800 Nicollet Mall

Minneapolis, Minnesota 55402

(651) 466-3000

 

March 20, 2009

 

Dear Shareholders:

 

You are cordially invited to join us for our 2009 annual meeting of shareholders, which will be held on Tuesday, April 21, 2009, at 11:00 a.m., Central time, in Ballroom A at the Minneapolis Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota. For your convenience, a map showing the location of the Minneapolis Convention Center is provided on the back of our proxy statement. Holders of record of our common stock as of February 23, 2009, are entitled to notice of, and to vote at, the 2009 annual meeting.

 

The notice of annual meeting of shareholders and the proxy statement describe the business to be conducted at the meeting. We also will report at the meeting on matters of current interest to our shareholders.

 

We hope you will be able to attend the meeting. However, even if you plan to attend in person, please vote your shares promptly to ensure that they are represented at the meeting. You may submit your proxy vote by telephone or Internet as described in the following materials or by completing and signing the enclosed proxy card and returning it in the envelope provided. If you decide to attend the meeting and wish to change your proxy vote, you may do so automatically by voting in person at the meeting.

 

If your shares are held in the name of a broker, trust, bank or other nominee, you will need proof of ownership to be admitted to the meeting, as described under “How can I attend the meeting?” on page 5 of the proxy statement.

 

We look forward to seeing you at the annual meeting.

 

Sincerely,

 

 

Richard K. Davis

Chairman, President and Chief Executive Officer

 

800 Nicollet Mall

Minneapolis, Minnesota 55402

(651) 466-3000

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

By Order of the Board of Directors

 

Lee R. Mitau
Secretary

 

March 20, 2009

PROXY STATEMENT

 

TABLE OF CONTENTS

 

PROXY STATEMENT
2009 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 2009

 

The Board of Directors of U.S. Bancorp is soliciting proxies for use at the annual meeting of shareholders to be held on April 21, 2009, and at any adjournment of the meeting. This proxy statement and the enclosed proxy card are first being mailed or made available to shareholders on or about March 20, 2009.

 

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. These matters include the election of directors, the ratification of the selection of our independent auditor, and an advisory (non-binding) vote on the compensation of our executives disclosed in this proxy statement. Also, management will report on our performance during the last fiscal year and, once the business of the annual meeting is concluded, respond to questions from shareholders.

 

Please read this proxy statement carefully. You should consider the information contained in this proxy statement when deciding how to vote your shares at the annual meeting.

 

The Board has set February 23, 2009, as the record date for the annual meeting. If you were a shareholder of record at the close of business on February 23, 2009, you are entitled to vote at the meeting.

 

As of the record date, 1,758,437,872 shares of our common stock were issued and outstanding and, therefore, eligible to vote at the meeting.

 

Holders of our common stock are entitled to one vote per share. Therefore, a total of 1,758,437,872 votes are entitled to be cast at the meeting. There is no cumulative voting.

 

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:

 

 

If you are a shareholder of record as of the record date, you can give a proxy to be voted at the meeting in any of the following ways:

 

 

The telephone and Internet voting procedures have been set up for your convenience. We encourage you to reduce corporate expense by submitting your vote by telephone or Internet. The procedures have been designed to authenticate your identity, to allow you to give voting instructions and to confirm that those

instructions have been recorded properly. If you are a shareholder of record and you would like to submit your proxy vote by telephone or Internet, please refer to the specific instructions provided on the enclosed proxy card. If you wish to submit your proxy by mail, please return your signed proxy card to us before the annual meeting.

 

If you hold your shares in “street name,” you must vote your shares in the manner prescribed by your broker or other nominee. Your broker or other nominee has enclosed or otherwise provided a voting instruction form for you to use in directing the broker or nominee how to vote your shares. Telephone and Internet voting are also encouraged for shareholders who hold their shares in street name.

 

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.” Two executive officers, Richard K. Davis and Lee R. Mitau, have been designated as the proxies for our 2009 annual meeting of shareholders.

 

It is a document that we are required to give you, or provide you access to, in accordance with regulations of the Securities and Exchange Commission (the “SEC”), when we ask you to designate proxies to vote your shares of our common stock at a meeting of our shareholders. The proxy statement includes information regarding the matters to be acted upon at the meeting and certain other information required by regulations of the SEC and rules of the New York Stock Exchange (the “NYSE”).

