determined that these relationships are immaterial to Messrs. Mehdi and Schnuck, and that Messrs. Mehdi and Schnuck are both independent directors.
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Compensation discussion and analysis
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Compensation discussion and analysis
This section explains how we compensated the individuals who served as our CEO or CFO for 2019 and each of our four other most highly
compensated executive officers for 2019 (our named executive officers, or "NEOs").
The
NEOs are as follows for 2019:
-
▶
-
Andrew Cecere, Chairman, President
and Chief Executive Officer;
-
▶
-
Terrance R. Dolan, Vice Chair and
Chief Financial Officer;
-
▶
-
Jeffry H. von Gillern, Vice Chair,
Technology and Operations Services;
-
▶
-
Shailesh M. Kotwal, Vice Chair,
Payment Services;
-
▶
-
Timothy A. Welsh, Vice Chair,
Consumer and Business Banking; and
-
▶
-
Gunjan Kedia, Vice Chair, Wealth
Management and Investment Services.
Ms.
Kedia was the fourth most highly compensated executive officer in 2019 after the CEO and CFO. She has been an NEO in the past, and we expect that she could be in the future. During 2019, the
business group she leads was impacted by the declining interest rate environment more significantly than other groups were, which resulted in a lower payout for her annual cash incentive award
compared to payouts for similarly situated executives. We are considering her to be an NEO in 2019 for consistency of presentation.
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Compensation discussion and analysis
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Executive compensation overview
|
Changes to program structure: Our Compensation and Human Resources Committee (referred to as the "Committee" in this "Compensation Discussion and
Analysis" section) considers the views of our shareholders, along with industry trends and the specific strategic needs of our company, when designing the executive compensation program. The Committee
considers the high support for our recent Say on Pay votes 95% in each of the last two years as a strong endorsement that the program is structured
effectively. The structural changes made in 2019 were modest and related to the payout formula of the annual cash incentive program:
-
▶
-
increased the emphasis on earnings per share ("EPS") from 35% to 50% weighting to further enhance executives'
alignment with shareholders and shared corporate results; and
-
▶
-
added a payout cap equal to 200% of an NEO's target award value to further reduce program risk.
Changes to target amounts: Adjustments to target compensation amounts paid to the NEOs in 2019 were based on the following
considerations:
-
▶
-
review of market data and competitive landscape;
-
▶
-
expanded scope of responsibilities (where applicable);
-
▶
-
internal pay equity;
-
▶
-
succession planning and retention; and
-
▶
-
performance of each NEO within his or her role.
2019 performance-based compensation results: Payouts for NEOs' 2019 annual cash incentive awards ranged from 74.9% to 89.1% of their respective target
amounts, reflecting corporate and business line performance that was challenged by unexpected interest rate movements. The performance period for our performance-based restricted stock
units ("PRSUs"), which are earned based on absolute and relative return on equity ("ROE") results, changed from one year to three years starting with grants made in 2018; accordingly, no PRSUs were
earned at the end of 2019.
Corporate and financial performance
|
In
2019 our company once again was at or near the top of its financial peer group in the most commonly used performance metrics for the banking industry.
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Compensation discussion and analysis
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Elements of total direct compensation
|
Sound compensation practices
|
Our
executive compensation program incorporates many strong governance features, including the following:
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Compensation discussion and analysis
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Philosophy and objectives of our executive compensation program
|
Compensation program objective
The Committee has structured the executive compensation program to create long-term shareholder value by attracting and retaining talented leaders and
rewarding them for top performance. The Committee achieves this objective through a compensation package that:
-
▶
-
links a significant portion of total compensation to corporate and business line performance metrics, which we believe
will create long-term shareholder value;
-
▶
-
provides total compensation that is market competitive, permitting us to hire and retain high-caliber individuals;
-
▶
-
emphasizes long-term, stock-based compensation, encouraging our executive officers to think and act as long-term
shareholders;
-
▶
-
subjects equity awards to multi-year performance, vesting and retention requirements that enhance executive ownership
and encourage a long-term view of corporate achievement; and
-
▶
-
encourages an appropriate sensitivity to risk on the part of senior management, which protects long-term shareholder
interests.
Pay for performance
U.S. Bancorp operates in a highly complex business environment, where it competes with many well-established financial institutions and, increasingly, with
non-banks offering products and services that traditionally were offered only by banks. Our long-term business objective is to maximize shareholder value by consistently delivering superior returns on
common equity that exceed the cost of equity. If we are successful in achieving this objective, the Committee believes the results will benefit our shareholders.
Accordingly,
our executive compensation program is designed to reward our executives for achieving annual and long-term financial results that further our long-term business objective. The annual cash
incentive plan rewards performance relative to corporate EPS and business line pretax income targets established at the beginning of the fiscal year, and the PRSUs are earned based on achievement of
ROE targets that directly measure the return generated by the company on its shareholders' investment. The ultimate value of both the PRSUs and RSUs is dependent on our long-term financial success as
reflected in the price of U.S. Bancorp stock. At the same time, the Committee carefully weighs the risks inherent in these programs against the goals of the programs and the company's risk appetite.
Additional discussion of the risk oversight undertaken by the Committee can be found below under "Decision Making and Policies Risk Considerations."
Competitive pay
When evaluating an NEO's compensation compared to market levels and the compensation of other members of our company's executive officer group, the Committee
considers the value of each element as well as the value of the total direct compensation package. The Committee does not "benchmark" pay to a particular market level but instead aims to establish
compensation that is at a competitive level within a reasonable range of median amounts, taking into consideration an NEO's performance, tenure in his or her position, and comparability of his or her
role with corresponding roles in peer institutions. Additional information about the Committee's use of market data can be found below under "Decision Making and Policies
Compensation Peer Group."
Compensation elements
Our NEOs' total direct compensation consists of three elements: base salary, annual cash incentive compensation, and long-term incentive compensation (60% of
which was delivered in PRSUs and 40% in RSUs). Each of these elements of total direct compensation is described in detail below.
NEOs
are also eligible to receive health benefits under the same plans available to our other employees, matching contributions to their U.S. Bank 401(k) Savings Plan accounts on the same basis as our
other employees, and retirement benefits that are earned over their career with the company. No NEO has a severance or standalone change-in-control agreement. NEOs do not receive gross-up payments for
tax liabilities resulting from perquisites, except in relation to relocation expenses.
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The
Committee considers the salary of executive officers relative to comparable executives in our compensation peer group and will make market-based adjustments as it deems
appropriate. Salaries can also be adjusted to reflect experience and tenure in a position, internal pay equity within the executive officer group, promotions or increased scope of responsibilities,
individual performance, and retention considerations.
2019 salary actions: The Committee increased Mr. Cecere's salary by $100,000, or 9%, in his second full year as CEO to help position his total
direct compensation more closely to the total direct compensation of CEOs in our compensation peer group. Mr. Welsh's salary increased by $50,000, or almost 10%, to reflect his expanded
responsibilities, which encompass the former Community Banking and Branch Delivery group as well as the former Consumer Banking Sales and Support group he had been leading. His increased salary is in
line with that of other executive officers in our
company with similar levels of responsibility. Each of the other NEOs' salaries were increased by $25,000, or 4%5%, to reflect market considerations and reward strong
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
2018
base salary
|
|
2019
base salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Cecere
|
|
|
$
|
1,100,000
|
|
|
|
$
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
$
|
675,000
|
|
|
|
$
|
700,000
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
$
|
600,000
|
|
|
|
$
|
625,000
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
$
|
550,000
|
|
|
|
$
|
575,000
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
$
|
525,000
|
|
|
|
$
|
575,000
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
$
|
550,000
|
|
|
|
$
|
575,000
|
|
|
|
|
|
|
|
|
|
|
Annual cash incentive awards
|
How we determine our NEOs' annual cash incentive awards
All executive officers have the opportunity to earn annual cash incentive awards that reflect their responsibility levels and reward achievement of corporate
and business line goals. The awards made to our NEOs for 2019 performance were granted under our Annual Executive Incentive Plan (the "AEIP").
The
formula for calculating each NEO's Annual Cash Incentive Payout consists of the following
elements:
-
▶
-
Each NEO's Target Award Amount,
which is set by the Committee as a percentage of his or her base salary (Target Award
Percentage × Base Salary)
-
▶
-
The Bonus Funding Percentage
applicable to each NEO, which is calculated based on a combination of corporate EPS and business line pretax income performance
-
▶
-
The Committee's assessment of each NEO's Individual Performance and Risk
Sensitivity, which can increase or decrease the value of the Bonus Funding Percentage applied to each NEO's Target Award Amount (but in no event may
individual payouts exceed 200% of an NEO's Target Award Amount)
Setting the Target Award Amounts
The Target Award Amount for each executive officer is based on the officer's level of responsibility within the organization as well as market-based and
internal pay equity considerations. The Target Award Amount is considered by the Committee to be an important tool in establishing an appropriate balance between short-term, cash-based compensation
and long-term, equity-based compensation in each NEO's total compensation package.
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2019 target award actions: The Committee made adjustments to the NEOs' Target Award Percentages in 2019 to ensure those executives'
target compensation levels remain competitive within our compensation peer group. Following an adjustment made in 2017, target levels remained steady in 2018, and then were further adjusted in 2019,
as shown below.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
NEO
|
|
Target Award
Percentage
for 2018
|
|
Target Award
Percentage
for 2019
|
|
Target Award
Amount
for 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Cecere
|
|
|
240
|
%
|
|
|
265
|
%
|
|
|
$
|
3,180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
|
|
|
|
|
|
|
|
$
|
1,050,000
|
|
|
|
Jeffry H. von Gillern
|
|
|
|
|
|
|
|
|
|
|
$
|
937,500
|
|
|
|
Shailesh M. Kotwal
|
|
|
140
|
%
|
|
|
150
|
%
|
|
|
$
|
862,500
|
|
|
|
Timothy A. Welsh
|
|
|
|
|
|
|
|
|
|
|
$
|
862,500
|
|
|
|
Gunjan Kedia
|
|
|
|
|
|
|
|
|
|
|
$
|
862,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculating the Bonus Funding Percentage
The Bonus Funding Percentage consists of two evenly
weighted factors: the Corporate Result, which is based on EPS performance, and the Business Line Result, which is based on a business line's pretax income performance. Both the EPS and business line
pretax income results are assessed
relative to targets included in our company's annual financial plan. The Board establishes these financial targets at the beginning of the fiscal year with the intent that they are challenging yet
reasonably achievable goals.
For
executives with leadership responsibilities for the entire company, including Messrs. Cecere and Dolan, or for a corporate-wide support function, the Business Line Result
is based on the weighted average of the pretax income results of all the company's business lines. For executives who lead a revenue-producing group, the Business Line Result is based on the weighted
average pretax income results of the business lines within the group he or she leads.
The
Bonus Funding Percentage for the Technology and Operations Services business line, led by Mr. von Gillern, is calculated differently from all other business lines in that
50% is based on EPS performance, 35% is based on business line pretax income performance, and 15% is based on that business line's expense management performance. The Committee considers expense
management to be particularly important to Technology and Operations Services because this business line has responsibility for a significant portion of the company's overall expenditures.
For
purposes of computing the Bonus Funding Percentage, our standard practice is to adjust EPS results so that the effect of any variation in our loan loss reserve build or release is reduced by 50%.
We consistently adjust EPS in this manner, whether the loan loss reserve variation is positive or negative. The Committee will also consider whether EPS should be further adjusted from reported
amounts to normalize any notable items.
The
Committee believes that EPS and business line pretax income are appropriate performance metrics for the executive officers' annual cash incentive awards for the following
reasons:
-
▶
-
EPS is a common metric used by investors to evaluate the profitability of a company, showing the
earnings (net income) we make on each outstanding share of common stock;
-
▶
-
a focus on EPS helps aligns the interests of the executive officers with those of shareholders;
-
▶
-
EPS captures elements of corporate performance that are beyond those of the individual operating
business lines, such as corporate funding policies and the management and use of capital;
-
▶
-
the business line pretax income targets are the fundamental drivers of the company's revenues and
income before taxes; and
-
▶
-
the EPS and pretax income targets are aligned with annual financial plan targets, which the Board
and management have assessed for achievability; accordingly, the targets provide incentives to take appropriate amounts of risk to achieve those goals.
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The
Bonus Funding Percentage for each business line (other than Technology and Operations Services, which follows the same general process but with slightly different inputs as described above) is
calculated as follows:
-
▶
-
The percentages by which actual corporate EPS differs from the EPS target and actual business line
pretax income differs from target pretax income are each multiplied by a leverage factor of four to magnify the positive or negative variation from actual results, yielding the Corporate Result and
the Business Line Result, respectively. Neither the Corporate Result nor the Business Line Result may be less than 0% or greater than 200%.
-
▶
-
Each of the Corporate Result and the Business Line Result is multiplied by 50% and then added
together to arrive at the Bonus Funding Percentage for that business line.
2019 Corporate Result: The Corporate Result was 89.3%, which was calculated as follows. The target level of
EPS in 2019 was $4.43. The company reported EPS of $4.16 for 2019, including notable items from the fourth quarter related to restructuring charges including severance and
certain asset impairments, and increased derivative liability related to Visa shares previously sold by the company. These notable items had an aggregate negative impact of $0.17 on EPS for the
year.
To determine the EPS value used to calculate the Corporate Result, the Committee started with the company's core EPS results for 2019 of $4.33 (that is,
excluding the impact of the notable items from reported EPS described above). In accordance with its standard practice, the Committee then adjusted the EPS results downward by $0.02 to offset by 50%
the positive effect that our lower-than-planned increase of loan loss reserves had on earnings. The resulting EPS value used to calculate the Corporate Result was
$4.31. The Corporate Result of 89.3% was the outcome after applying the leverage factor to the difference between target and actual EPS results.
2019 Business Line Results: Pretax income results ranged from 87.7% to 138.4% of target performance across our company's 23
revenue-producing business lines, which generated Business Line Results of 50.6% to 200.0% following application of the leverage factor and the 200%
earn-out cap. The weighted average Business Line Result of all the company's business lines was 81.8%.
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Bancorp
2020
Proxy
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The Business Line Results were as follows for the NEOs:
|
|
|
|
|
NEO
|
|
Business Line Result
|
|
|
|
|
|
|
|
Andrew Cecere
Terrance R. Dolan
|
|
81.8% (based on weighted average pretax income results for all the company's business lines)
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
88.9% (based on both pretax income and expense management results for the Technology and Operations Services business line)
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
88.0% (based on weighted average pretax income results for the business lines within the Payment Services group)
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
80.4% (based on weighted average pretax income results for the business lines within the Consumer and Business Banking group)
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
60.6% (based on weighted average pretax income results for the business lines within the Wealth Management and Investment Services group)
|
|
|
|
|
|
|
|
Factoring in individual performance and risk sensitivity
The Committee considers the performance of the business lines managed by each executive officer and that executive officer's individual
performance during the year. The Committee also uses a formal "risk scorecard" assessment, which can result in downward or upward adjustments to the Bonus Funding Percentage to reflect the executives'
demonstrated sensitivity to risk.
The
Committee believes that it is important to retain the ability to recognize outstanding individual performance and risk mitigation in determining Annual Cash Incentive Payouts, as
well as to acknowledge
circumstances where individual performance improvements are suggested or where inappropriate risk-taking behaviors have occurred. Modifications to our NEOs' Bonus Funding Percentage based on their
individual performance and risk sensitivity have been used only occasionally, however, and have historically been modest in scope. During the five-year period preceding 2019, NEOs collectively
received increases three times and decreases three times, resulting in modifications ranging from 5% to +10%.
2019 individual performance and risk sensitivity actions: The Committee determined that each NEO's applicable Bonus Funding Percentage
appropriately reflected that executive's performance and contribution to the company in 2019. Accordingly, no individual performance-based modifications were made to the NEOs' Bonus Funding
Percentages. Following an analysis of the NEOs' risk scorecard results, the Committee did not make any risk-based modifications to the NEOs' Bonus Funding Percentages.
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2019 Annual Cash Incentive Payout results: The resulting payouts made to the NEOs in February 2020 for 2019
performance under the
annual cash incentive plan were as follows:
-
*
-
Includes expense management factor.
Long-term incentive awards
|
Establishing the structure of the equity awards
Long-term, stock-based compensation represents the most significant portion of our NEOs' total compensation package. In 2019, 65% of our CEO's target total
direct compensation and 62% of our other NEOs' target
total direct compensation consisted of equity awards. The Committee uses equity awards to align the NEOs' interests with those of long-term shareholders.
The
Committee grants equity awards to executive officers under the U.S. Bancorp 2015 Stock Incentive Plan. In 2019, 60% of the value of each executive officer's long-term incentive award was granted
in the form of PRSUs that will cliff vest (if earned) at the end of a three-year performance period, and 40% was granted in the form of RSUs that will vest ratably over three years. Cash dividends on
unvested PRSUs are accrued during the performance period, but accrued dividends are only paid at vesting on shares earned, if any, by the executives.