 

If your shares are registered directly in your name, 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 or other nominee, then the broker, bank, trust 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 or other nominee how to vote their shares using the voting instruction form provided by it.

 

If you hold any shares in the U.S. Bancorp 401(k) Savings Plan, you are receiving, or being provided access to, the same proxy materials as any other shareholder of record. 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.

 

If you receive more than one proxy card or voting instruction form, it means that you hold shares registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card, or if you submit your proxy vote by telephone or Internet, vote once for each proxy card or voting instruction form you receive.

 

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 or other nominee giving you the right to vote the shares at the meeting.

 

If you are a participant in the U.S. Bancorp 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.

 

Election of each director requires that the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. The affirmative vote of a majority of the voting power of our common stock present and entitled to vote on the matter is required for the ratification of the selection of our independent auditor; the advisory vote to approve the compensation of our executives disclosed in this proxy statement; and the approval of any other proposals. Because your vote on executive compensation is advisory, it will not be binding upon the company or the Board of Directors. However, the Compensation and Human Resources Committee will take into account the outcome of the vote when considering future executive compensation programs.

 

You may vote “FOR,” “AGAINST” or “ABSTAIN” for each nominee for the Board of Directors and on the other proposals.

 

If you submit your proxy but abstain from voting on one or more matters, your shares will be counted as present at the meeting for the purpose of determining a quorum. Shares not present at the meeting and shares voting “ABSTAIN” have no effect on the election of directors. If you abstain from voting on the proposal ratifying the selection of our independent auditor or the advisory vote proposal approving the compensation of our executives disclosed in this proxy statement, your abstention has the same effect as a vote against that proposal.

 

If you hold your shares in street name and do not provide voting instructions to your broker or other nominee, your shares will be considered to be “broker non-votes” and will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote under the rules of the NYSE. Shares that constitute broker non-votes will be counted as present at the meeting for the purpose of determining a quorum. Your broker or other nominee has discretionary authority to vote your shares on the election of directors, the ratification of Ernst & Young LLP as our independent auditor, and the advisory vote to approve the compensation of our executives disclosed in this proxy statement, even if your broker, bank, trust or other nominee does not receive voting instructions from you.

 

Representatives of Broadridge Financial Solutions, Inc., our tabulation agent, will tabulate the votes and act as independent inspectors of election.

 

You will vote on the following management proposals:

 

 

 

The Board of Directors recommends that you vote FOR the election of each of the nominees to the Board of Directors, FOR the ratification of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2009, and FOR the advisory approval of the compensation of our executives disclosed in this proxy statement.

 

We are not aware of any other matters that will be voted on at the annual meeting. However, if any other business properly comes before the meeting, the persons named as proxies for shareholders will vote on those matters in a manner they consider appropriate.

 

If you submit a signed proxy card or submit your proxy by telephone or Internet and do not specify how you want to vote your shares, we will vote your shares:

 

 

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:

 

 

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 are a participant in the U.S. Bancorp 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, 2009. If you hold your shares in street name, contact your broker, bank, trust or other nominee regarding how to revoke your proxy and change your vote.

 

Yes. We have procedures to ensure that, regardless of whether shareholders vote by mail, telephone, Internet or in person, all proxies, ballots and voting tabulations that identify shareholders are kept permanently confidential, except as disclosure may be required by federal or state law or as expressly permitted by a shareholder. We also have the voting tabulations performed by an independent third party.

 

You may be asked to present valid picture identification, such as a driver’s license or passport, before being admitted to the meeting. If you hold your shares in street name, you also will need proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from your broker or other nominee are examples of proof of ownership.

 

Please let us know whether you plan to attend the meeting by responding affirmatively when prompted during telephone or Internet voting or by marking the attendance box on the proxy card.

 

We pay for the cost of proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms, banks, trusts or other nominees for forwarding proxy materials to street name holders. We have retained MacKenzie Partners, Inc. to assist in the solicitation of proxies for the annual meeting for a fee of approximately $7,500, plus associated costs and expenses.

 

We are soliciting proxies primarily by mail. In addition, our directors, officers and regular employees may solicit proxies by telephone, facsimile, e-mail or in person. We will not pay these individuals any additional compensation for their services other than their regular salaries.

 

In order for a shareholder proposal to be considered for inclusion in our proxy statement for the 2010 annual meeting, we must receive the written proposal at our principal executive offices at 800 Nicollet Mall, Minneapolis, Minnesota 55402, Attention: Corporate Secretary, on or before November 20, 2009. The proposal must comply with SEC regulations regarding the inclusion of shareholder proposals in company-sponsored proxy materials.

 

Our bylaws provide that a shareholder may nominate a director for election at the annual meeting if proper written notice is received by the Corporate Secretary of U.S. Bancorp at our principal executive offices in Minneapolis, Minnesota, at least 120 days in advance of the anniversary of the prior year’s annual meeting. A shareholder may present from the floor a proposal that is not included in the proxy statement if proper written notice is received by the Corporate Secretary at least 120 days in advance of the anniversary of the date the proxy statement for the prior year’s annual meeting was released to shareholders. For the 2010 annual meeting, notices of director nominations and shareholder proposals to be made from the floor must be received on or before December 22, 2009, and November 20, 2009, respectively. The notice must contain the specific information required by our bylaws. You may request a copy of our bylaws by contacting our Corporate Secretary, at U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402, or by telephone (651) 466-3000. Shareholder proposals and director nominations for which notice is received by us after November 20, 2009, and December 22, 2009, respectively, may not be presented in any manner at the 2010 annual meeting.

 

You or any other interested party may communicate with our Board of Directors by sending a letter addressed to our Board of Directors, non-management directors, lead director or specified individual directors to:

 

The Office of the Corporate Secretary
U.S. Bancorp
BC-MN-H21O
800 Nicollet Mall
Minneapolis, MN 55402

 

Any such letters will be delivered to the independent 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.

 

If we sent you a printed copy of our proxy statement and annual report, you can request electronic delivery if you are a shareholder of record or if you hold your shares in street name. In fact, we encourage you to request electronic delivery of these documents if you are comfortable viewing documents online, because it saves us the expense of printing and mailing the materials to you and helps preserve environmental resources. Shareholders who sign up to receive proxy materials electronically will receive an e-mail with links to the proxy materials, which may give them faster delivery of the materials and will save money for our company and our shareholders. Your e-mail address will be kept separate from any other company operations and will be used for no other purpose.

 

If we sent you a printed copy of our proxy statement and annual report and you would like to sign up to receive these materials electronically in the future, you can choose this option by:

 

 

If you choose to view future proxy statements and annual reports over the Internet, you will receive an e-mail message next year containing a link to the Internet website where you can access our proxy statement and annual report. The e-mail also will include instructions for voting over the Internet. You may revoke this request at any time by following the instructions at http://enroll.icsdelivery.com/usb. Your election is permanent unless you revoke it later.

 

As you may have heard, SEC rules now allow companies to choose to mail their shareholders a notice that their proxy materials can be accessed over the Internet, instead of sending a paper copy of the proxy statement and annual report. Shareholders of companies who choose this delivery method can always request delivery of a paper copy of the proxy materials. We have decided not to adopt this new delivery method for this year’s annual meeting materials. We are considering carefully how to realize the cost savings opportunity and environmental benefits of avoiding the printing and mailing of these documents to shareholders who do not request paper copies, while still maintaining a meaningful and convenient proxy process for our shareholders.

 

Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held on April 21, 2009:

 

Our proxy statement and 2008 Annual Report are available at www.usbank.com/proxymaterials.

 

The following table shows how many shares of our common stock were beneficially owned as of February 23, 2009, by:

 

 

Unless otherwise noted, the shareholders listed in the table have sole voting and investment power with respect to the shares of common stock owned by them, and such shares are not subject to any pledge.

 

 

 

 

 

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors to file initial reports of ownership and reports of changes in ownership of our securities with the SEC. Executive officers 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 2008 and written representations from the executive officers and directors, we believe that all Section 16(a) filing requirements applicable to our executive officers and directors during 2008 were satisfied.

 

Our Board of Directors currently has 13 members. Until 2007 our Board was divided into three classes and the members of each class were elected to serve a three-year term with the term of office for each class ending in consecutive years. At our 2007 annual meeting, our shareholders approved amendments to our Restated Certificate of Incorporation that provided for the phased-in elimination of the classification of our Board and the annual election of our directors. These amendments resulted in the directors at our 2008 annual meeting and thereafter being elected to one-year terms, but did not shorten the term of any director elected prior to our 2008 annual meeting.