The
mix of performance-based and time-based equity vehicles is designed to motivate achievement of financial objectives while encouraging retention and stock ownership.
Setting the value of the equity awards
Each year in January, the Committee determines the dollar value of the long-term incentive awards to be granted to the executive officers, and the grants are
made on a pre-determined date in mid-February. In setting each year's award amounts, the Committee considers the relative market position of the awards and the total compensation for each executive,
the proportion of each executive's total direct compensation to be delivered as a long-term incentive award, internal pay equity, executive performance and changes in responsibility, retention
considerations, and corporate performance.
2019 equity value actions: The Committee increased the value of the long-term incentive awards granted to the NEOs in 2019 to align those NEOs' total
compensation with the opportunities available to executives in similar roles at companies in our peer group and to reward strong performance during 2018. All of the NEOs' award values increased by
5%12% except for Mr. Welsh's award value, which increased by 31%. The larger increase for Mr. Welsh's award
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reflects his expanded responsibilities, which encompass the former Community Banking and Branch Delivery group as well as the former Consumer Banking Sales
and Support group he had been leading, and
internal pay equity considerations.
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Value of
equity awards
granted in 2018
|
|
Value of
equity awards
granted in 2019
|
|
|
Andrew Cecere
|
|
|
$
|
7,260,000
|
|
|
|
$
|
8,100,000
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
$
|
3,250,000
|
|
|
|
$
|
3,500,000
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
$
|
2,300,000
|
|
|
|
$
|
2,500,000
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
$
|
2,000,000
|
|
|
|
$
|
2,100,000
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
$
|
1,600,000
|
|
|
|
$
|
2,100,000
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
$
|
2,000,000
|
|
|
|
$
|
2,100,000
|
|
|
|
|
|
|
|
|
|
|
Selecting the performance metrics for the PRSU awards
The number of PRSUs earned is determined according to a formula that uses a comparison of our actual ROE result to target-level ROE, as well as our ROE
performance relative to that of our peer financial institutions. ROE is used as the performance metric because:
-
▶
-
it directly reflects the return generated by the company on our shareholders' investment;
-
▶
-
it encompasses profitability, efficiency, balance sheet management and financial leverage, and is among the most
widely used indicators of financial performance in our industry;
-
▶
-
achieving a high ROE requires prudent management of the tradeoffs between risk and return, requiring an appropriate
balance between achieving the highest return on invested capital and managing risk within the company's established risk tolerance levels; and
-
▶
-
using ROE as a performance metric aligns the interests of the executives with those of long-term shareholders, because
sustaining a high ROE is a primary driver of strong earnings growth and long-term valuation.
The
Committee uses a performance matrix reflecting both the absolute and relative ROE scales to determine the final PRSU award amounts earned during the performance period. Target levels of both
absolute and relative ROE are established, with maximum and minimum levels also identified. Earn-out amounts are determined using interpolation.
The
Committee believes that the PRSU earn-out structure provides an important balance between rewarding the achievement of absolute performance goals and strong relative performance. Executives are
not rewarded for poor performance simply because members of our financial peer group have even worse performance, nor are they rewarded for exceeding expectations if performance relative to peers is
substandard. In addition, by using a sliding scale for each ROE performance metric, the matrix takes into account the amount of variance from the ROE target and peer group ROE results, rewarding
performance while mitigating the incentive for excessive risk taking that may result from an "all-or-nothing" award.
Setting the levels of absolute and relative ROE for the PRSU performance matrix
The target and maximum ROE levels selected by the Committee for the three-year performance period contained in the PRSU awards granted in February 2019 were
based on the ROE range included in the company's profitability goals announced at the last Investor Day conference to be held before the grant. While the September 2016 Investor Day presentation
provided an ROE range of 13.5% to 16.5%, the Committee adjusted the goals contained in the PRSUs granted in 2019 upward to reflect the impact intervening tax reform was expected to have on the
company's ROE results over the awards' three-year performance period. As reflected below, the target award level was set at 14.5%, with a maximum result of 17.5%. These values are the same as were
used in the PRSU awards granted in 2018.
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The Committee also established a sliding scale of ROE achieved relative to the ROE of our financial peer group, which consisted of the following institutions:
Bank of America, BB&T, Fifth Third, J.P. Morgan, KeyCorp, PNC, Regions, SunTrust, and Wells Fargo. Following the merger of BB&T and SunTrust, which closed in December 2019, the resulting Truist
Financial will be included in the group used to measure relative ROE performance for the awards granted in 2019. This group is used by the company for financial comparison purposes because these
companies, along with U.S. Bancorp, are the largest financial services companies based in the United States that provide broadly comparable retail and commercial banking services. The matrix provides
that performance above the median of peers will increase the payout otherwise earned based on our absolute ROE result, while performance below the median of peers will reduce the award payout.
The
company's absolute and relative ROE results for each of the three years within the performance period are applied to the performance matrix to produce a percentage of target PRSUs result for that
year. At the end of the performance period, the percentage results for the three years will be averaged to determine the percentage of target PRSUs earned and eligible to vest upon the third
anniversary of the grant date.
2019 PRSU results: Prior to 2018, the PRSUs were granted with a one-year performance period and then vested ratably over four years. Because of the
change from one-year to three-year performance periods beginning with grants made in February 2018, no PRSUs were earned at the end of 2018 or 2019.
Decision making and policies
|
Who is involved in making compensation decisions
Executive compensation policy, practices and amounts are determined by the Committee, which is composed entirely of independent directors. The Committee has
responsibility for setting each component of compensation for our CEO with the assistance and guidance of its independent compensation consultant. The Committee has retained Meridian Compensation
Partners, LLC ("Meridian") as its independent compensation consultant.
Our
CEO and senior members of our human resources group, also with the assistance of Meridian, develop initial recommendations for all components of compensation for the executive officers other than
the CEO and present their recommendations to the Committee for review and approval. The Committee also annually reviews the total amount and types of compensation paid to non-employee members of the
Board of Directors and recommends any changes to the independent directors for approval.
The
Committee retains an independent compensation consultant to:
-
▶
-
provide advice regarding compensation program design, competitive practices, market trends and peer group composition;
-
▶
-
provide perspectives and assist the Committee in setting the pay of our CEO;
-
▶
-
provide the same advisory services to the Committee, our CEO, and senior members of our human resources group
regarding the compensation of the other executive officers; and
-
▶
-
advise the Committee on non-employee director compensation.
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Meridian
does not provide any other services to our company. Following a review of the relationship between the company and its independent compensation consultant in 2019, the Committee concluded
that Meridian's work for the Committee does not raise any conflicts of interest.
How compensation is determined
The executive compensation outcomes described in the preceding pages are the culmination of a year's worth of analysis and decision making by the Committee,
as follows:
|
|
|
|
|
|
|
JanuaryFebruary
|
|
|
|
|
▶
Review the company's recent performance in several key financial metrics and compare it to the performance of its peer institutions in the financial services
industry
|
|
|
|
|
▶
Determine the payouts to be made under the annual cash incentive plan based on the previous year's corporate, business line and individual performance and
sensitivity to risk
|
|
|
|
|
▶
Calculate the percentage of target PRSU awards earned for the last completed performance period, as applicable
|
|
|
|
|
▶
Set the coming year's base salaries and target award percentages for the annual cash incentive plan
|
|
|
|
|
▶
Establish the structure and performance targets for the upcoming annual cash incentive plan
|
|
|
|
|
▶
Set the structure and amount of long-term incentive awards
|
|
|
|
|
▶
Establish performance targets for the upcoming PRSU awards and grant equity awards
|
|
|
|
|
▶
Consider risks arising from the company's incentive compensation plans (see below for more information about the risk consideration process)
|
|
|
|
|
April
|
|
|
|
|
▶
Review total compensation tally sheets for each executive officer, including compensation outcomes under various termination scenarios
|
|
|
|
|
▶
Review Say on Pay voting recommendations from proxy advisors and consider the results of the shareholder vote
|
|
|
|
|
JulyOctober
|
|
|
|
|
▶
Review comparative compensation information from peer institutions (see below for more information about our compensation peer group), as well as a larger group
of diversified financial companies
|
|
|
|
|
▶
Receive compensation consultant reports on compensation practices and trends in the financial services industry
|
|
|
|
|
▶
Review market information and recommend non-employee director compensation for approval by the independent directors
|
|
|
|
|
December
|
|
|
|
|
▶
Receive management reports on feedback from fall shareholder engagement conversations
|
|
|
|
|
▶
Establish design of executive compensation program for upcoming year and make preliminary decisions about target levels of compensation
|
|
|
|
|
▶
Review executive officers' performance evaluations
|
|
|
|
|
Ongoing
|
|
|
|
|
▶
Review the company's year-to-date financial performance relative to the targets included in its incentive compensation plans
|
|
|
|
|
▶
Evaluate the structure of the executive compensation program and assess its effectiveness in creating long-term shareholder value
|
|
|
|
|
|
|
|
|
45
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Compensation discussion and analysis
|
Compensation peer group
The Committee used the following group of financial services companies to perform market checks when setting the compensation of our executive officers in
2019 (listed in descending order of assets held at December 31, 2018, including U.S. Bancorp's relative position in the group):
-
▶
-
JPMorgan Chase & Co.
-
▶
-
Bank of America Corporation
-
▶
-
Citigroup Inc.
-
▶
-
Wells Fargo & Company
-
▶
-
U.S. Bancorp
-
▶
-
The PNC Financial Services Group, Inc.
-
▶
-
Capital One Financial Corporation
-
▶
-
BB&T Corporation (merged with SunTrust in December 2019 to form Truist Financial Corporation)
-
▶
-
SunTrust Banks, Inc. (merged with BB&T in December 2019 to form Truist Financial Corporation)
-
▶
-
Fifth Third Bancorp
Starting
in 2020, the peer group used by the Committee includes Truist Financial Corporation, which was created by the merger of BB&T Corporation and SunTrust Banks, Inc., and adds Citizens
Financial Group, Inc.
The
Committee selects peers that it believes represent the company's most meaningful competitors in the marketplace for executive talent. The Committee also reviews and uses compensation data from a
large group of diversified financial services companies as an additional point of comparison. As a result of this ongoing analysis and resulting
compensation adjustments, our executive compensation positioning is generally within market range, recognizing that several positions are unique to our company and do not have clear market
comparisons.
Stock ownership and retention requirements
The Committee believes that ownership of our common stock by our executive officers directly aligns their interests with those of our other shareholders and
helps balance the incentives for risk taking inherent in equity-based awards. We require our executives to hold significant amounts of company stock. We also require that they retain until retirement
a substantial portion of their vested stock awards (net of shares withheld to satisfy tax obligations), even after minimum ownership levels have been met. The current ownership and retention
requirements are as follows:
Vested
PRSUs, all RSUs and stock received and held after exercise of stock options are included in determining whether an executive officer satisfies his or her applicable minimum ownership level. As
of December 31, 2019, all our executive officers were in compliance with the stock ownership and retention requirements.
Clawback and forfeiture provisions
-
▶
-
Clawback of paid cash
awards: Under its clawback policy, the Committee will evaluate the facts and circumstances surrounding any restatement of earnings, and in its sole
discretion, may adjust and recoup cash incentive amounts paid to our CEO, any executive officers or any other employees as it deems appropriate, if attributable to materially misleading reported
earnings that require restatement.
-
▶
-
Forfeiture of unpaid cash
awards: Payouts of annual cash incentive awards can be reduced to $0, regardless of company performance relative to plan metrics, if the executive
officer has demonstrated negative personal performance that was significantly insensitive to risk during the performance period.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
46
|
Table of Contents
Compensation discussion and analysis
|
|
-
▶
-
Cancellation of unvested equity
awards: The equity award agreements for executive officers provide that outstanding awards can be canceled if the executive's conduct has subjected the
company to significant financial, reputational or other risk through violations of company policies, laws or regulations; negligent or willful misconduct; or activity resulting in a significant or
material control deficiency.
Change-in-control provisions
-
▶
-
No cash benefit: The
executive officers are not entitled to receive any cash payments upon a change-in-control of our company, with or without a subsequent termination in employment, except as provided by broad-based
severance plans generally available to our employees.
-
▶
-
No single-trigger equity
acceleration: The equity award agreements for executive officers provide that a change-in-control of our company would not trigger accelerated vesting
of an executive officer's outstanding equity awards unless his or her employment was involuntarily terminated within 12 months after the change-in-control other than for cause.
Hedging and pledging policy
The Committee has adopted a policy that prohibits executive officers and directors of the company from hedging shares of the company's common stock,
including, but not limited to, engaging in short sales or trading in puts, calls, covered calls or other derivative products. The policy also prohibits executive officers and directors from pledging
shares of the company's common stock as collateral for a loan.
Risk considerations
Overview: Prudent risk taking is an integral part of any business strategy, and our compensation program is not intended to encourage management
decisions that completely eliminate risk. Rather, the combination of various elements in our program is designed to encourage appropriate sensitivity to risk and mitigate the potential to reward risk
taking that may produce short-term results that appear in isolation to be favorable, but that may undermine the successful execution of our long-term business strategy and negatively affect
shareholder value. Our compensation practices are also designed to reward performance while maintaining our core commitment to customer service and ethical principles. Together with the company's
processes for strategic planning, its internal control over financial reporting and other financial and compliance policies and practices, the design of our compensation program helps to discourage
management actions that demonstrate insensitivity to risk.
Role of management: As a large financial services company, we were subject to a continuing horizontal industry review of incentive compensation
policies and practices undertaken by the Federal Reserve Board. We routinely undertake a thorough risk analysis of every incentive compensation plan of the company, the individuals covered by each
plan and the risks inherent in each plan's design and implementation. We also conduct validation and back-testing activities to ensure that compensation plans are correctly risk rated, the plans are
designed to adequately mitigate risk inherent therein, and the plans are administered effectively. The Incentive Review Committee was created to oversee that review and to provide more comprehensive
oversight of the relationship between the various kinds of risk we manage and our company's incentive compensation plans and programs. The Incentive Review Committee meets throughout the year and
reviews and approves all company incentive plans.
The
Incentive Review Committee reviews incentive plan elements such as risk controls, plan participants, performance measures, performance and payout curves or formulas, how target level performance
is determined (including whether any thresholds and caps exist), how frequently payouts occur, and the mix of fixed and variable compensation that the plan delivers. The plans and programs are also
reviewed from the standpoint of reasonableness (for example, how target pay levels compare to similar plans for similar employee groups at other companies, and how payout amounts relate to the results
that generate the payments), how well the plans and programs are aligned with the company's goals and objectives and with its risk appetite, and from an overall standpoint, whether these plans and
programs represent an appropriate mix of short-term and long-term compensation.
As
part of this review by the Incentive Review Committee, our management team, including senior risk officers and individuals from the compensation department, have identified the risks inherent in
these programs and have modified plans and controls where appropriate to mitigate certain potential risks. For example, most business line incentive compensation plans with a credit component track
early defaults, or defaults that occur within the first 12 months, and must include a provision that allows the company to offset future payments by the amount of the previously paid incentives
related to the early default.
|
|
|
|
|
|
47
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Compensation discussion and analysis
|
In
addition, a "risk scorecard" assessment measuring adequacy of risk management is undertaken for senior management-level employees who have the individual ability to pose material risk to the
company, including the executive officers; all employees who have credit responsibility and who participate in annual corporate cash incentive plans; and all employees who, as part of a group, can
engage in risk-taking behavior that could be material to the company and who participate in annual corporate cash incentive plans. This analysis serves as the basis for annual cash incentive plan
adjustments for these employees. Annually, the Incentive Review Committee also addresses risk events that pose a material adverse impact to the company or business line to determine whether an event
should trigger cancellation of equity awards. The Incentive Review Committee has reviewed its process with the Compensation and Human Resources Committee and discussed the areas where
compensation-related risks were being addressed by plan modifications, or were mitigated by internal controls or otherwise.
Role of the Board: The Compensation and Human Resources Committee also conducts an annual review of the compensation packages and components for
the executive officers. The Committee assesses the incentives for risk taking contained in the compensation program and balances them with the other goals of the compensation program. The Committee
meets at that time with members of senior management for a discussion of the material risks our company faces, to assess those risks and the overall risk tolerance of the company approved by the Board
of Directors in relation to the levels of risk inherent in the compensation plans and programs and the performance targets set each year.
In
evaluating the incentives for risk taking in compensation plans and policies for executive officers, the Committee considered the following risk-mitigating aspects of those plans and policies:
|
|
|
|
|
|
|
Overall executive compensation program risk mitigation factors
|
|
|
|
|
▶
Long-term incentive focus: The majority of the total compensation received by executive officers is in the form of
equity awards with multi-year vesting schedules, which helps to ensure that executives have significant value tied to long-term stock price performance and mitigates incentives to manage the company with an excessive focus on short-term
gain.
|
|
|
|
|
Annual cash incentive risk mitigation factors
|
|
|
|
|
▶
Specific risk sensitivity analysis: A "risk scorecard" assessment is performed for executive officers and can result
in adjustments to award payouts under the annual cash incentive plan.
|
|
|
|
|
▶
Clawback policy: The company's incentive compensation clawback policy discourages risk taking that would lead to
improper financial reporting.
|
|
|
|
|
▶
Cap on award value: The maximum annual cash incentive award payable to an executive officer is equal to 200% of that
officer's target award value, which limits the potential incentive to take excessive risk to maximize award value.
|
|
|
|
|
Long-term incentive risk mitigation factors
|
|
|
|
|
▶
Equity cancellation provisions: Executive officers' unvested equity awards can be cancelled if their conduct has
subjected the company to significant financial, reputational or other risk.
|
|
|
|
|
▶
Choice of performance metric: The PRSUs use ROE as the measure of corporate performance for determining the final
number of units earned under the award. Achieving a high ROE requires an appropriate balance between achieving the highest return on invested capital and managing risk within the company's established risk tolerance levels.
|
|
|
|
|
▶
Maximum PRSU payout limited: The number of units that may be earned under the performance formula is capped at 150%,
which limits the potential incentive to take excessive risk to maximize award value.
|
|
|
|
|
▶
Sliding scale earn-out calculation: The PRSU performance matrix takes into account the amount of variance from the ROE
target and peer group ROE results, mitigating the incentive for excessive risk taking that may result from an "all-or-nothing" award.
|
|
|
|
|
▶
Meaningful stock ownership and retention requirements: Executives are required to hold significant amounts of company
stock, a portion of which must be held until retirement, which fosters the alignment of executives' interests with those of our long-term shareholders.
|
|
|
|
|
▶
Policy prohibiting hedging of shares: Our executives are prohibited from taking actions designed to hedge or offset
any decrease in the market value of our common stock.
|
|
|
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
48
|
Table of Contents
Compensation discussion and analysis
|
|
Based
on a consideration of the foregoing reviews and factors, the Committee has determined that risks arising from the company's compensation policies and practices for its employees are not
reasonably likely to have a material adverse effect on the company.
Compensation committee report
The Compensation and Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon
this review and discussion, the Compensation and Human Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and
in our 2019 Annual Report on Form 10-K.
Compensation and Human Resources Committee of the Board of Directors of U.S. Bancorp
|
|
|
|
|
Scott W. Wine, Chair
|
|
David B. O'Maley
|
|
|
Arthur D. Collins, Jr.
|
|
O'dell M. Owens, M.D., M.P.H.
|
|
|
Olivia F. Kirtley
|
|
|
|
|
|
|
|
|
|
|
49
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
Executive compensation
Summary compensation table
|
The
following table shows the cash and non-cash compensation awarded to or earned by our NEOs in 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
principal position
|
|
|
Year
|
|
|
Salary
($)
|
|
|
Stock
awards
($)1
|
|
|
Option
awards
($)2
|
|
|
Non-equity
incentive plan
compensation
($)3
|
|
|
Change in
pension value
and
non-qualified
deferred
compensation
earnings
($)4
|
|
|
All other
compensation
($)5
|
|
|
Total
($)
|
|
Andrew Cecere
|
|
|
2019
|
|
|
1,200,000
|
|
|
8,100,000
|
|
|
|
|
|
2,718,900
|
|
|
6,713,623
|
|
|
52,503
|
|
|
18,785,026
|
|
Chairman, President and
|
|
|
2018
|
|
|
1,100,000
|
|
|
7,260,000
|
|
|
|
|
|
2,663,760
|
|
|
2,369,125
|
|
|
44,243
|
|
|
13,437,128
|
|
Chief Executive Officer
|
|
|
2017
|
|
|
941,538
|
|
|
4,500,000
|
|
|
1,500,000
|
|
|
1,659,867
|
|
|
3,381,404
|
|
|
31,947
|
|
|
12,014,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
2019
|
|
|
700,000
|
|
|
3,500,000
|
|
|
|
|
|
897,750
|
|
|
1,380,957
|
|
|
32,810
|
|
|
6,511,517
|
|
Vice Chair and
|
|
|
2018
|
|
|
675,000
|
|
|
3,250,000
|
|
|
|
|
|
953,505
|
|
|
234,766
|
|
|
23,451
|
|
|
5,136,722
|
|
Chief Financial Officer
|
|
|
2017
|
|
|
650,000
|
|
|
2,325,000
|
|
|
775,000
|
|
|
768,040
|
|
|
579,394
|
|
|
16,188
|
|
|
5,113,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
2019
|
|
|
625,000
|
|
|
2,500,000
|
|
|
|
|
|
835,313
|
|
|
358,150
|
|
|
37,764
|
|
|
4,356,227
|
|
Vice Chair, Technology
|
|
|
2018
|
|
|
600,000
|
|
|
2,300,000
|
|
|
|
|
|
838,320
|
|
|
15,670
|
|
|
25,226
|
|
|
3,779,216
|
|
and Operations Services
|
|
|
2017
|
|
|
575,000
|
|
|
1,725,000
|
|
|
575,000
|
|
|
655,270
|
|
|
186,832
|
|
|
31,935
|
|
|
3,749,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal6
|
|
|
2019
|
|
|
575,000
|
|
|
2,100,000
|
|
|
|
|
|
764,175
|
|
|
105,265
|
|
|
88,889
|
|
|
3,633,329
|
|
Vice Chair, Payment
|
|
|
2018
|
|
|
550,000
|
|
|
2,000,000
|
|
|
|
|
|
791,560
|
|
|
50,547
|
|
|
79,244
|
|
|
3,471,351
|
|
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh6
|
|
|
2019
|
|
|
575,000
|
|
|
2,100,000
|
|
|
|
|
|
731,400
|
|
|
129,709
|
|
|
37,693
|
|
|
3,573,802
|
|
Vice Chair, Consumer and
Business Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
2019
|
|
|
575,000
|
|
|
2,100,000
|
|
|
|
|
|
646,013
|
|
|
132,614
|
|
|
113,128
|
|
|
3,566,755
|
|
Vice Chair, Wealth
|
|
|
2018
|
|
|
550,000
|
|
|
2,000,000
|
|
|
|
|
|
739,970
|
|
|
140,101
|
|
|
94,821
|
|
|
3,524,892
|
|
Management and
|
|
|
2017
|
|
|
525,000
|
|
|
1,200,000
|
|
|
400,000
|
|
|
611,520
|
|
|
|
|
|
69,327
|
|
|
2,805,847
|
|
Investment Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Stock awards
The amounts in this column are calculated based on the number of time-based restricted stock units, or RSUs, and performance-based restricted stock units, or
PRSUs, awarded and the fair market value of U.S. Bancorp common stock on the date the award was made in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") Topic 718.
The 2019 values in this table reflect the fair market value of each officer's RSUs plus the target payout for the PRSUs on the grant date. The number of PRSUs
subject to each of these awards will be determined after a three-year performance period beginning on January 1, 2019 and ending December 31, 2021. Depending on our company performance
during this time, 0% to 150% of the target number of PRSUs granted to the executive officers can be earned. The fair market value of RSUs plus the maximum potential payout amounts for the PRSUs on the
grant date were as follows: (i) Mr. Cecere, $10,530,000; (ii) Mr. Dolan, $4,550,000; (iii) Mr. von Gillern, $3,250,000; (iv) Mr. Kotwal,
$2,730,000; (v) Mr. Welsh, $2,730,000; (vi) Ms. Kedia, $2,730,000.
-
2.
-
Option awards
The amounts in this column are based on the fair value of the stock option awards as estimated using the Black-Scholes option-pricing model in accordance with
FASB ASC Topic 718. The assumptions used to arrive at the Black-Scholes value for the grants made in 2017 are disclosed in Note 17 to our consolidated financial statements included in our 2017
Annual Report on Form 10-K. No stock options were granted in 2018 or 2019.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
50
|
Table of Contents
Executive compensation
|
|
-
3.
-
Non-equity incentive plan compensation
The 2019 amounts in this column relate to awards granted under our Annual Executive Incentive Plan, or AEIP, in January 2019, determined in January 2020 based on
2019 performance, and paid out in February 2020. The AEIP and these awards are discussed above in the "Compensation Discussion and Analysis" section of this proxy statement.
-
4.
-
Change in pension value and non-qualified deferred compensation earnings
The amounts in this column represent the increase in the actuarial net present value of all future retirement benefits under the U.S. Bank Pension Plan and the
U.S. Bank Non-Qualified Retirement Plan. A number of factors can cause the amounts reflected in this column to vary significantly, including volatility in the discount rate applied to determine the
value of future payment streams and changes to mortality assumptions.
The change in present value amounts reported for 2019 are generally larger than those reported for 2018 for the respective NEOs. These larger "change" values are
primarily due to the lower discount rates used for year-end 2019, which are approximately 100 basis points lower than those for year-end 2018. Other drivers of the increase are increases in pay, age
and years of service.
The net present values of the pension benefits as of December 31, 2019, used to calculate the net change in pension benefits were determined using the
same assumptions used to determine our pension obligations and expense for financial statement purposes. See Note 16 to our consolidated financial statements included in our 2019 Annual Report
on Form 10-K for these specific assumptions. Additional information about our Pension Plan and Non-Qualified Retirement Plan is included below under the heading "Pension Benefits." We have not
provided above-market or preferential earnings on any nonqualified deferred compensation and, accordingly, no such amounts are reflected in this column.
-
5.
-
All other compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Parking
reimbursement
($)
|
|
|
Matching
contribution into
401(k) savings
plan
($)
|
|
|
Reimbursement
of financial
planning
expenses
($)
|
|
|
Executive
physical
($)
|
|
|
Home
security
system
expenses
($)
|
|
|
Commuting
expenses
($)a
|
|
|
Housing
expenses
($)a
|
|
|
Club dues
|
|
|
Other
($)b
|
|
|
Total
($)
|
|
Mr. Cecere
|
|
|
5,400
|
|
|
11,200
|
|
|
21,025
|
|
|
|
|
|
7,623
|
|
|
|
|
|
|
|
|
6,581
|
|
|
674
|
|
|
52,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Dolan
|
|
|
5,400
|
|
|
11,200
|
|
|
7,000
|
|
|
|
|
|
661
|
|
|
|
|
|
|
|
|
8,549
|
|
|
|
|
|
32,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. von Gillern
|
|
|
5,400
|
|
|
11,200
|
|
|
7,000
|
|
|
3,857
|
|
|
425
|
|
|
|
|
|
|
|
|
6,500
|
|
|
3,382
|
|
|
37,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Kotwal
|
|
|
|
|
|
11,200
|
|
|
|
|
|
|
|
|
|
|
|
49,490
|
|
|
25,668
|
|
|
|
|
|
2,531
|
|
|
88,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Welsh
|
|
|
5,400
|
|
|
11,200
|
|
|
14,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,916
|
|
|
152
|
|
|
37,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Kedia
|
|
|
|
|
|
11,200
|
|
|
21,025
|
|
|
3,000
|
|
|
|
|
|
43,259
|
|
|
34,644
|
|
|
|
|
|
|
|
|
113,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
a.
-
The amounts for Mr. Kotwal and
Ms. Kedia represent expenses for corporate housing in Minnesota and expenses for commercial air fare and related parking and ground transportation when they travel between their respective
homes and their offices in Minneapolis.
-
b.
-
The amount for Mr. Cecere represents
meal costs incurred by his spouse at employee recognition events she attended as his guest. The amount for Mr. von Gillern includes (i) a $3,000 matching contribution under our
charitable matching gifts program, which is available to all of our employees and (ii) a $382 cost incurred by members of his family at an employee recognition event they attended as his
guests. The amount for Mr. Kotwal represents transportation costs incurred in his service on other organizations' boards of directors. The amount for Mr. Welsh represents two non-cash
awards.
Our company occasionally allows its executives the personal use of tickets for sporting and
cultural events previously acquired by our company for the purpose of business entertainment. In addition, an executive's spouse might accompany him or her on a business-related flight aboard a
company-owned aircraft if a seat on that aircraft would otherwise be empty. There is no incremental cost to our company for the use of such tickets or for such flights.
-
6.
-
Mr. Kotwal was not an NEO in 2017,
and Mr. Welsh was not an NEO in 2017 or 2018. The table above reflects their compensation for only the years they were NEOs.
|
|
|
|
|
|
51
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
Grants of plan-based awards
|
The
following table summarizes the equity and non-equity plan-based awards granted in 2019 to the NEOs. The first line of information for each executive contains information about
the 2019 annual cash incentive awards that each executive was granted under our AEIP, and the remaining information relates to PRSUs and RSUs granted in 2019 under the U.S. Bancorp 2015 Stock
Incentive Plan.
Grants of plan-based awards for fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
compensation
committee
meeting at
|
|
|
Estimated future
payouts
under non-equity
incentive plan awards1
|
|
|
Estimated future payouts under
equity incentive plan awards4
|
|
|
All other
stock awards:
number of
shares of
stock or
|
|
|
Grant date
fair value
of stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Grant
date
|
|
|
which grant
was approved
|
|
|
Target
($)2
|
|
|
Maximum
($)3
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
units
(#)5
|
|
|
awards
($)6
|
|
Andrew Cecere
|
|
|
|
|
|
|
|
|
3,180,000
|
|
|
6,360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
96,314
|
|
|
144,471
|
|
|
|
|
|
4,860,004
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,209
|
|
|
3,239,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
|
|
|
|
|
|
1,050,000
|
|
|
2,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
41,617
|
|
|
62,425
|
|
|
|
|
|
2,099,994
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,745
|
|
|
1,400,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
|
|
|
|
|
|
937,500
|
|
|
1,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
29,727
|
|
|
44,590
|
|
|
|
|
|
1,500,024
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,818
|
|
|
1,000,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
|
|
|
|
|
|
862,500
|
|
|
1,725,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
24,970
|
|
|
37,455
|
|
|
|
|
|
1,259,986
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
|
|
840,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
|
|
|
|
|
|
862,500
|
|
|
1,725,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
24,970
|
|
|
37,455
|
|
|
|
|
|
1,259,986
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
|
|
840,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
|
|
|
|
|
|
862,500
|
|
|
1,725,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
0
|
|
|
24,970
|
|
|
37,455
|
|
|
|
|
|
1,259,986
|
|
|
|
|
2/14/19
|
|
|
1/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
|
|
840,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Estimated future payouts under non-equity incentive plan awards
These columns show the potential payments for each of the NEOs under our AEIP for 2019 performance. Actual annual cash incentive payout amounts are determined in
accordance with a formula based on corporate EPS performance and business line pretax income performance, in each case ranging from 0% to 200% of target levels, subject to adjustment for individual
performance and risk sensitivity. Additional information regarding how the payout amounts for these awards are determined is included above in "Compensation Discussion and
Analysis Annual Cash Incentive Awards," and the actual amounts paid based on 2019 performance are reported above in the Non-Equity Incentive Plan Compensation column in the
Summary Compensation Table.
-
2.
-
Target estimated future payouts under non-equity incentive plan awards
As described above in "Compensation Discussion and Analysis Annual Cash Incentive Awards," the Compensation and Human Resources Committee
establishes a target cash incentive amount for each NEO, expressed as a percentage of that NEO's base salary.
-
3.
-
Maximum estimated future payouts under non-equity incentive plan awards
As described above in "Compensation Discussion and Analysis Annual Cash Incentive Awards," the maximum cash incentive amount for each NEO
equals 200% of that NEO's target amount.
-
4.
-
Estimated future payouts under equity incentive plan awards PRSUs
The threshold, target and maximum columns each show the potential number of PRSUs that could be earned by each of these NEOs during the three-year performance
period of January 1, 2019, to December 31, 2021. The number of PRSUs earned will be between 0 and 150% of target based on the company's absolute and relative ROE performance during that
period, as set in the applicable award agreements. Additional information regarding how the PRSU awards are earned is included above in "Compensation Discussion and Analysis
Long-Term Incentive Awards."
Any PRSUs earned during the performance period will vest on February 14, 2022, the third anniversary of the grant date. Cash dividends on unvested PRSUs
are accrued during the performance period, but accrued dividends are only paid at vesting on shares earned, if any, by the executives.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
52
|
Table of Contents
Executive compensation
|
|
-
5.
-
Estimated future payouts under equity incentive plan awards RSUs
These RSUs vest at the rate of 33% on the first and second anniversaries of the grant date and 34% on the third anniversary of the grant date, with vesting dates
of February 14, 2020, 2021, and 2022. The RSUs pay an amount equal to the dividends paid on our shares of common stock.
-
6.
-
Grant date fair value of stock awards
The grant date fair value of the PRSUs and the RSUs was calculated using the target number of units multiplied by the closing market price of a share of our
common stock on the grant date.
Outstanding equity awards
|
The
following table shows the unexercised stock options and the unvested RSUs and PRSUs held at the end of fiscal year 2019 by the NEOs.