 

Warren R. Staley and Peter H. Coors served as directors during 2008 until their retirements on April 15, 2008, and September 30, 2008, respectively.

 

Douglas M. Baker, Jr., Y. Marc Belton, Richard K. Davis, Joel W. Johnson, David B. O’Maley, O’dell M. Owens, M.D., M.P.H., Craig D. Schnuck and Patrick T. Stokes have been nominated by the Governance Committee for election to the Board to serve until the 2010 annual meeting or until their successors are elected and qualified. Mr. Belton, who was elected to our Board in March 2009, was initially identified as a possible director candidate by an independent director search consultant engaged by the Governance Committee to assist with the director search process.

 

Each of the nominees has agreed to serve as a director if elected. Proxies may not be voted for more than eight directors. If, for any reason, any nominee becomes unable to serve before the election, the persons named as proxies will vote your shares for a substitute nominee selected by the Board of Directors. Alternatively, the Board of Directors, at its option, may reduce the number of directors that are nominated for election.

 

The election of each nominee requires that the number of votes cast “FOR” the nominee’s election exceed the votes cast “AGAINST” that nominee’s election.

 

The Board of Directors recommends a vote FOR election of the eight nominated directors. Proxies will be voted FOR the election of the eight nominees unless otherwise specified.

 

The nominees for election as directors and the directors whose terms of office will continue after the meeting have provided the following information about themselves. Dates listed for the nominees and continuing directors include service as directors of predecessor companies to U.S. Bancorp.

 

 

 

 

Our Board of Directors and management are dedicated to exemplary corporate governance. Good corporate governance is vital to our continued success. Our Board of Directors has adopted the U.S. Bancorp Corporate Governance Guidelines to provide a corporate governance framework for our directors and management to effectively pursue our objectives for the benefit of our shareholders. The Board reviews and updates these guidelines and the charters of the Board committees at least annually in response to evolving “best practices” and the results of annual Board and committee evaluations. Our Corporate Governance Guidelines, as well as our Code of Ethics and Business Conduct, can be found at www.usbank.com by clicking on “About U.S. Bancorp” and then “Corporate Governance.” Shareholders may request a free printed copy of our Corporate Governance Guidelines and our Code of Ethics and Business Conduct from our investor relations department by contacting them at investorrelations@usbank.com or by calling (866) 775-9668.

 

Our Board of Directors has determined that each of our directors other than Richard K. Davis has no material relationship with U.S. Bancorp and is independent. Mr. Davis is not independent because he is an executive officer of U.S. Bancorp.

 

Each of our Audit, Governance and Compensation and Human Resources Committees is composed only of independent directors. Our procedures for assessing director independence are described in detail below and under the heading “Certain Relationships and Related Transactions—Review of Related Person Transactions” in this proxy statement.

 

Our Board has adopted certain standards to assist it in assessing the independence of each of our directors. Absent other material relationships with U.S. Bancorp, a director of U.S. Bancorp who otherwise meets the independence qualifications of the NYSE listing standards may be deemed “independent” by the Board of Directors after consideration of all of the relationships between U.S. Bancorp, or any of our subsidiaries, and the director, or any of his or her immediate family members (as defined in the NYSE listing standards), or any entity with which the director or any of his or her immediate family members is affiliated by reason of being a partner, officer or a significant shareholder thereof. However, ordinary banking relationships (such as depository, lending, transfer agency, registrar, trust and custodial, private banking, investment management, securities brokerage, cash management and other services readily available from other financial institutions) are not considered by the Board in determining a director’s independence, as the Board considers these relationships to be categorically immaterial. A banking relationship is considered “ordinary” if:

 

 

In assessing the independence of our directors, our Governance Committee and full Board carefully considered all of the business relationships between U.S. Bancorp and our directors or their affiliated companies, other than ordinary banking relationships. This review was based primarily on responses of the directors to questions in a questionnaire regarding employment, business, familial, compensation and other relationships with U.S. Bancorp and our management. Where relationships other than ordinary banking relationships existed, the Board determined that, except in the case of Mr. Davis, none of the relationships between U.S. Bancorp and the directors or the directors’ affiliated companies impair the directors’ independence because the amounts involved are immaterial to the directors or to those companies when compared to their annual income or gross revenues. The Board also determined that, for all of the

relationships between U.S. Bancorp and our directors or the directors’ affiliated companies, none of the relationships had unique characteristics that could influence the director’s impartial judgment as a director of U.S. Bancorp.