Outstanding equity awards at 2019 fiscal year-end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number of
stock
units that
have not
vested
(#)
|
|
|
Market value
of stock
units that
have not
vested
($)1
|
|
|
Equity incentive
plan awards:
number of
unearned stock
units that have
not vested
(#)
|
|
|
Equity incentive
plan awards:
market or
payout value
of unearned
stock units
that have not
vested
($)1
|
|
Andrew Cecere
|
|
|
51,125
|
|
|
51,126
|
(2)
|
|
55.01
|
|
|
2/16/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,333
|
|
|
35,112
|
(3)
|
|
39.49
|
|
|
2/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,044
|
|
|
|
|
|
44.32
|
|
|
2/19/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,366
|
|
|
|
|
|
40.32
|
|
|
2/20/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,948
|
|
|
|
|
|
33.99
|
|
|
2/14/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,187
|
|
|
|
|
|
28.63
|
|
|
2/15/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,209
|
(4)
|
|
3,806,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,471
|
(5)
|
|
8,565,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,178
|
(6)
|
|
2,085,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,134
|
(7)
|
|
7,004,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,383
|
(8)
|
|
2,750,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,094
|
(9)
|
|
1,724,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
26,414
|
|
|
26,415
|
(2)
|
|
55.01
|
|
|
2/16/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,748
|
|
|
583
|
(3)
|
|
41.88
|
|
|
7/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,091
|
|
|
9,364
|
(3)
|
|
39.49
|
|
|
2/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,531
|
|
|
|
|
|
44.32
|
|
|
2/19/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,583
|
|
|
|
|
|
40.32
|
|
|
2/20/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,918
|
|
|
|
|
|
33.99
|
|
|
2/14/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,745
|
(4)
|
|
1,645,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,425
|
(5)
|
|
3,701,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,748
|
(6)
|
|
933,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,884
|
(7)
|
|
3,135,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,966
|
(8)
|
|
1,420,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
476
|
(9)
|
|
28,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,759
|
(9)
|
|
460,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number of
stock
units that
have not
vested
(#)
|
|
|
Market value
of stock
units that
have not
vested
($)1
|
|
|
Equity incentive
plan awards:
number of
unearned stock
units that have
not vested
(#)
|
|
|
Equity incentive
plan awards:
market or
payout value
of unearned
stock units
that have not
vested
($)1
|
|
Jeffry H. von Gillern
|
|
|
19,599
|
|
|
19,600
|
(2)
|
|
55.01
|
|
|
2/16/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,101
|
|
|
10,701
|
(3)
|
|
39.49
|
|
|
2/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,614
|
|
|
|
|
|
44.32
|
|
|
2/19/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,000
|
|
|
|
|
|
40.32
|
|
|
2/20/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,183
|
|
|
|
|
|
33.99
|
|
|
2/14/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,818
|
(4)
|
|
1,175,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,590
|
(5)
|
|
2,643,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,145
|
(6)
|
|
660,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,425
|
(7)
|
|
2,218,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,780
|
(8)
|
|
1,054,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,868
|
(9)
|
|
525,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
13,633
|
|
|
13,634
|
(2)
|
|
55.01
|
|
|
2/16/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,091
|
|
|
9,364
|
(3)
|
|
39.49
|
|
|
2/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
(4)
|
|
987,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,455
|
(5)
|
|
2,220,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,691
|
(6)
|
|
574,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,544
|
(7)
|
|
1,929,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,370
|
(8)
|
|
733,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,759
|
(9)
|
|
460,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
(4)
|
|
987,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,455
|
(5)
|
|
2,220,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,753
|
(6)
|
|
459,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,035
|
(7)
|
|
1,543,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,622
|
(10)
|
|
451,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
13,633
|
|
|
13,634
|
(2)
|
|
55.01
|
|
|
2/16/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,647
|
(4)
|
|
987,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,455
|
(5)
|
|
2,220,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,691
|
(6)
|
|
574,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,544
|
(7)
|
|
1,929,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,370
|
(8)
|
|
733,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,786
|
(11)
|
|
402,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
The amounts in this column are calculated
using a per share value of $59.29, the closing market price of a share of our common stock on December 31, 2019.
-
2.
-
These non-qualified stock options vest at
the rate of 25% per year; 25% vested on each of February 16, 2018 and 2019, with remaining vesting to occur on February 16, 2020 and 2021.
-
3.
-
These non-qualified stock options vest at
the rate of 25% per year; 25% vested on each of February 18, 2017, 2018 and 2019, with remaining vesting to occur on February 18, 2020.
-
4.
-
These RSUs vest at the rate of 33% on the
first and second anniversaries of the grant date and 34% on the third anniversary of the grant date, with vesting dates of February 14, 2020, 2021, and 2022.
-
5.
-
The number of PRSUs listed is the maximum
number that could be earned during the three-year performance period of January 1, 2019, to December 31, 2021. The number of PRSUs earned will be between 0 and 150% of target based on
the company's absolute and relative ROE performance during that period, as set in the applicable award agreements. Performance for 2019 was above target, but the results could change during the
remaining two years of the performance period. Any earned PRSUs will vest on February 14, 2022, the third anniversary of the grant date.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
54
|
Table of Contents
Executive compensation
|
|
-
6.
-
These RSUs vest at the rate of 33% on the
first and second anniversaries of the grant date and 34% on the third anniversary of the grant date; 33% vested on February 14, 2019, with remaining vesting to occur on February 14, 2020
and 2021.
-
7.
-
The number of PRSUs listed is the maximum
number that could be earned during the three-year performance period of January 1, 2018, to December 31, 2020. The number of PRSUs earned will be between 0 and 150% of target based on
the company's absolute and relative ROE performance during that period, as set in the applicable award agreements. Performance for 201819 was above target, but the results could change
during the remaining year of the performance period. Any earned PRSUs will vest on February 14, 2021, the third anniversary of the grant date.
-
8.
-
These PRSUs, the number of which was
determined based on our actual 2017 performance compared to the targets set in the applicable award agreements, vest at the rate of 25% per year; 25% vested on each of February 16, 2018 and
2019, with remaining vesting to occur on February 16, 2020 and 2021.
-
9.
-
These PRSUs, the number of which was
determined based on our actual 2016 performance compared to the targets set in the applicable award agreements, vest at the rate of 25% per year; 25% vested on each of February 18, 2017, 2018
and 2019, with remaining vesting to occur on February 18, 2020.
-
10.
-
These RSUs, granted to Mr. Welsh
as part of his compensation package at hire, vest at the rate of 25% per year; 25% vested on each of February 16, 2018 and 2019, with remaining vesting to occur on February 16, 2020 and
2021.
-
11.
-
These RSUs, granted to Ms. Kedia
as part of her compensation package at hire, vest at the rate of 25% per year; 25% vested on each of December 12, 2017, 2018 and 2019, with remaining vesting to occur on December 12,
2020.
Option exercises and stock vested
|
The
following table summarizes information with respect to stock option awards exercised and RSUs and PRSUs vested during fiscal 2019 for each of the NEOs.
Option exercises and stock vested during fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Number of shares
acquired on exercise
(#)
|
|
|
Value realized
on exercise
($)1
|
|
|
Number of shares
acquired on vesting
(#)
|
|
|
Value realized
on vesting
($)2
|
|
Andrew Cecere
|
|
|
165,564
|
|
|
4,985,049
|
|
|
91,671
|
|
|
4,696,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
|
|
|
|
|
|
33,705
|
|
|
1,726,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
|
|
|
|
|
|
29,861
|
|
|
1,529,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
30,227
|
|
|
522,782
|
|
|
25,090
|
|
|
1,285,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
|
|
|
|
|
|
7,629
|
|
|
389,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
|
|
|
|
|
|
17,742
|
|
|
962,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Value realized on exercise
Value determined by subtracting the exercise price per share from the market value per share of our common stock at the time of exercise and multiplying the
difference by the number of shares acquired on exercise.
-
2.
-
Value realized on vesting
Value determined by multiplying the number of vested shares by the market value on the vesting date (determined for these purposes as the closing market price of
a share of our common stock on the date prior to the vesting date, or on the most recent prior business day in the event the date prior to the vesting date is not a business day).
|
|
|
|
|
|
55
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
Defined benefit pension plans
Our company sponsors two defined benefit pension plans: the U.S. Bank Pension Plan and the U.S. Bank Legacy Pension Plan. The U.S. Bank Legacy Pension Plan
was established effective January 1, 2020, to receive a transfer from the U.S. Bank Pension Plan of the accrued benefits of participants who terminated employment prior to January 1,
2020. The U.S. Bank Legacy Pension Plan and the U.S. Bank Pension Plan have substantively identical terms. If an employee whose pension was transferred to the U.S. Bank Legacy Pension Plan is rehired,
the employee will participate in the U.S. Bank Legacy Pension Plan on the same terms as the employee would have participated in the U.S. Bank Pension Plan prior to the spinoff. Employees may only
participate in the U.S. Bank Pension Plan or the U.S. Bank Legacy Pension Plan under no circumstance may an employee participate in both plans.
Because
the U.S. Bank Legacy Pension Plan received accrued benefits transferred from the U.S. Bank Pension Plan, the history of the U.S. Bank Pension Plan is relevant to both plans. The U.S. Bank
Pension Plan was created through the merger of the former U.S. Bancorp's career average pay defined benefit plan, known as the "U.S. Bancorp Cash Balance Pension Plan," and the former Firstar
Corporation's non-contributory defined benefit plan, which was primarily a final average pay plan. Under the U.S. Bank Pension Plan, for employees who were hired prior to July 3, 2008, or
rehired prior to November 15, 2009, and who did not elect to accrue benefits under the cash balance formula, benefits are calculated using a final average pay formula, based upon the employee's
years of service and average salary during the
five consecutive years of service in which compensation was the highest during the ten years prior to retirement, with a normal retirement age of 65.
Effective
January 1, 2010, our company established a new cash balance formula for certain current and all future eligible employees. Under the cash balance formula, participants receive annual
pay credits based on eligible pay multiplied by a percentage determined by their age and years of service. Participants also receive an annual interest credit. Participants in the pension plan that
elected to receive pension benefits using the cash balance formula had their existing benefits in the pension plan frozen and earn future benefits under the cash balance formula.
Substantially
all employees are eligible to receive benefits under the U.S. Bank Pension Plan or the U.S. Bank Legacy Pension Plan, as applicable. Participation requires one year of service with U.S.
Bancorp or its affiliates, and vesting of benefits requires five years of service for benefits under the final average pay formula and three years of service for benefits under the post-2009 cash
balance formula (and certain legacy plans). Mr. Dolan is the only NEO (of those eligible at the time) who elected to remain covered by the final pay formula; all other NEOs are covered by the
cash balance formula.
Although
no new benefits are accrued under the former U.S. Bancorp Cash Balance Pension Plan formula and Firstar Corporation's plan formula for service after 2001, benefits previously earned under
those plans have been preserved and will be part of a retiree's total retirement benefit. In order to preserve the relative value of benefits that use the final average pay formula, subsequent changes
in compensation (but not in service) may increase the amount of those benefits.
Federal
laws limit the amount of compensation we may consider when determining benefits payable under qualified defined benefit pension plans. We also maintain a non-contributory, non-qualified
retirement plan (the U.S. Bank Non-Qualified Retirement Plan) that pays the excess pension benefits that would have been payable under our current and prior qualified defined benefit pension plans if
the federal limits were not in effect.
Messrs. Cecere,
Dolan and von Gillern earned benefits under the former U.S. Bancorp Cash Balance Pension Plan that will be included in their ultimate retirement benefits.
As
part of her compensation package agreed to at hire, Ms. Kedia receives an additional 23 years of service when calculating her pay credits in the non-qualified plan. The additional
years of service represent her service with her prior employer.
Supplemental retirement benefits
Messrs. Cecere, Dolan and von Gillern are eligible for a supplemental benefit, which is also paid under the U.S. Bank Non-Qualified Retirement Plan,
that augments benefits earned under the U.S. Bank Pension Plan
and the non-qualified excess benefits discussed above. The supplemental benefit ensures that eligible executives receive a total retirement
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
56
|
Table of Contents
Executive compensation
|
|
benefit
equal to a fixed percentage of the executive's final average cash compensation. In the case of Messrs. Dolan and von Gillern, their supplemental benefits were frozen in 2001. For
purposes of this supplemental benefit, final average cash compensation includes annual base salary, annual cash bonuses and other cash compensation awards as determined by the Compensation and Human
Resources Committee. Eligibility for these supplemental benefits has been determined by this committee based on individual performance and level of responsibility.
Vesting
of the supplemental benefit is generally subject to certain conditions, including that an executive officer provide a certain number of years of service determined by the Compensation and
Human Resources Committee. Mr. Cecere is eligible for an amount of total retirement benefits at age 65 equal to 55% of the average cash compensation during his final three years of service,
reduced by his estimated retirement benefits from Social Security. Mr. Cecere is fully vested
in a portion of his supplemental benefit, with his vested portion increasing on a pro rata basis up to age 60. Mr. Dolan has a frozen monthly annuity of $522 in which he is fully vested,
payable as early as his termination date. Mr. von Gillern also has a frozen monthly annuity benefit of $138 in which he is fully vested, payable as early as his termination date.
In
accordance with his election, Mr. Cecere's supplemental benefit will be paid in the form of a lump sum. For the supplemental benefits payable to Messrs. Dolan and von Gillern, the
standard form is either a lump sum or a joint and survivor annuity, depending on the present value of the lump sum at retirement.
The
present value of the supplemental benefit for Messrs. Dolan and von Gillern is currently less than $400,000, so in accordance with plan rules, their supplemental benefit will default to
payment in a lump sum. Each of Messrs. Dolan and von Gillern has the option to make an election to receive his supplemental benefit as an annuity if the election is made 12 months prior
to the applicable officer's termination date, the officer is over age 55, and the present value of the supplemental benefit exceeds $50,000. The amount of the lump sum distribution equals the
actuarial equivalent of the annuity form of payment and is calculated using substantially similar actuarial assumptions as for our pension plan obligations discussed in Note 16 to our
consolidated financial statements included in our 2019 Annual Report on Form 10-K. The means of calculating the various annuity benefits are described in the pension plan.
|
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57
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U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
Pension benefits for fiscal 2019
The following table summarizes information with respect to each plan that provides for payments or other benefits at, following, or in connection with the
retirement of any of the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan name
|
|
|
Number of
years
credited
service
(#)
|
|
|
Present
value of
accumulated
benefits
($)1, 2
|
|
|
Payments
during last
fiscal year
($)
|
|
Andrew Cecere
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
34
|
|
|
12,994,189
|
|
|
|
|
|
|
Excess benefit
|
|
|
34
|
|
|
5,579,141
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
34
|
|
|
758,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
19,331,519
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
3
|
|
|
77,171
|
|
|
|
|
|
|
Excess benefit
|
|
|
21
|
|
|
3,718,935
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
21
|
|
|
813,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
4,609,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
1
|
|
|
17,589
|
|
|
|
|
|
|
Excess benefit
|
|
|
19
|
|
|
1,018,540
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
19
|
|
|
395,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
1,431,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess benefit
|
|
|
5
|
|
|
232,101
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
5
|
|
|
63,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
296,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess benefit
|
|
|
3
|
|
|
96,185
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
3
|
|
|
33,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
129,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
U.S. Bank Non-Qualified Retirement Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess benefit
|
|
|
26
|
|
|
239,632
|
|
|
|
|
|
|
U.S. Bank Pension Plan
|
|
|
3
|
|
|
33,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
272,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
The measurement date and material
actuarial assumptions applied in quantifying the present value of the current accrued benefits are discussed in Note 16 to our consolidated financial statements included in our 2019 Annual
Report on Form 10-K. These assumptions include the use of a 3.24% discount rate for the supplemental and excess plans and a 3.41% discount rate for the qualified pension plan. The mortality
assumptions used are based on the RP 2014 mortality table projected generationally using a customized RPEC_2014 scale. The average pay used for the benefit calculations was historical pay through the
measurement date (December 31, 2019).
The amounts in this column were calculated based on the earliest age at which the applicable officer is entitled to
receive unreduced retirement benefits and ignore any vesting requirements. The earliest age of unreduced retirement benefits is 65 for all our NEOs, and all are currently vested in 100% of their
pension benefits.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
58
|
Table of Contents
Executive compensation
|
|
-
2.
-
In the event of the death of one of the
officers in this table, a pre-established percentage of the officer's pension benefits will be paid to the officer's beneficiary. The actual percentage paid to the beneficiary is dependent on the form
of payment of benefits elected by the officer. The default percentage is 50% to the officer's spouse. An additional lump sum death benefit may be payable based on certain actuarial calculations. The
present value of the payments to an officer's beneficiary would not exceed the total present value of accumulated benefits shown in this
column.
-
3.
-
Mr. Cecere is 100% vested and
eligible to begin receiving his U.S. Bank Pension Plan benefit and the pre-2005 portion of his excess and supplemental benefits under the U.S. Bank Non-Qualified Retirement Plan upon retirement at any
age. The remainder of his excess and supplemental benefits are payable upon the later of age 62 or retirement. If any of the vested benefits are paid before Mr. Cecere reaches age 65, the
benefits are reduced by certain early retirement benefit formulas specified in the applicable plan for each year prior to Mr. Cecere's reaching age 65. These early retirement benefit formulas
reduce the annual pension benefit amount payable to Mr. Cecere due to the longer benefit payment period related to the earlier commencement of benefits.
Nonqualified deferred compensation
|
Under
the U.S. Bank Executive Employees Deferred Compensation Plan (2005 Statement) (the "Executive Deferred Compensation Plan"), members of our senior management, including all of
our executive officers, may choose to defer all or a part of their annual base salary and annual cash incentive payments. The minimum amount that can be deferred in any calendar year is $1,000. Cash
compensation that is deferred is deemed to be invested in one of several investment funds, including a U.S. Bancorp common stock fund, as selected by the participant.
Shown
below are the rates of return for each of the investment options (also known as measurement funds) available under the Executive Deferred Compensation Plan for the period from January 1,
2019, through December 31, 2019:
|
|
|
Fund Name
|
|
2019 Returns
|
Stable Value Fund
|
|
2.50%
|
|
|
|
Bond Index Fund
|
|
8.68%
|
|
|
|
US Large Cap Equity Index Fund
|
|
31.43%
|
|
|
|
US Small-Mid Equity Index Fund
|
|
28.00%
|
|
|
|
International Equity Index Fund
|
|
22.00%
|
|
|
|
Deferred Savings U.S. Bancorp Stock Fund
|
|
33.14%
|
|
|
|
Amounts
deferred under the Executive Deferred Compensation Plan are credited with earnings and investment gains and losses by assuming that deferred amounts were invested in one or more of the
hypothetical investment options selected by the plan participant. Plan participants are allowed to change their investment elections at any time, but the changes are only effective at the beginning of
the following calendar quarter. The measurement funds are merely measuring tools to determine the amount by which account balances will be debited or credited to reflect deemed investment returns on
deferred compensation.
Although
the plan administrator has established procedures permitting a plan participant to reallocate deferred amounts among these investment alternatives after the initial election to defer, the
election to defer is irrevocable, and the deferred compensation will not be paid to the plan participant until his or her retirement or earlier termination of employment. At that time, the participant
will receive, depending upon the payment choice and investment alternatives selected by him or her, payment of the amounts credited to his or her account under the plan in a lump-sum payment or in
annual installments over 5, 10, 15 or 20 years. Payments are made ratably in cash from each of the investment alternatives in which the participant has a balance, except the U.S. Bancorp stock
fund, which is generally paid in shares. If a participant dies before the entire deferred amount has been distributed, the undistributed portion will be paid to the participant's beneficiary in a
single lump sum. The benefits under the plan otherwise are not transferable by the participant.
|
|
|
|
|
|
59
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
The following table summarizes information with respect to the participation of the NEOs in any defined contribution or other plan that provides for the
deferral of compensation on a basis that is not tax-qualified.
Nonqualified deferred compensation for fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Executive
contributions
in last FY
($)
|
|
|
Registrant
contributions
in last FY
($)
|
|
|
Aggregate
earnings
in last FY
($)1
|
|
|
Aggregate
withdrawals/
distributions
($)
|
|
|
Aggregate
balance
at last FYE
($)
|
|
Andrew Cecere
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
310,178
|
|
|
|
|
|
67,991
|
|
|
|
|
|
474,955
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
110,452
|
|
|
|
|
|
26,524
|
|
|
|
|
|
206,721
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gunjan Kedia
|
|
|
110,995
|
|
|
|
|
|
15,670
|
|
|
|
|
|
126,665
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
The amounts reported in this column
represent the change during the last fiscal year in the value of the underlying investment fund or U.S. Bancorp stock fund in which the NEO's deferred amounts were deemed to be invested and any
increases in the deferred amounts due to dividends payable upon those funds.
-
2.
-
Of this amount, $415,503 represents
Mr. Kotwal's deferrals of cash compensation in 2018 and 2019. These amounts were included in his compensation reported in the Summary Compensation Table in our proxy statement for the
applicable years.
-
3.
-
Of this amount, $110,452 represents
Mr. Welsh's deferrals of cash compensation in 2019. Of the amount deferred in 2019, $57,165 is deferred salary and is reported in the Summary Compensation Table, and the remainder is deferred
incentive pay earned in 2018 and not included in the Summary Compensation Table as Mr. Welsh was not an NEO in 2018.
-
4.
-
Ms. Kedia deferred incentive pay
in the amount of $110,995 that was earned for her 2018 performance, and this amount is included in the Summary Compensation Table with her 2018 compensation.
Potential payments upon termination or change-in-control
|
General
Any NEO whose employment is voluntarily or involuntarily terminated is entitled to the payments or other benefits that the officer has accrued and is vested
in under the benefit plans discussed above in this proxy statement, including under the heading "Pension Benefits." Except as is specifically described below with respect to disability, death or
termination of employment following a change-in-control of U.S. Bancorp, no NEO is entitled to any other benefits upon any employment termination or change-in-control scenario.
Payments made upon disability
Cash payments: Under the terms of the U.S. Bank Non-Qualified Retirement Plan, Mr. Cecere is eligible for an annual disability benefit that is equal to 60%
of his current annual cash compensation. The definition of disability is similar to that used for the broad-based disability program described below. The definition of annual cash compensation is the
same definition as is used to calculate supplemental pension benefits under this plan, without using a five-year average. His agreement under the non-qualified retirement plan provides that
Mr. Cecere is eligible to receive disability payments through the earlier of the cessation of his disability or reaching his normal retirement age.
Messrs. Dolan,
von Gillern, Kotwal and Welsh and Ms. Kedia are eligible for an annual disability benefit of $150,000 (equal to 50% of annual cash compensation, capped at $300,000 of
compensation) under the terms of the U.S. Bank Long-Term Disability Insurance Plan insured by Hartford Life and Accident Insurance Company, our broad-based disability program. Optional additional
disability insurance is available for purchase by those NEOs. The definition of disability is generally that a participant is unable to perform material duties of his or her own occupation for
24 months
|
|
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|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
60
|
Table of Contents
Executive compensation
|
|
following
the six-month elimination period, or any occupation after 24 months, and suffers a loss of at least 20% in predisability earnings. The definition of annual cash compensation is actual
cash compensation for a one-year period ending September 30. The disability benefit for any of the officers would be reduced by any benefits payable under the U.S. Bank Pension Plan, Social
Security or worker's compensation. The duration of disability payments under this broad-based program is dependent upon the age of the participant when the disability occurs. Because each of
Messrs. Dolan, von Gillern, Kotwal and Welsh and Ms. Kedia is under age 63, payments would continue through the earlier of the cessation of their disability or reaching their normal
retirement age, assuming all other plan conditions are met.
Effect on equity awards: If the employment of any of our NEOs who have received equity compensation awards is terminated due to disability, the terms of our stock
option, PRSU, and most RSU agreements provide that the vesting and other terms of those awards will continue as if the termination of employment did not occur. No financial information for the event
of disability is set forth below in the Potential Payments Upon Disability, Death, or Termination After a Change-in-Control table below for the equity awards held by our NEOs other than
Mr. Welsh and Ms. Kedia, as there is no immediate financial impact upon the occurrence of any of these events. Mr. Welsh and Ms. Kedia both hold unvested RSUs they were
granted when initially hired, and the agreements governing those awards provide for the acceleration of any unvested RSUs in the event of long-term disability.
Payments made upon death
Cash payments: NEOs are eligible to receive life insurance benefits under the same plans available to our other employees. Their benefit is equal to annual cash
compensation, capped at $300,000. In addition, optional term life insurance is available for purchase. As this benefit is generally available to all salaried employees and does not discriminate in
scope, terms, or operation in favor of the NEOs, the value has not been quantified in the Potential Payments Upon Disability, Death, or Termination After a Change-in-Control table.
Effect on equity awards: Most of our equity award agreements with NEOs provide for the acceleration of any unvested award upon death. For all RSUs and for PRSUs
other than those granted in 2018, outstanding units will vest upon death. All of our stock option agreements also provide for the acceleration of vesting upon death, and the stock option agreements
generally provide that the administrator of the NEO's estate has a three-year period after death during which to exercise the options.
For
PRSUs granted in 2018, the vesting and other terms of the award will continue as if the death did not occur. The value of the PRSUs granted in 2018 is accordingly not included in the amounts
payable upon death in the Potential Payments Upon Disability, Death, or Termination After a Change-in-Control table below.
Payments upon termination after a change-in-control
Cash payments: None of our NEOs is entitled to any cash payments in connection with a change-in-control of U.S. Bancorp.
Effect on equity awards: Most of our equity award agreements provide for acceleration of the vesting of any unvested award if an NEO's employment is involuntarily
terminated within 12 months after a change-in-control of U.S. Bancorp other than for cause. For all RSUs and for PRSUs other than those granted in 2018, outstanding units will vest upon a
qualifying termination. All of our stock option agreements also provide for acceleration after a qualifying termination, and accelerated stock options may be exercised at any time during the
12 months following the NEO's termination.
For
PRSUs granted in 2018, the vesting and other terms of the award will continue as if the termination following a change-in-control did not occur. The value of the PRSUs granted in 2018 is
accordingly not included in the amounts payable upon involuntary termination (other than for cause) after a change-in-control in the Potential Payments Upon Disability, Death, or Termination After a
Change-in-Control table below.
Quantification of estimated payments and benefits
The following table shows potential annual cash payments to the NEOs upon disability and the potential benefits the NEOs could accrue through accelerated
equity vesting upon death or involuntary termination of employment (other than for cause) following a change-in-control of U.S. Bancorp. The table also shows the potential benefit Mr. Welsh and
Ms. Kedia could accrue through accelerated vesting of RSUs upon disability. No information regarding pension amounts payable to the NEOs is shown in the following table; applicable pension
amounts payable to these executive officers are discussed above under the heading "Pension Benefits."
|
|
|
|
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61
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Executive compensation
|
The
amounts shown assume that termination was effective as of December 31, 2019, and are estimates of the amounts that would be paid to the NEOs upon termination, in addition to the base salary
and cash incentive payments earned by them during 2019. The actual amounts to be paid can only be determined at the time of an NEO's termination.
Potential payments upon disability, death, or termination after a change-in-control
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of payment
|
|
|
Annual
disability
payments
($)
|
|
|
Payments
upon death
($)
|
|
|
Payments upon involuntary
termination (other
than for cause) after a
change-In-control
($)
|
|
Andrew Cecere
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base pay
|
|
|
720,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
1,631,340
|
|
|
|
|
|
|
|
|
|
Acceleration of unvested equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
914,037
|
|
|
914,037
|
|
|
|
RSUs and PRSUs2
|
|
|
|
|
|
16,078,144
|
|
|
16,078,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,351,340
|
|
|
16,992,181
|
|
|
16,992,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrance R. Dolan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base pay
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of unvested equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
308,613
|
|
|
308,613
|
|
|
|
RSUs and PRSUs2
|
|
|
|
|
|
6,955,369
|
|
|
6,955,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
150,000
|
|
|
7,263,982
|
|
|
7,263,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffry H. von Gillern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base pay
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of unvested equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
295,768
|
|
|
295,768
|
|
|
|
RSUs and PRSUs2
|
|
|
|
|
|
5,178,270
|
|
|
5,178,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
150,000
|
|
|
5,474,038
|
|
|
5,474,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shailesh M. Kotwal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base pay
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of unvested equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
243,761
|
|
|
243,761
|
|
|
|
RSUs and PRSUs2
|
|
|
|
|
|
4,235,500
|
|
|
4,235,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
150,000
|
|
|
4,479,261
|
|
|
4,479,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A. Welsh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Pay
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs and PRSUs2
|
|
|
451,908
|
(3)
|
|
3,379,056
|
|
|
3,379,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
601,908
|
|
|
3,379,056
|
|
|
3,379,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
62
|
Table of Contents
Executive compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of payment
|
|
|
Annual
disability
payments
($)
|
|
|
Payments
upon death
($)
|
|
|
Payments upon involuntary
termination (other
than for cause) after a
change-In-control
($)
|
|
Gunjan Kedia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Pay
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Invested Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options1
|
|
|
|
|
|
58,354
|
|
|
58,354
|
|
|
|
RSUs and PRSUs2
|
|
|
402,342
|
(3)
|
|
4,177,811
|
|
|
4,177,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
552,342
|
|
|
4,236,165
|
|
|
4,236,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Value computed for each stock option
grant by multiplying (i) the difference between (a) $59.29, the closing market price of a share of our common stock on December 31, 2019, and (b) the exercise price per
share for that option grant by (ii) the number of shares subject to that option that vest.
-
2.
-
Value determined by multiplying the
number of units that vest by $59.29, the closing market price of a share of our common stock on December 31, 2019.
-
2.
-
Represents the one-time value realized
through accelerated vesting of RSUs granted to Mr. Welsh and Ms. Kedia as part of their compensation packages at hire. Not an annual amount.
Total compensation amounts and ratio for 2019
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the
relationship between the annual total compensation of our employees and the annual total compensation of our CEO.
-
▶
-
The median of the annual total compensation of all employees of our company other than the CEO was $69,775 in 2019.
-
▶
-
The annual total compensation for our CEO was $18,801,847 in 2019, which equals the amount reported in the Summary
Compensation Table plus the amount spent on health and welfare benefits generally available to all employees.
-
▶
-
The resulting ratio of the annual total compensation of our median employee to the annual total compensation of our
CEO for 2019 is 1:269.
The
ratio stated above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K and is not necessarily comparable to the ratios reported by other
companies.
Median employee identification and compensation calculation
As allowed by Item 402(u) of Regulation S-K, we are using the same median employee for our 2019 pay ratio disclosure as we used for our 2017 and
2018 pay ratio disclosure because there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. The
median employee had been identified among persons employed by us on December 31, 2017, on the basis of earnings subject to Medicare tax as reported in Box 5, "Medicare wages and tips,"
on each employee's 2017 Form W-2.
In
accordance with the "de minimis" exemption provided in Item 402(u) of Regulation S-K, we continued to exclude from consideration all of
our non-U.S. employees. As of December 31, 2019, we had 2,996 non-U.S. employees, representing approximately 4.2% of our total U.S. and non-U.S. workforce of 71,353 active employees on that
date. The excluded employees work in the following jurisdictions: Ireland (947), Poland (831), United Kingdom (381), Mexico (373), Canada (190), Spain (108), Germany (86), Norway (39), Belize (13),
Lithuania (11), Sweden (9), Belgium (7), and Cayman Islands (1).
We
determined our median employee's total compensation in the same manner that we determined the CEO's compensation for purposes of this pay ratio disclosure.
|
|
|
|
|
|
63
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Director compensation
|
Director compensation
Determining compensation for non-employee directors
The Compensation and Human Resources Committee retained its independent compensation consultant to provide advice regarding non-employee director compensation
in 2019. Before recommending a non-employee director compensation program to the independent members of the Board for approval, the Committee reviewed director compensation information for our
compensation peer group companies to check the alignment of our compensation package with market practice and current trends. The detailed peer data that was reviewed included information about
compensation paid per director, total board compensation cost, the absolute and relative amounts attributable to various compensation components, additional retainers paid to lead independent
directors and committee chairs, and stock ownership requirements.
Cash compensation for Board and committee service in the April 2019 April 2020 term
Our non-employee directors received the following cash fees for serving on the Board and committees this term:
|
|
|
|
|
|
|
|
Retainer
|
|
Annual retainer for service on the Board
|
|
$
|
100,000
|
|
|
|
|
|
|
Additional annual retainer for Lead Director
|
|
$
|
50,000
|
|
|
|
|
|
|
Additional annual retainer for chairs of Capital Planning, Compensation and Human Resources, Governance, and Public Responsibility Committees
|
|
$
|
25,000
|
|
|
|
|
|
|
Additional annual retainer for chairs of Audit and Risk Management Committees
|
|
$
|
40,000
|
|
|
|
|
|
|
Additional annual retainer for other members of Audit and Risk Management Committees
|
|
$
|
15,000
|
|
|
|
|
|
|
Each
non-employee director who served on U.S. Bancorp's primary banking subsidiary's board of directors or on any ad hoc committee of the U.S. Bancorp Board of Directors received $1,500 per meeting
for that service. Each non-employee director was also paid $1,500 for each meeting he or she attended that was not a regularly scheduled Board or committee meeting.
Equity award for Board service in the April 2019 April 2020 term
Each non-employee director received an annual award of restricted stock units with a grant date fair value of approximately $160,000 under the U.S. Bancorp
2015 Stock Incentive Plan. This plan provides that no non-employee director may receive an equity award or awards with an aggregate grant date fair value in excess of $600,000 in any calendar year.