 

The business relationships between U.S. Bancorp and our directors or the directors’ affiliated companies that were considered by the Board were:

 

 

The Board also considered the relationship between U.S. Bancorp and Craig D. Schnuck that is described later in this proxy statement under the heading “Certain Relationships and Related Transactions.”

 

Director Qualification Standards.  We will only consider as candidates for director individuals who possess the highest personal and professional ethics, integrity and values, and who are committed to representing the long-term interests of our shareholders. In evaluating candidates for nomination as a director of U.S. Bancorp, the Governance Committee will also consider other criteria, including current or recent experience as a chief executive officer of a public company or as a leader of another major complex organization; business and financial expertise; geography; experience as a director of a public company; gender and ethnic diversity on the Board; independence; and general criteria such as ethical standards, independent thought, practical wisdom and mature judgment. In addition, directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on the Board for an extended period of time. One or more of our directors must possess the education or experience required to qualify as an audit committee financial expert.

 

Director Nominee Selection Process.  The selection process for director candidates includes the following steps: (1) identification of director candidates by the Governance Committee based upon suggestions from current directors and executives and recommendations received from shareholders; (2) possible engagement of a director search firm to provide names and biographies of director candidates for the Governance Committee’s consideration; (3) interviews of candidates by the chairman of the Governance Committee and two other Governance Committee members; (4) reports to the Board by the Governance Committee on the selection process; (5) recommendations by the Governance Committee; and (6) formal nomination by the Board for inclusion in the slate of directors at the annual meeting. Director candidates recommended by shareholders are given the same consideration as candidates suggested by directors and executive officers. A shareholder seeking to recommend a prospective candidate for the Governance Committee’s consideration should submit the candidate’s name and sufficient written information about the candidate to permit a determination by the Governance Committee whether the candidate meets the director selection criteria set forth in our Corporate Governance Guidelines. Recommendations should be sent to the Board of Directors in care of the Corporate Secretary of U.S. Bancorp at the address listed on page 5 of this proxy statement.

 

The Board of Directors conducts its business through meetings of the Board and the following standing committees: Audit; Governance; Compensation and Human Resources; Risk Management; Community Reinvestment and Public Policy; and Executive. The standing committees regularly report on their deliberations and actions to the full Board. Each of the standing committees has the authority to engage outside experts, advisors and counsel to the extent it considers appropriate to assist the committee in its work. Each of the standing committees has adopted and operates under a written charter. These charters can be found on our website at www.usbank.com by clicking on “About U.S. Bancorp” and then “Corporate Governance.” Shareholders may request a free printed copy of any of these charters from our investor relations department by contacting them at investorrelations@usbank.com or by calling (866) 775-9668.

 

The Board of Directors held twelve meetings during fiscal year 2008. Each director attended at least 75% of the total meetings of the Board and Board committees on which the director served during the fiscal year.

 

The following table shows the membership of each Board committee.

 

Committee Membership

 

 

Audit Committee

 

The Audit Committee is responsible for assisting the Board of Directors in its oversight of the quality and integrity of our financial statements, including matters related to internal controls, our compliance with legal and regulatory requirements, the qualifications and independence of our independent auditor, the integrity of the financial reporting processes, both internal and external, and the performance of our internal audit function and independent auditor. The Audit Committee has sole authority to retain and terminate the independent auditor and is directly responsible for the compensation and oversight of the work of the independent auditor. All of the Audit Committee members meet the independence and experience requirements of the NYSE and the SEC. The Audit Committee charter generally prohibits Audit Committee members from serving on more than two other public company audit committees. Our Board of Directors has identified Olivia F. Kirtley, our Audit Committee chairman, as an audit committee financial expert under the rules of the SEC. The Audit Committee held eight meetings in 2008. During three of the meetings, the Audit Committee met in private session with our independent auditor and during four of the meetings met alone in executive session without members of management present.

Governance Committee

 

The Governance Committee is responsible for discharging the Board’s responsibilities relating to corporate governance matters, including developing and recommending to the Board a set of corporate governance principles, overseeing succession planning for our chief executive officer, and identifying and recommending to the Board individuals qualified to become directors. The Governance Committee also manages the performance review process for our current directors, oversees the evaluation of management, and makes recommendations to the Board regarding any shareholder proposals. All of the Governance Committee members meet the independence requirements of the NYSE. The Governance Committee held eight meetings in 2008. During each of the six regularly scheduled meetings and one special meeting, the Governance Committee held an executive session without members of management present.

 

Compensation and Human Resources Committee

 

The Compensation and Human Resources Committee is responsible for discharging the Board’s responsibilities relating to the compensation of our executive officers and non-employee directors and approving our compensation plans, practices and programs. The Compensation and Human Resources Committee also evaluates the chief executive officer’s performance and the succession plans for executive officers other than our chief executive officer. All of the Compensation and Human Resources Committee members meet the independence requirements of the NYSE. The Compensation and Human Resources Committee held six meetings in 2008. During each meeting, the Compensation and Human Resources Committee held an executive session without members of management present.

 

Risk Management Committee

 

The Risk Management Committee is responsible for providing oversight of our risk management function including our policies, procedures and practices relating to the management of credit risk; financial, liquidity and market risk; and operational risk. The Risk Management Committee also approves and makes recommendations to the Board of Directors regarding the issuance or repurchase of debt and equity securities, reviews and evaluates potential mergers and acquisitions, and reviews other actions regarding our capital stock, including our dividend policy. The Risk Management Committee held eight meetings in 2008. During each of the six regularly scheduled meetings, the Risk Management Committee held an executive session without members of management present.

 

Community Reinvestment and Public Policy Committee

 

The Community Reinvestment and Public Policy Committee is responsible for reviewing and considering our position and practices on matters of public interest and public responsibility and similar issues involving our relationship with the community at large. This includes reviewing our activities, performance and compliance with the Community Reinvestment Act and fair lending regulations, and reviewing our policies and procedures with respect to sustainability and corporate political contributions. The Community Reinvestment and Public Policy Committee held four meetings in 2008. During each of the four regularly scheduled meetings, the Community Reinvestment and Public Policy Committee held an executive session without members of management present.

 

Executive Committee

 

The Executive Committee has authority to exercise all powers of the Board of Directors between regularly scheduled Board meetings. The Executive Committee did not meet in 2008.

 

Our Board of Directors has established guidelines with respect to the role of our lead director. In the absence of an independent chairman, the lead director has the following responsibilities:

 

 

Our Amended and Restated 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 vote 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.

 

The 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 that 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.

Each director nominee named in this proxy statement has tendered an irrevocable resignation as a director in accordance with our Corporate Governance Guidelines, which resignation will become effective if he fails to receive the required vote for election at the annual meeting and the Board accepts his resignation.

 

Our non-employee directors meet in executive session at each regular meeting of the Board without the chief executive officer or any other member of management present, and the independent directors meet alone on an annual basis. The lead director presides at all of these sessions. The role of lead director is rotated annually among the chairmen of each committee other than the Executive Committee. The chairman of the Community Reinvestment and Public Policy Committee is currently acting as the lead director.

 

Policy Regarding Service on Other Boards.  Our Board of Directors has established a policy that restricts our directors from serving on the boards of directors of more than three public companies in addition to their service on our Board of Directors unless the Board determines that such service will not impair their service on the U.S. Bancorp Board. Currently, no directors exceed this restriction.

 

Policy Regarding Attendance at Annual Meetings.  We encourage, but do not require, our Board members to attend the annual meeting of shareholders. Last year all of our directors attended the annual shareholders’ meeting.

 

Retirement Policy.  Our Board of Directors has established a guideline that an independent director retire at the first annual meeting of shareholders held after his or her 72nd birthday.

 

Compensation Philosophy

 

Recent Developments.  The compensation philosophy described here underlies the compensation decisions made by the Compensation and Human Resources Committee (the “Compensation Committee”) relating to the 2008 compensation of our executive officers. The cash incentive bonus and long-term equity incentive compensation portions of the 2008 compensation package for our executives were determined at the January 2009 meeting of the Compensation Committee. Since that time, significant new restrictions have been imposed on the compensation of our executive officers under the American Recovery and Reinvestment Act of 2009 (the “ARRA”).