The restricted stock units were fully vested at the time of grant, but the underlying shares will not be delivered until the director ceases to serve on the Board. Each non-employee director may elect
to have all of his or her shares delivered promptly following cessation of service or to have the shares delivered in ten annual installments. Each non-employee director is entitled to receive
additional fully vested restricted stock units having a fair market value equal to the amount of dividends he or she would have received had restricted stock been awarded instead of restricted stock
units.
Director stock ownership requirements
The Compensation and Human Resources Committee has established stock ownership requirements for each non-employee director equal to five times the value of
the annual cash retainer. New directors must satisfy this minimum ownership level within five years after joining the Board. As of December 31, 2019, all the directors had sufficient holdings
to meet or exceed the stock ownership requirements, or had not yet served on our Board for five years.
Deferred compensation plan participation
Under the U.S. Bank Outside Directors Deferred Compensation Plan (2005 Statement) (the "Director Deferred Compensation Plan"), our non-employee directors may
choose to defer all or a part of their cash fees. The minimum amount that can be deferred in any calendar year is $1,000. Cash fees that are deferred are deemed to be
invested in one of several investment funds, including a U.S. Bancorp common stock fund, as selected by the participant.
These
investment alternatives are the same as those available under the Executive Deferred Compensation Plan. See "Executive Compensation Nonqualified Deferred Compensation" above
for the rates of return for 2019 for each of
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
64
|
Table of Contents
Director compensation
|
|
these
investment options (also known as measurement funds). The terms of the Director Deferred Compensation Plan are substantially the same as the terms of the Executive Deferred Compensation Plan
described in that section.
Director compensation for fiscal 2019
The following table shows the compensation of the individuals who served as non-employee members of our Board of Directors during any part of fiscal year
2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name1
|
|
|
Fees earned or
paid in cash
($)
|
|
|
Stock
awards
($)2
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
Warner L. Baxter
|
|
|
146,000
|
|
|
159,980
|
|
|
|
|
|
305,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dorothy J. Bridges
|
|
|
124,000
|
|
|
159,980
|
|
|
|
|
|
283,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth L. Buse
|
|
|
127,000
|
|
|
159,980
|
|
|
1,000
|
(4)
|
|
287,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc N. Casper
|
|
|
104,500
|
(3)
|
|
159,980
|
|
|
|
|
|
264,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur D. Collins, Jr.
|
|
|
129,500
|
(3)
|
|
159,980
|
|
|
5,000
|
(4)
|
|
294,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly J. Harris
|
|
|
126,500
|
|
|
159,980
|
|
|
|
|
|
286,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roland A. Hernandez
|
|
|
144,500
|
(3)
|
|
159,980
|
|
|
|
|
|
304,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doreen Woo Ho
|
|
|
125,500
|
|
|
159,980
|
|
|
4,000
|
(4)
|
|
289,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Olivia F. Kirtley
|
|
|
125,500
|
(3)
|
|
159,980
|
|
|
|
|
|
285,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen S. Lynch
|
|
|
122,500
|
(3)
|
|
159,980
|
|
|
|
|
|
282,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard P. McKenney
|
|
|
150,500
|
(3)
|
|
159,980
|
|
|
5,000
|
(4)
|
|
315,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yusuf I. Mehdi
|
|
|
124,000
|
|
|
159,980
|
|
|
|
|
|
283,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. O'Maley
|
|
|
154,500
|
|
|
159,980
|
|
|
5,000
|
(4)
|
|
319,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
O'dell M. Owens, M.D., M.P.H.
|
|
|
109,000
|
|
|
159,980
|
|
|
|
|
|
268,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig D. Schnuck
|
|
|
119,500
|
|
|
159,980
|
|
|
|
|
|
279,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott W. Wine
|
|
|
144,500
|
(3)
|
|
159,980
|
|
|
|
|
|
304,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Andrew Cecere, our Chairman, President
and Chief Executive Officer, did not receive any compensation for his service as a director. The compensation he received as an NEO is shown above in the Summary Compensation Table.
-
2.
-
The amounts in this column are calculated
based on the fair market value of our common stock on the date the grant was made in accordance with FASB ASC Topic 718. Each non-employee director elected at the 2019 annual meeting to serve a term
ending at the 2020 annual meeting received a grant of 3,124 restricted stock units on April 18, 2019, with a grant date fair value of $159,980.
No non-employee director held any stock options as of December 31, 2019. The non-employee directors held
restricted stock units as of December 31, 2019, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Restricted stock units
|
|
|
|
Name
|
|
|
Restricted
stock units
|
|
Mr. Baxter
|
|
|
14,628
|
|
|
|
Ms. Kirtley
|
|
|
86,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Bridges
|
|
|
5,147
|
|
|
|
Ms. Lynch
|
|
|
14,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Buse
|
|
|
6,203
|
|
|
|
Mr. McKenney
|
|
|
7,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Casper
|
|
|
13,962
|
|
|
|
Mr. Mehdi
|
|
|
6,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Collins
|
|
|
81,035
|
|
|
|
Mr. O'Maley
|
|
|
85,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Harris
|
|
|
22,121
|
|
|
|
Dr. Owens
|
|
|
76,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hernandez
|
|
|
32,081
|
|
|
|
Mr. Schnuck
|
|
|
93,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Woo Ho
|
|
|
32,079
|
|
|
|
Mr. Wine
|
|
|
19,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
3.
-
Messrs. Casper, Collins,
Hernandez, McKenney and Wine and Mses. Kirtley and Lynch chose to defer their cash fees under the Director Deferred Compensation Plan.
-
4.
-
Represents matching contributions under
our charitable matching gifts program, which is available to all of our directors.
|
|
|
|
|
|
65
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Audit committee report and payment of fees to auditor
|
Audit committee report and payment of fees to auditor
Audit committee report
The consolidated financial statements of U.S. Bancorp for the year ended December 31, 2019, were audited by Ernst & Young LLP,
independent auditor for U.S. Bancorp.
As
part of its activities, the Audit Committee has:
-
1.
-
Reviewed and discussed with management the audited financial statements of U.S. Bancorp;
-
2.
-
Discussed with the independent auditor the matters required to be discussed under Auditing Standard No. 1301,
Communications with Audit Committees, as adopted by the U.S. Public Company Accounting Oversight Board ("PCAOB"), Statement of Auditing Standards
No. 99 (Consideration of Fraud in a Financial Statement Audit), and under the SEC, PCAOB and NYSE rules;
-
3.
-
Received the written disclosures and letter from the independent auditor required by applicable requirements of the PCAOB regarding the independent
accountant's communications with the audit committee concerning independence; and
-
4.
-
Discussed with the independent auditor its independence.
Based
on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of U.S. Bancorp for
the year ended December 31, 2019, be included in U.S. Bancorp's Annual Report on Form 10-K filed with the SEC.
Audit Committee of the Board of Directors of U.S. Bancorp
|
|
|
|
|
Roland A. Hernandez, Chair
|
|
Karen S. Lynch
|
|
|
Warner L. Baxter
|
|
Scott W. Wine
|
|
|
Elizabeth L. Buse
|
|
|
|
|
Fees to independent auditor
The following aggregate fees were billed to us for professional services by Ernst & Young LLP for fiscal years 2019 and 2018:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
2019
|
|
|
2018
|
|
Audit fees
|
|
$
|
12.6
|
|
$
|
11.4
|
|
Audit-related fees
|
|
|
6.2
|
|
|
5.8
|
|
Tax fees
|
|
|
6.8
|
|
|
6.4
|
|
All other fees
|
|
|
0.8
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
26.4
|
|
$
|
24.0
|
|
|
|
|
|
|
|
|
|
Audit fees: Audit fees consist of fees billed to us by Ernst & Young LLP for the audit of our consolidated financial statements
included in our Annual Reports on Form 10-K, reviews of our financial statements included in each of our Quarterly Reports on Form 10-Q, and audits of financial statements of our
subsidiaries required by regulation, as well as procedures required by regulators, comfort letters, consents and assistance provided with our regulatory filings.
Audit-related fees: Audit-related fees consist of fees billed to us by Ernst & Young LLP for audits of pension and other employee
benefit plan financial statements, audits of the financial statements of certain of our subsidiaries and affiliated entities, reviews of internal controls not related to the audit of our consolidated
financial statements, and internal control reports for various lines of business to support their customers' business requirements.
Tax fees: Tax fees consist of fees billed to us by Ernst & Young LLP for tax compliance and review, tax planning and other tax
services. The aggregate fees billed for tax compliance and review services, including the preparation of and assistance with federal, state and local income tax returns, sales and use filings, and
foreign and other tax compliance, provided to us by Ernst & Young LLP was $4.6 million in 2019 and $4.4 million in 2018. In addition to fees being paid
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
66
|
Table of Contents
Audit committee report and payment of fees to auditor
|
|
for
tax compliance services, we paid $2.2 million in 2019 and $2.0 million in 2018 for tax planning and other tax services provided to us by Ernst & Young LLP.
All other fees: Other fees billed to us by Ernst & Young LLP in 2019 and 2018 primarily related to advisory services for internal
control programs.
Administration of engagement of independent auditor
The Audit Committee is responsible for appointing, compensating, retaining and overseeing the work of our independent auditor, including approving the
services provided by the independent auditor and the associated fees. The Audit Committee has established a policy for pre-approving the services provided by our independent auditor in accordance with
the auditor independence rules of the SEC. This policy requires the review and pre-approval by the Audit Committee of all audit and permissible non-audit services provided by our independent auditor
and an annual review of the financial plan for audit fees. To ensure that auditor independence is maintained, the Audit Committee annually pre-approves the audit services to be provided by our
independent auditor and the related estimated fees for such services, as well as the nature and extent of specific types of audit-related, tax and other non-audit services to be provided by the
independent auditor during the year.
As
the need arises, other specific permitted services are pre-approved on a case-by-case basis during the year. A request for pre-approval of services on a case-by-case basis must be submitted by our
Controller or Chief Risk Officer. These requests are required to include information on the nature of the particular service to be provided, estimated related fees and management's assessment of the
impact of the service on the auditor's independence. The Audit Committee has delegated to its chair pre-approval authority between meetings of the Audit Committee. Any pre-approvals made by the chair
must be reported to the Audit Committee. The Audit Committee will not delegate to management the pre-approval of services to be performed by our independent auditor.
All
of the services provided by our independent auditor in 2019 and 2018, including services related to the Audit-Related Fees, Tax Fees and All Other Fees described above, were approved by the Audit
Committee under its pre-approval policies after consideration of any impact of these services on the auditor's independence.
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67
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U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Proposal 2 Ratification of selection of independent auditor
|
Proposal 2 Ratification of selection of independent
auditor
The Audit Committee has selected Ernst & Young LLP as our independent auditor for the 2020 fiscal year. Ernst &
Young LLP began serving as our independent auditor for the fiscal year ended December 31, 2003. Our
Audit Committee has carefully considered the selection of Ernst & Young LLP as our independent auditor, and has also considered whether there should be regular rotation of the
independent external audit firm.
The
Audit Committee annually reviews Ernst & Young LLP's independence and performance in connection with the committee's determination of whether to retain Ernst &
Young LLP or engage another firm as our independent auditor. In determining whether to reappoint Ernst & Young LLP as U.S. Bancorp's independent auditor, the Audit Committee took
into consideration a number of factors, including
-
▶
-
the qualifications of Ernst & Young LLP, the lead audit partner, and other key personnel;
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▶
-
the length of time the firm has been engaged;
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▶
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the quality of the historical and recent performance on the U.S. Bancorp audit;
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▶
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Ernst & Young LLP's capability and expertise in handling the breadth and complexity of our operations;
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▶
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the appropriateness of Ernst & Young LLP's fees on an absolute basis and as compared to peer firms; and
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▶
-
the advisability and potential impact of selecting a different independent audit firm.
In
accordance with SEC rules and company policies, lead and concurring audit partners are subject to a maximum of five years of service in that capacity. The process for selecting the audit firm's
lead engagement partner involves
meetings with the candidates for the role by management; review and discussion with the chair of the Audit Committee, who meets with selected candidates; and further discussion with the full
committee.
The
members of the Audit Committee believe the continued retention of Ernst & Young LLP to serve as our independent auditor is in the best interests of our company and its shareholders.
While we are not required to do so, we are submitting the selection of Ernst & Young LLP to serve as our independent auditor for the 2020 fiscal year for ratification in order to
ascertain the views of our shareholders on this appointment. If the selection is not ratified, the Audit Committee will reconsider its selection. Representatives of Ernst & Young LLP are
expected to be present at the annual meeting, will be available to answer shareholder questions, and will have the opportunity to make a statement if they desire to do so.
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FOR
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The Board of Directors recommends that you vote "FOR" ratification of the selection of Ernst & Young LLP as the independent auditor of U.S.
Bancorp for the 2020 fiscal year.
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U.S.
Bancorp
2020
Proxy
Statement
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68
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Table of Contents
Proposal 3 Advisory vote on executive compensation
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Proposal 3 Advisory vote on executive compensation
Executive compensation is an important matter to us. We are asking our shareholders to provide advisory approval of the compensation of our
executive officers named in the Summary Compensation Table, as we have described it in the "Compensation Discussion and Analysis" and "Executive Compensation" sections of this proxy statement. We have
been conducting annual advisory votes on executive compensation since 2009 and expect to conduct the next advisory vote at our 2021 annual meeting of shareholders.
We
have designed our executive compensation program to create long-term shareholder value by attracting and retaining talented leaders and rewarding them for top performance. Our company is presenting
this proposal, which
gives you as a shareholder the opportunity to endorse or not endorse our executive pay program by voting "FOR" or "AGAINST" the following resolution:
"RESOLVED,
that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the compensation tables and
the related disclosure contained in this proxy statement."
As
discussed in the "Compensation Discussion and Analysis" section earlier in this proxy statement, the Compensation and Human Resources Committee of the Board of Directors believes that the
compensation of our NEOs in 2019 was reasonable and appropriate, reflected the performance of our company, and aligned our executives' interests with those of our shareholders to support long-term
value creation.
This
vote, which is required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is not intended to address any specific item of compensation, but
rather our overall compensation policies and procedures relating to our NEOs described in this proxy statement. Accordingly, your vote will not directly affect or otherwise limit any existing
compensation or award arrangement of any of our NEOs.
Because
your vote is advisory, it will not be binding upon the Board of Directors. However, the Board values our shareholders' opinions, and the Compensation and Human Resources Committee will take
into account the outcome of the vote when considering future executive compensation arrangements.
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FOR
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The Board of Directors recommends that you vote "FOR" approval of the compensation of our named executive officers, as disclosed in this proxy
statement.
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69
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U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Security ownership of certain beneficial owners and management
|
Security ownership of certain beneficial owners and management
The following tables show how many shares of our common stock were beneficially owned as of February 7, 2020, by each current director
and director nominee, each of the NEOs, all of our directors and executive officers as a group, and each person who is known by us to beneficially own more than 5% of our voting securities.
Unless
otherwise noted, the shareholders listed in the tables have sole voting and investment power with respect to the shares of common stock owned by them. None of the shares beneficially owned by
our directors or executive officers is subject to any pledge, in accordance with our company policy prohibiting them from pledging or hedging our common stock.
Directors and executive officers
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Name of beneficial owner
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Outstanding
shares of
common
stock1
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Options exercisable
within 60 days of
February 5, 2019
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Restricted
stock
units2
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Deferred
compensation3
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Total
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Percent of
common stock
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Warner L. Baxter
|
|
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|
|
|
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14,740
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|
|
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|
14,740
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*
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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Dorothy J. Bridges
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5,186
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|
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5,186
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*
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Elizabeth J. Buse
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6,250
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6,250
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*
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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Marc N. Casper
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14,068
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683
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14,751
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*
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|
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|
|
|
|
|
|
|
|
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|
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Andrew Cecere
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571,779
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681,678
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|
90,799
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|
|
|
|
|
1,344,256
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*
|
|
|
|
|
|
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|
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Arthur D. Collins, Jr.
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81,654
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35,156
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116,810
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*
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|
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|
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|
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|
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|
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Terrance R. Dolan
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41,865
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|
157,439
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|
37,127
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|
|
|
|
|
236,431
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*
|
|
|
|
|
|
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Kimberly J. Harris
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22,290
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|
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22,290
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*
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|
|
|
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|
|
|
|
|
|
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Roland A. Hernandez
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32,326
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|
7,089
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39,415
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|
*
|
|
|
|
|
|
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|
|
|
|
|
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Doreen Woo Ho
|
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|
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32,324
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|
|
2,425
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|
34,749
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|
|
*
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
|
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Gunjan Kedia
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23,035
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20,450
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16,449
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59,934
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|
|
*
|
|
|
|
|
|
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|
|
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|
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Olivia F. Kirtley
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10,649
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|
|
|
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86,842
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30,891
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|
|
128,382
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|
|
*
|
|
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|
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|
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|
|
|
|
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Shailesh M. Kotwal
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6,823
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|
57,905
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|
|
24,208
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|
|
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88,936
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|
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*
|
|
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|
|
|
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|
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Karen S. Lynch
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14,740
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4,048
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18,788
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|
|
*
|
|
|
|
|
|
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|
|
|
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|
|
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Richard P. McKenney
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|
|
|
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7,992
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6,216
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|
|
14,208
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|
|
*
|
|
|
|
|
|
|
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|
|
|
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|
|
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Yusuf I. Mehdi
|
|
|
|
|
|
|
|
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6,250
|
|
|
|
|
|
6,250
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|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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David B. O'Maley
|
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183,147
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|
|
|
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|
85,704
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13,036
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|
|
281,887
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|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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O'dell M. Owens, M.D., M.P.H.