 

In November 2008, our company participated in the Capital Purchase Program of the government’s Troubled Asset Relief Program (“TARP”) by issuing preferred stock and warrants to the U.S. Department of the Treasury. As a TARP participant, we will be prohibited under the ARRA from, among other things, paying or accruing any bonus, retention award or incentive compensation to our 25 most highly compensated employees, including all of our executive officers, for 2009 and during the remainder of the time period of our TARP participation. An incentive payment in the form of long-term restricted stock may be permitted to be granted to these individuals. The Compensation Committee will consider these new limits and their impact on the compensation program for its executive officers for 2009, which will necessarily differ significantly from the structure described below during the remaining time period of our TARP participation.

 

The ARRA contained numerous other restrictions on executive compensation, which are reflected in this Compensation Discussion and Analysis to the extent they impact this discussion.

 

Guiding Principles.  U.S. Bancorp’s compensation philosophy is to structure compensation awards to members of our executive management to directly align their interests with those of our shareholders. Our executive compensation program is intended to attract, motivate, reward and retain the management talent required to achieve our corporate objectives and increase shareholder value, while at the same time making the

most efficient use of shareholder resources. This compensation philosophy puts a strong emphasis on pay for performance, and has emphasized equity awards as a significant component in order to correlate the long-term growth of shareholder value with management’s most significant compensation opportunities. At the same time, the company recognizes the risks inherent in putting too great an emphasis on any one form of equity award, and has implemented its goal of aligning management’s interests with those of our shareholders by using a mix of equity awards that reduces the motivation toward excessive risk-taking behaviors.

 

The three primary components of total direct compensation for our senior executives are:

 

 

On a longer-term basis, we also provide members of senior management with retirement benefits that are earned over their career with U.S. Bancorp.

 

Historically, the relative weighting of the three components of compensation has been designed to strongly reward long-term performance by heavily emphasizing the proportion of long-term equity compensation. In light of the changing economic environment and the heightened sensitivity to incentives that encourage management risk-taking, the Compensation Committee, with the support of its independent compensation advisor, determined to reallocate the relative weightings of these components beginning in July 2008. This reallocation was intended to place more emphasis on base pay and total cash compensation and to decrease the relative long-term equity component of compensation as a percentage of an executive’s total compensation. The relative proportions of base salary, annual cash incentive and long-term equity compensation described here will necessarily be modified for 2009 compensation and during the remaining time period of our TARP participation.

 

 

Stock Ownership.  The Compensation Committee believes that the ownership of our common stock by senior management directly aligns their interests with those of our other shareholders and also helps balance the incentives for risk-taking inherent in equity-based awards. The Compensation Committee established stock ownership guidelines for executive officers in 2002. The requirement for the chief executive officer is ownership of stock valued at five times current annual salary. The stock ownership requirement for other executive officers is ownership of stock valued at four times current annual salary. All of the executive officers named in the Summary Compensation Table in this proxy statement currently hold sufficient amounts of our common stock to meet or exceed the stock ownership requirements.

 

Company-wide Pay Philosophy.  Our company firmly believes that, while the strategic and leadership responsibilities of executive management require commensurate levels of compensation, the contributions of our other managers and employees are also critical to our long-term success. These individuals must also have compensation opportunities that are competitive in the marketplace and in proportion to their contributions and responsibilities. Their compensation program should involve greater risks and rewards as they gain levels of increased responsibility with U.S. Bancorp. In 2008, which was a very challenging year for U.S. Bancorp because of economic and marketplace conditions, our senior management employees who were not executive officers received annual cash bonuses that were below target levels, but that were reduced to a lesser degree than the executive management bonuses. The overall award pool for this group was funded at 72% of aggregate target level. The overall funding for this group was based on a new, formulaic approach based on the overall performance of our company and the performance of the individual business lines. In determining the total pool, the company’s overall performance as measured against an EPS target set at the beginning of the year was weighted 35%, and the performance of the business lines against their 2008 annual financial plan, also set at the beginning of the year, was weighted 65%. A pre-defined multiplier was then used to magnify the positive or negative percentage correlation between actual results and plan. This formulaic structure increases transparency and predictability for our employees, giving them confidence that incentive compensation will be paid if corporate goals are met by limiting discretionary modifications of the bonus pool by executive management, and clearly aligning their incentives with corporate performance and shareholder interests.