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|
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77,302
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|
|
|
|
|
77,302
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|
*
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Craig D. Schnuck
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93,899
|
|
|
|
|
|
93,899
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Jeffry H. von Gillern
|
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49,035
|
|
|
158,998
|
|
|
29,785
|
|
|
|
|
|
237,818
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|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Timothy A. Welsh
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7,839
|
|
|
|
|
|
13,122
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|
|
|
|
|
20,961
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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John P. Wiehoff
|
|
|
|
|
|
|
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|
972
|
|
|
699
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|
|
1,671
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Scott W. Wine
|
|
|
400
|
|
|
|
|
|
20,001
|
|
|
15,155
|
|
|
35,556
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
All directors and executive officers as a group (31 persons)
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|
|
1,055,888
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|
|
1,370,674
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|
|
945,394
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|
|
115,398
|
|
|
3,487,354
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
-
*
-
Indicates
less than 1%.
|
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|
U.S.
Bancorp
2020
Proxy
Statement
|
|
70
|
Table of Contents
Security ownership of certain beneficial owners and management
|
|
-
1.
-
Common stock
-
2.
-
Restricted stock units
Restricted stock units (including performance-based restricted stock units held by our executive officers) are distributable in an equivalent number of shares of
our common stock upon settlement. Restricted stock units granted to our officers are settled as they vest, and restricted stock units granted to our directors are immediately vested but do not settle
until the director ceases to serve on the Board. The number of restricted stock units that are currently vested, or that vest within 60 days of February 7, 2020, is included in this
column.
-
3.
-
Deferred compensation
Certain of our directors and executive officers have deferred cash compensation under our deferred compensation plans. Some of these deferred amounts will be
paid out in shares of our common stock upon the director's or officer's retirement or other termination of employment or service with U.S. Bancorp. The directors and officers have no voting or
investment power as to these shares. The number of shares to which the directors and officers would have been entitled had their employment or service with U.S. Bancorp been terminated as of
February 7, 2020, is included in this column.
Principal shareholders
|
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|
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|
Name of beneficial owner
|
|
|
Shares of
common stock
|
|
|
Percent of
common stock
|
|
Warren E. Buffett,
Berkshire Hathaway Inc. and
National Indemnity Company1
|
|
|
150,088,061
|
|
|
9.83
|
%
|
|
|
|
|
|
|
|
|
The Vanguard Group2
|
|
|
110,997,200
|
|
|
7.27
|
%
|
|
|
|
|
|
|
|
|
BlackRock, Inc.3
|
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|
98,486,038
|
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|
6.45
|
%
|
|
|
|
|
|
|
|
|
-
1.
-
Warren E. Buffett, Berkshire Hathaway Inc. and National Indemnity Company
Based on Amendment No. 5 to Schedule 13G filed with the SEC on February 14, 2020, by Warren E. Buffett, Berkshire Hathaway Inc., a
holding company which Mr. Buffett may be deemed to control, National Indemnity Company, an insurance company which Mr. Buffett may be deemed to control, and other members of the filing
group of which none beneficially owns more than 5% of the outstanding shares of U.S. Bancorp common stock. Mr. Buffett has sole voting and dispositive power over 884,230 shares, and shared
voting and dispositive powers over 150,088,061 shares. Berkshire Hathaway has sole voting and dispositive powers over no shares, and shared voting and dispositive powers over 150,088,061 shares.
National Indemnity Company has sole voting and dispositive powers over no shares, and shared voting and dispositive powers over 93,649,443 shares. The address for each of Mr. Buffett and
Berkshire Hathaway is 3555 Farnam Street, Omaha, NE 68131. The address for National Indemnity Company is 1314 Douglas Street, Omaha, NE 68102.
-
2.
-
The Vanguard Group
Based on Amendment No. 4 to Schedule 13G filed with the SEC on February 12, 2020, by The Vanguard Group, on behalf of itself and certain of
its subsidiaries. The Vanguard Group has sole voting power over 2,145,493 shares, shared voting power over 451,564 shares, sole dispositive power over 110,997,200 shares and shared dispositive power
over 2,448,701 shares. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., wholly-owned subsidiaries of The Vanguard Group, beneficially own 1,607,457 and 1,354,250
shares, respectively. The address for The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.
-
3.
-
BlackRock, Inc.
Based on Amendment No. 10 to Schedule 13G filed with the SEC on February 6, 2020, by BlackRock, Inc., on behalf of itself and certain
of its subsidiaries. BlackRock has sole voting power over 85,079,495 shares and sole dispositive power over 98,486,038 shares. The address for BlackRock is 55 East 52nd Street, New York,
NY 10055.
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71
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
Table of Contents
|
Questions and answers about the annual meeting and voting
|
Questions and answers about the annual meeting and voting
Why did I receive the proxy materials?
We have furnished the proxy materials to you over the Internet or mailed you a printed copy of these materials because the Board of Directors of U.S. Bancorp
is soliciting your proxy to vote your shares of our common stock at the annual meeting of shareholders to be held on April 21, 2020, or at any adjournments or postponements of the meeting.
What is a proxy?
It is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written
document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We refer to this as your "proxy vote." Andrew Cecere,
our Chairman, President and Chief Executive Officer, and Laura F. Bednarski, our Corporate Secretary, have been designated as the proxies to cast the votes of our shareholders at our 2020 annual
meeting of shareholders.
What is the purpose of the meeting?
At our annual meeting, shareholders will act upon the matters outlined in the notice of annual meeting of shareholders and described in this proxy statement.
Management will also report on our 2019 performance and, once the business of the annual meeting is concluded, respond to questions submitted in writing during or before the meeting.
How can I access the proxy materials and vote my shares?
The instructions for accessing the proxy materials and voting can be found in the information you received
either by mail or e-mail. Depending on how you received the proxy materials, you may vote by Internet, telephone or mail. We encourage you to vote by
Internet.
-
▶
-
If you are a shareholder who
received a notice by mail regarding the Internet availability of the proxy materials:You may access the
proxy materials and voting instructions over the Internet via the web address provided in the notice. In order to access this material and vote, you will need the control number provided on
the notice you received in the mail. You may vote by following the instructions on the notice or on the
website.
-
▶
-
If you are a shareholder who
received an e-mail directing you to the proxy materials:You may access the proxy materials and voting
instructions over the Internet via the web address provided in the e-mail. In order to access these materials and vote, you will need the control number provided in the e-mail. You may vote by
following the instructions in the e-mail or on the website.
-
▶
-
If you are a shareholder who
received the proxy materials by mail:You may vote your shares by following the instructions provided on the
proxy card or voting instruction form. If you vote by Internet or telephone, you will need the control number provided on the proxy card or voting instruction form. If you vote by mail, please
complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed envelope.
How do I vote if my shares are held in the U.S. Bank 401(k) Savings Plan?
If you hold any shares in the U.S. Bank 401(k) Savings Plan, you are receiving, or being provided access to, the same proxy materials as any
other shareholder. However, your proxy vote will serve as voting instructions to the plan trustee. Your voting instructions must be received at least five days prior to the annual meeting in order to
count. In accordance with the terms of the plan, the trustee will vote all of the shares held in the plan in the same proportion as the actual proxy votes submitted by plan participants at least five
days prior to the annual meeting.
Why did I receive a notice regarding the Internet availability of proxy materials instead of a printed copy of the proxy materials?
In accordance with rules adopted by the SEC, we are furnishing our proxy materials to our shareholders primarily over the Internet instead
of mailing printed copies of those materials to each shareholder. By doing so, we reduce costs and lessen the environmental impact of our proxy solicitation. On or about March 10, 2020, we
mailed a notice of Internet availability of the proxy materials to most of our shareholders. The notice contains instructions about how to access our
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U.S.
Bancorp
2020
Proxy
Statement
|
|
72
|
Table of Contents
Questions and answers about the annual meeting and voting
|
|
proxy
materials and vote online. This notice is not a proxy card and cannot be used to vote your shares. If you received a notice but would like to receive a paper copy of our proxy materials, please
follow the instructions on the notice.
Our
other shareholders, including shareholders who have previously requested to receive paper copies of the proxy materials and persons holding shares through our benefit plans,
received paper copies of the proxy materials instead of a notice. If you received paper copies of the notice or proxy materials, we encourage you to sign up to receive all of your future proxy
materials electronically, as described under "How can I receive my proxy materials by e-mail in the future?" below.
Who is entitled to vote at the meeting?
The Board has set February 25, 2020, as the record date for the annual meeting. If you were a shareholder at the close of business on
February 25, 2020, you are entitled to vote at the meeting. As of the record date, 1,521,261,340 shares of our common stock were issued and outstanding and, therefore, eligible to vote at the
meeting.
What are my voting rights?
Holders of our common stock are entitled to one vote per share. Therefore, a total of 1,521,261,340 votes are entitled to be cast at the
meeting. There is no cumulative voting.
How many shares must be present to hold the meeting?
In accordance with our bylaws, shares equal to at least one-third of the voting power of our outstanding shares of common stock as of the
record date must be present at the meeting in order to hold the meeting and conduct business. This is called a quorum. Your shares are counted as present at the meeting if:
-
▶
-
you have properly submitted a proxy vote by Internet, telephone or mail, even if you abstain from
voting on one or more matters;
-
▶
-
you are present and vote in person at the meeting; or
-
▶
-
you hold your shares in street name (as discussed below) and you provide voting instructions to your
broker, bank, trust company or other nominee or you do not provide voting instructions but your broker, bank, trust company or other nominee uses its discretionary authority to vote your shares on the
ratification of the selection of our independent auditor.
What is the difference between a shareholder of record and a "street name" holder?
If your shares are registered directly in your name with our transfer agent, Computershare Investor Services, you are considered the
shareholder of record with respect to those shares.
If
your shares are held in a stock brokerage account or by a bank, trust company or other nominee, then the broker, bank, trust company or other nominee is considered to be the
shareholder of record with respect to those shares. However, you still are considered the beneficial owner of those shares and your shares are said to be held in "street name." Street name holders
generally cannot vote their shares directly and must instead instruct the broker, bank, trust company or other nominee how to vote their shares using the voting instruction form provided by it.
How do I attend the meeting?
The 2020 Annual Meeting of Shareholders will be held at 11:00 a.m., local time, on Tuesday, April 21, 2020, at the following
location:
Marriott
Charlotte City Center
Charlotte Ballroom
100 W. Trade Street
Charlotte, NC 28202
Admission
to the meeting is limited to our registered shareholders and street name holders as of the record date and persons holding valid written legal proxies naming them as the
representative of such a shareholder (only one representative for each shareholder appointed by proxy will be admitted to the meeting).
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Admission requires government-issued photo identification and documentary evidence of eligibility to attend the meeting as described below.
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Shareholder of record
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Street name holder
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Representative of a
shareholder of record
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Representative of a
street name holder
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▶
Admission ticket printed from www.proxyvote.com
OR
▶
Notice of Internet Availability of Proxy Materials
OR
▶
Proxy card
OR
▶
Verification at the registration desk that your name is included on the list of U.S.
Bancorp shareholders of record on February 25, 2020
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▶
Admission ticket printed from www.proxyvote.com
OR
▶
Notice of Internet Availability of Proxy Materials
OR
▶
Voting
instruction form from your broker, bank, trust company or other nominee
OR
▶
A
letter from your broker, bank, trust company or other nominee confirming you owned U.S. Bancorp shares on February 25, 2020
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▶
A valid written legal proxy naming you as representative, signed by the shareholder of record
AND one of the following:
▶
Printed admission ticket belonging to the shareholder of record
OR
▶
Notice of Internet Availability of Proxy Materials sent to the shareholder of record
OR
▶
Proxy card sent to the shareholder of record
OR
▶
Verification at the registration desk that the shareholder's name is included on the list of U.S. Bancorp shareholders of record on February 25,
2020
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▶
A valid written legal proxy naming you as representative, signed by the street name holder's broker, bank, trust company or other nominee
AND one of the following:
▶
Printed admission ticket belonging to the street name holder
OR
▶
Notice of Internet Availability of Proxy Materials sent to the street name holder
OR
▶
Voting instruction form from the street name holder's broker, bank, trust company or other nominee
OR
▶
A letter from the street name holder's broker, bank, trust company or other nominee confirming the street
name holder owned U.S. Bancorp shares on February 25, 2020
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To promote an efficient admission process, we encourage all of our shareholders attending the meeting to pre-register and bring an admission ticket with
them. To print an admission ticket in advance, visit www.proxyvote.com and follow the instructions provided at this website. You will need the control number provided on your
proxy card, voting instruction form, Notice of Internet Availability of Proxy Materials, or e-mail that directed you to the proxy materials.
At
the entrance to the meeting, we will inspect the documentation you present for admission and decide in our sole discretion whether it meets the requirements stated above. Security measures may
include bag searches and other screening procedures. The use of cameras or recording devices will not be permitted at the meeting.
Please
allow ample time for the admission procedures described above. Anyone needing special assistance should call our company's Investor Relations team at 866.775.9668. If you are not able to attend
the meeting, you will still be able to access an audio replay of the management presentation given at the meeting from our website. You can find
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instructions
on how to access the replay and the presentation materials on our website at www.usbank.com by clicking on "About Us" and then "Investor Relations" and then "Webcasts &
Presentations."
How can I ask a question at the meeting?
We value questions from our shareholders. To ensure an orderly and efficient response to questions, you will
have an opportunity at the meeting to submit questions in writing to the CEO. In addition, you can submit written questions in advance when you pre-register for the meeting and access your
admission ticket at www.proxyvote.com.
Can I vote my shares in person at the meeting?
If you are a shareholder of record, you may vote your shares in person by completing a ballot at the meeting. Even if you currently plan to attend the
meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend the meeting.
If
you are a street name holder, you may vote your shares in person at the meeting only if you obtain a signed letter or other document from your broker, bank, trust company or other nominee giving
you the right to vote the shares at the meeting.
If
you are a participant in the U.S. Bank 401(k) Savings Plan, you may submit a proxy vote as described above, but you may not vote your 401(k) Savings Plan shares in person at the meeting.
What if I am a shareholder of record and do not specify how I want my shares voted?
If you submit your proxy by Internet or submit a signed proxy card and do not specify how you want to vote your shares, we will vote your shares in accordance
with the recommendations of the Board. Our telephone voting procedures do not permit you to submit your proxy vote by telephone without specifying how you want your shares voted.
What if I hold my shares in street name and do not provide voting instructions?
If you hold your shares in street name and do not provide voting instructions, your broker, bank, trust company or other nominee has discretionary authority
to vote your shares on the ratification of the selection of Ernst & Young LLP as our independent auditor. However, in the absence of your specific instructions as to how to vote, your
broker, bank, trust company or other nominee does not have discretionary authority to vote on any other proposal. Such a situation results in a "broker non-vote," which does not have an effect on the
outcome of the proposal. It is important, therefore, that you provide instructions to your broker, bank, trust company or other nominee so that your vote with respect to the other proposals is
counted.
What is the voting standard and what is the effect of abstentions?
You may vote "FOR," "AGAINST" or "ABSTAIN" with respect to each nominee for the Board of Directors (Proposal 1), the ratification of the selection of
independent auditor (Proposal 2), and the advisory vote on executive compensation (Proposal 3).
The
following table summarizes the voting standard applicable to each proposal and the effect of an "ABSTAIN" vote in each instance.
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Proposal
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Voting standard
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Effect of "ABSTAIN" vote
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Election of directors
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The nominee is elected if the number of votes cast "FOR" him or her exceeds the number of votes cast "AGAINST" him or her
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No effect
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Other proposals
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The proposal is approved if "FOR" votes are cast by the majority of shares present and entitled to vote on the matter
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Same effect as "AGAINST" vote
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Questions and answers about the annual meeting and voting
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What does it mean if I receive more than one notice of Internet availability of proxy materials, proxy card, voting instruction form, or e-mail with instructions on how to access the proxy materials?
If you receive more than one notice of Internet availability of proxy materials, proxy card, voting instruction form, or e-mail with instructions on how to
access the proxy materials, it means that you hold shares in more than one account. To ensure that all of your shares are voted, vote separately for each notice of Internet availability of proxy
materials, proxy card, voting instruction form, and e-mail you receive.
Can I change my vote after submitting my proxy?
Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at the annual meeting. If you are a shareholder of record, you may
revoke your proxy and change your vote by:
-
▶
-
voting again over the Internet or by telephone by no later than 11:59 p.m., Eastern Time, on April 20,
2020, or by submitting a proxy card with a later date and returning it so that it is received by April 20, 2020; or
-
▶
-
submitting written notice of revocation to our Corporate Secretary at the address shown on page 78 of this proxy
statement so that it is received by April 20, 2020.
Attending
the meeting will not revoke your proxy unless you specifically request to revoke it or submit a ballot at the meeting. To request an additional proxy card, or if you have any questions about
the annual meeting or how to vote or revoke your proxy, you should write to Investor Relations, U.S. Bancorp, 800 Nicollet Mall, Minneapolis, MN 55402 or call 866.775.9668.
If
you hold your shares in street name, contact your broker, bank, trust company or other nominee regarding how to revoke your proxy and change your vote. If you are a participant in the U.S. Bank
401(k) Savings Plan, you may revoke your proxy and change your vote as described above, but only until 11:59 p.m., Eastern Time, on April 16, 2020.
Will my vote be kept confidential?
Yes. We have procedures to ensure that all proxies, ballots and voting tabulations that identify shareholders are kept permanently confidential, except as
follows: to meet legal requirements, to assert claims for or defend claims against our company, to allow authorized individuals to count and certify the results of the shareholder vote if a proxy
solicitation in opposition to the Board takes place, or to respond to shareholders who have written comments on proxy cards or who have requested disclosure. We also have the voting tabulations
performed by an independent third party.
Who will count the votes?
Representatives of Broadridge Financial Solutions, Inc., our tabulation agent, will tabulate the votes and act as independent inspectors of election.
Who pays for the cost of proxy preparation and solicitation?
We pay for the cost of proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms, banks, trust companies or other
nominees for forwarding proxy materials to street name holders. We have retained Alliance Advisors, LLC, to assist in the solicitation of proxies for the annual meeting for a fee of $20,000,
plus associated costs and expenses.
We
are soliciting proxies primarily by mail. In addition, our directors, officers and employees may solicit proxies by telephone, facsimile, e-mail or in person. They will not receive any additional
compensation for these activities.
Do we "household" annual meeting materials?
The SEC rules allow a single copy of the notice of Internet availability of proxy materials or proxy statement and annual report to be delivered to multiple
shareholders sharing the same address and last name, or who we reasonably believe are members of the same family, and who consent to receive a single copy of these materials in a manner provided by
these rules. This practice is referred to as "householding." Although we do not household for our registered shareholders, we understand that some brokers, banks, trust companies and other nominees
household U.S. Bancorp notices of Internet availability of proxy materials or proxy statements and annual reports, delivering a single copy of each to multiple shareholders sharing an address unless
contrary instructions have been received from the affected shareholders. Once you have received notice from your broker, bank, trust company or other nominee that it will be householding materials to
your address, householding will continue until you are notified otherwise or until you revoke your consent.
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If,
at any time, you no longer wish to participate in householding and would prefer to receive a separate copy of our notice of Internet availability of proxy materials or proxy statement or annual
report, or if you are receiving multiple copies of any of these documents and wish to receive only one, please notify your broker, bank, trust company or other nominee. We will deliver promptly upon
written or oral request a separate copy of our notice of Internet availability of proxy materials, proxy statement and/or our annual report to a shareholder at a shared address to which a single copy
was delivered. For copies of any of these documents, shareholders should write to Investor Relations, U.S. Bancorp, BC-MN-H23K, 800 Nicollet Mall, Minneapolis, Minnesota 55402, or call 866.775.9668.
How can I receive my proxy materials by e-mail in the future?
Instead of receiving future paper copies of the notice of Internet availability of proxy materials or our proxy materials by mail, you can elect to receive an
e-mail with links to these documents, your control number and instructions for voting over the Internet. Opting to receive your proxy materials by e-mail will save the cost of producing
and mailing documents to you and will also help conserve environmental resources. Your e-mail address will be kept separate from any other company operations and will be used for no other purpose.
If
we mailed you a notice of Internet availability of proxy materials or a printed copy of our proxy statement and annual report and you would like to sign up to receive these materials by e-mail in
the future, you can choose this option by:
-
▶
-
following the instructions provided on your proxy card or voting instruction form if you received a paper copy of the
proxy materials;
-
▶
-
following the instructions provided when you vote over the Internet; or
-
▶
-
going to http://enroll.icsdelivery.com/usb and following the instructions provided.
You
may revoke this request at any time by following the instructions at http://enroll.icsdelivery.com/usb. Your election will remain in effect unless you revoke it later.
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Other matters
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Other matters
Annual Report to Shareholders and Form 10-K
|
If
you received a paper copy of the proxy materials, our 2019 Annual Report to Shareholders, including financial statements for the year ended December 31, 2019, accompanied
this proxy statement. The 2019 Annual Report to Shareholders is also available on our website at www.usbank.com by clicking on "About Us" and then "Investor Relations." Copies of our 2019 Annual
Report on Form 10-K, which is on file with the SEC, are available to any shareholder who submits a request in writing to Investor Relations, U.S. Bancorp, BC-MN-H23K, 800 Nicollet Mall,
Minneapolis, Minnesota 55402. Copies of any exhibits to the Form 10-K are also available upon written request and payment of a fee covering our reasonable expenses in furnishing the exhibits.
Delinquent Section 16(a) reports
|
Section 16(a)
of the Exchange Act requires our executive officers, Controller and directors to file initial reports of ownership and reports of changes in ownership of our
securities with the SEC. Our executive officers, Controller and directors are required to furnish us with copies of these reports. Based solely on a review of the Section 16(a) reports
furnished to us with respect to 2019 and written representations from our executive officers, Controller and directors, we believe that all Section 16(a) filing requirements applicable to those
persons during 2019 were satisfied, except that Mark G. Runkel was late in filing one Form 4. Mr. Runkel's transaction was executed in April 2019 and reported in May 2019.
Communicating with U.S. Bancorp's Board of Directors
|
Shareholders
or any other interested party may communicate with our Board of Directors by sending a letter addressed to our Board of Directors, non-employee directors, Chairman, Lead
Director or specified individual directors to:
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The Office of the Corporate Secretary
U.S. Bancorp
BC-MN-H21O
800 Nicollet Mall
Minneapolis, MN 55402
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Any
such letters will be delivered to the Lead Director, or to a specified director if so addressed. Letters relating to accounting matters will also be delivered to our Chief Risk Officer for
handling in accordance with the Audit Committee's policy on investigation of complaints relating to accounting matters.
The
Lead Director (or, in the Lead Director's discretion, the chair of the relevant Board committee) may be available to meet with shareholders as appropriate. Requests for such a meeting are
considered on a case-by-case basis.
Deadlines for nominating directors and submitting proposals for the 2021 annual meeting
|
Please
see below for the specific information and deadline requirements applicable to shareholders who want to nominate directors or submit proposals for next year's annual meeting.
Note that any director nomination or shareholder proposal for which notice is received by us after the relevant deadline set forth below may not be presented at the 2021 annual meeting.
Nominating a director for inclusion in our proxy statement (proxy access nominees)
A shareholder or group of up to 20 shareholders that has held at least 3% of the outstanding shares of our company's common stock for at least three years is
able to nominate directors to fill up to 20% of the Board seats (but at least two directors) for inclusion in our proxy statement if the shareholder(s) and nominee(s) satisfy the requirements
specified in our bylaws and notice is received between 150 and 120 days before the anniversary of the date the proxy statement for the prior year's annual meeting was released to shareholders.
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Proxy
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Other matters
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In
order for a nominee to be considered for inclusion in our proxy statement for the 2021 annual meeting of shareholders, we must receive written notice of the nomination at our principal executive
offices at U.S. Bancorp, BC-MN-H21O, 800 Nicollet Mall, Minneapolis, Minnesota, Attention: Corporate Secretary, no earlier than October 11, 2020, and no later than November 10, 2020. The
notice must contain the specific information required by our bylaws. You can find a copy of our bylaws on our website at www.usbank.com by clicking on "About Us" and then "Investor Relations" and then
"Corporate Governance" and then "Governance Documents" and then "Restated Bylaws."
Other shareholder proposals and director nominations
Proper proposals or nominations must be submitted to the Corporate Secretary of U.S. Bancorp at our principal executive offices in Minneapolis, Minnesota, at
the address provided above. Shareholder proposals to be considered for inclusion in the proxy statement must comply with SEC regulations regarding the inclusion of shareholder proposals in
company-sponsored proxy materials. Notices of director nominations and shareholder proposals to be made from the floor must contain the specific information required by our bylaws (available on our
website as described above).
The
submission deadlines for these proposals and nominations are as follows:
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Proposal
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How presented
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Deadline
|
Nomination of directors
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To nominate a director from the floor at the annual meeting
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December 22, 2020
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All other proposals
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To have a shareholder proposal be considered for inclusion in the proxy statement or to present the proposal from the floor at the annual meeting
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November 10, 2020
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Other matters for consideration
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We
do not know of any other matters that may be presented for consideration at the 2020 annual meeting. If any other business does properly come before the annual meeting, the
persons named as proxies above under the heading "Questions and Answers About the Annual Meeting and Voting What is a proxy?" will vote as they deem in the best interests of U.S.
Bancorp.
Laura
F. Bednarski
Corporate Secretary
Dated:
March 10, 2020
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Non-GAAP financial measures
|
Non-GAAP financial measures
This proxy statement contains the following non-GAAP financial measures: return on tangible common equity (ROTCE); efficiency ratio, using net
interest income on a taxable-equivalent basis and excluding notable
items; return on average assets (ROA), excluding notable items; and return on average common equity (ROE), excluding notable items.
ROTCE
is calculated by dividing net earnings applicable to common shareholders, excluding the impact of intangibles amortization, by tangible common shareholders' equity. We believe that ROTCE is a
meaningful way for holders of U.S. Bancorp common stock to assess our use of equity.
We
use net interest income on a taxable-equivalent basis to calculate our efficiency ratio. We believe that this presentation is the preferred industry measurement of net interest income as it
provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. We excluded notable items from the presentation of efficiency ratio, ROA and ROE for 2019 for our
company and peers because we believe that core results provide a more reliable means of comparison.
The
calculations of these measures for U.S. Bancorp follow:
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Years Ended December 31
(Dollars in Millions)
|
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2019
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2018
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2017
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2016
|
|
|
2015
|
|
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2014
|
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2013
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2012
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2011
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2010
|
|
Net income applicable to U.S. Bancorp common shareholders
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|
$
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6,583
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|
$
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6,784
|
|
$
|
5,913
|
|
$
|
5,589
|
|
$
|
5,608
|
|
$
|
5,583
|
|
$
|
5,552
|
|
$
|
5,383
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|
$
|
4,721
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|
$
|
3,332
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|
Intangibles amortization (net-of-tax)
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|
|
133
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|
|
127
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|
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114
|
|
|
116
|
|
|
113
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|
|
129
|
|
|
145
|
|
|
178
|
|
|
194
|
|
|
239
|
|
|
|
|
|
|
|
|
|
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|
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization (a)
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|
6,716
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|
|
6,911
|
|
|
6,027
|
|
|
5,705
|
|
|
5,721
|
|
|
5,712
|
|
|
5,697
|
|
|
5,561
|
|
|
4,915
|
|
|
3,571
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|
Average total equity
|
|
|
53,252
|
|
|
50,391
|
|
|
49,097
|
|
|
47,988
|
|
|
45,502
|
|
|
43,524
|
|
|
41,287
|
|
|
38,736
|
|
|
33,116
|
|
|
28,799
|
|
Average preferred stock
|
|
|
(5,984
|
)
|
|
(5,636
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)
|
|
(5,490
|
)
|
|
(5,501
|
)
|
|
(4,836
|
)
|
|
(4,756
|
)
|
|
(4,804
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)
|
|
(4,381
|
)
|
|
(2,414
|
)
|
|
(1,742
|
)
|
Average noncontrolling interests
|
|
|
(629
|
)
|
|
(628
|
)
|
|
(631
|
)
|
|
(649
|
)
|
|
(689
|
)
|
|
(687
|
)
|
|
(1,370
|
)
|
|
(1,125
|
)
|
|
(916
|
)
|
|
(750
|
)
|
Average goodwill (net of deferred tax liability)1
|
|
|
(8,742
|
)
|
|
(8,606
|
)
|
|
(8,160
|
)
|
|
(8,242
|
)
|
|
(8,347
|
)
|
|
(8,435
|
)
|
|
(8,564
|
)
|
|
(8,295
|
)
|
|
(8,288
|
)
|
|
(8,410
|
)
|
Average intangible assets, other than mortgage servicing rights
|
|
|
(681
|
)
|
|
(595
|
)
|
|
(637
|
)
|
|
(783
|
)
|
|
(764
|
)
|
|
(848
|
)
|
|
(920
|
)
|
|
(1,112
|
)
|
|
(1,297
|
)
|
|
(1,517
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible common equity (b)
|
|
|
37,216
|
|
|
34,926
|
|
|
34,179
|
|
|
32,813
|
|
|
30,866
|
|
|
28,798
|
|
|
25,629
|
|
|
23,823
|
|
|
20,201
|
|
|
16,380
|
|
Return on tangible common equity (a)/(b)
|
|
|
18.0
|
%
|
|
19.8
|
%
|
|
17.6
|
%
|
|
17.4
|
%
|
|
18.5
|
%
|
|
19.8
|
%
|
|
22.2
|
%
|
|
23.3
|
%
|
|
24.3
|
%
|
|
21.8
|
%
|
Net interest income
|
|
$
|
13,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable-equivalent adjustment2
|
|
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, on a taxable-equivalent basis
|
|
|
13,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, on a taxable-equivalent basis (as calculated above)
|
|
|
13,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income
|
|
|
9,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Securities gains (losses), net
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Notable items3
|
|
|
(140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenue, excluding net securities gains (losses) and notable items (c)
|
|
|
23,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense
|
|
|
12,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Notable items4
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense, excluding notable items (d)
|
|
|
12,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio, excluding notable items (d)/(c)
|
|
|
54.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to U.S. Bancorp
|
|
$
|
6,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Notable items5
|
|
|
(272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to U.S. Bancorp, excluding notable items (e)
|
|
|
7,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets (f)
|
|
$
|
475,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets, excluding notable items (e)/(f)
|
|
|
1.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to U.S. Bancorp common shareholders
|
|
$
|
6,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Notable items5
|
|
|
(272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to U.S. Bancorp common shareholders, excluding notable items (g)
|
|
|
6,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity (h)
|
|
$
|
46,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average common equity, excluding notable items (g)/(h)
|
|
|
14.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1.
-
Includes goodwill related to certain
investments in unconsolidated financial institutions per prescribed regulatory requirements.
-
2.
-
Based on a federal income tax
rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes.
-
3.
-
Notable
items related to noninterest income for the year ended December 31, 2019 include: $140 million derivative liability charge related to previously sold Visa shares.
-
4.
-
Notable
items related to noninterest expense for the year ended December 31, 2019 include: $200 million of severance charges and asset impairments.
-
5.
-
Notable items for the year
ended December 31, 2019 include: $112 million (after-tax) derivative liability charge related to previously sold Visa shares and $160 million (after-tax) of severance charges and
asset impairments.
|
|
|
|
|
|
U.S.
Bancorp
2020
Proxy
Statement
|
|
80
|
Table of Contents
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on April 20, 2020; or April 16, 2020, for shares held in the U.S. Bancorp 401(k) Savings Plan. Have this proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. U.S. BANCORP INVESTOR RELATIONS 800 NICOLLET MALL BC-MN-H23K MINNEAPOLIS, MN 55402-7014 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on April 20, 2020; or April 16, 2020, for shares held in the U.S. Bancorp 401(k) Savings Plan. Have this proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date this proxy card and return it in the postage-paid envelope we have provided, or return it to U.S. Bancorp, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, so that it is received by April 16, 2020. SHAREHOLDER MEETING REGISTRATION To attend the meeting, go to the Register for Meeting link at www.proxyvote.com. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E89706-P31064-Z75986 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. U.S. BANCORP The Board of Directors recommends a vote "FOR" each of the following nominees: For ! ! ! ! ! ! ! ! ! ! ! ! ! Against ! ! ! ! ! ! ! ! ! ! ! ! ! Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! 1 - Election of Directors: 1a. Warner L. Baxter The Board of Directors recommends a vote "FOR" the following proposals: 2 - The ratification of the selection of Ernst & Young LLP as our independent auditor for the 2020 fiscal year. 3 - An advisory vote to approve the compensation of our executives disclosed in this proxy statement. For Against Abstain 1b. Dorothy J. Bridges ! ! ! ! ! ! 1c. Elizabeth L. Buse 1d. Marc N. Casper 1e. Andrew Cecere 1f. Kimberly J. Harris 1g. Roland A. Hernandez 1h. Olivia F. Kirtley 1i. Karen S. Lynch 1j. Richard P. McKenney 1k. Yusuf I. Mehdi 1l. John P. Wiehoff For address changes and/or comments, please check this box and write them on the back where indicated. ! 1m. Scott W. Wine Note: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date