 

Components of our Compensation Program

 

Base Pay

 

Under the compensation structure followed by the Compensation Committee since July 2008, the levels of base salaries for our executive officers have been generally targeted at the median level of our peer group or, to the extent their experience warrants, at higher levels. An individual’s position relative to the median pay level is based on a variety of factors, including experience and tenure in a position, scope of responsibilities, individual performance, and personal contributions to corporate performance. Annual increases, if any, are based on these same factors. Highly experienced and long-tenured executives would not typically receive an increase in base pay each year. However, in July 2008, all members of our managing committee, other than our chief executive officer, received an increase of 15% in base pay to bring it to the peer median, as a result of the change in our compensation design to increase the proportion of base salary as part of an executive’s total direct compensation. In January 2009, however, all members of our managing committee, including our chief executive officer, elected to reduce their base salary by 5% as part of an effort to reduce corporate expense. Our managing committee is made up of our chief executive officer and his direct reports. The median pay levels are determined from survey information provided by nationally recognized consulting firms that gather compensation data from many companies. The specific companies included in the peer group are listed

below under “Compensation Determination and Policies—Use of Consultants and Peer Group Analysis.” The base pay component of total compensation is paid in cash on a semi-monthly basis.

 

Annual Cash Incentives

 

Under the compensation program in place for 2008, the executive officers named in the Summary Compensation Table below had an opportunity to receive cash incentives to reward them for achieving the corporate and business line financial objectives established in advance by the Compensation Committee as well as individual performance goals. These awards are granted under our 2006 Executive Incentive Plan (the “EIP”), which is administered by the Compensation Committee.

 

On an annual basis, the Compensation Committee has set a target percentage of base pay for each executive’s annual cash bonus amount. The target levels for 2008 were intended to give executives the opportunity for total annual cash compensation to be in approximately the 70th to 80th percentile range of our peer group, assuming corporate and individual performance met performance goals. Cash bonus targets for the executive officers named in the Summary Compensation Table below ranged from 120% to 225% of base salary. Consistent with our strong pay for performance philosophy and as described above, annual bonus targets were set at levels that made more than half of an executive officer’s total cash compensation dependent upon our financial results. At the end of the year, the Compensation Committee reviews various measures of corporate performance in order to determine the amount of an individual’s target bonus that will be awarded. The individual awards for 2008 performance granted to each of the executive officers named in the Summary Compensation Table below are discussed below under “Performance of Individual Named Executive Officers.”

 

In considering cash bonus awards for 2008, the Compensation Committee reviewed corporate performance against:

 

 

The Compensation Committee considered that U.S. Bancorp’s EPS for 2008 was $1.61, which was below the target of $2.71 that had been set by the Committee for 2008 performance. However, it was clear to the Committee at the time that compensation decisions were being made that U.S. Bancorp’s corporate performance would be among the best, if not the best, of our peer group in many of the standard industry performance measures. The Committee also recognized that the challenging and volatile economic climate had a substantial impact on overall corporate performance in 2008, and that the positive performance against the company’s peers resulted from a prudent approach to risk management and balance sheet management over the past several years. In addition, the Compensation Committee also gave significant weight to the fact that our business lines had together achieved 99% of their 2008 operating income goals in a challenging economic climate.

 

Although no targets were set with respect to industry performance measures, the Compensation Committee gave significant weight to our performance relative to the other nine financial institutions

comprising our peer group with respect to the following items in determining to pay our senior executive officers a percentage of their target cash bonus amount:

 

One-Year Performance Relative to Peers

 

 

The maximum award that can be made under the 2006 Executive Incentive Plan is based on net income. The terms of the EIP set a maximum award level of 0.2% of net income for the performance year as the maximum award that can be given to any executive under the EIP for that year, and the factors described above are then used by the Compensation Committee to determine the appropriate lesser amount for an executive’s incentive bonus award. This maximum award amount was established principally to position the EIP to comply with IRS Section 162(m) regulations, and is not indicative of the level of actual awards.

 

In determining the appropriate amount for the cash bonus payments for these senior executive officers, the Compensation Committee first looked at the cash bonus formula that had been developed for administering the incentive plans that apply to the other senior managers and employees in the company and described above under “Compensation Philosophy—Company-wide Pay Philosophy.” For those incentive plans in 2008, this formula dictated the size of the cash bonus pools for each business line by weighting 35% of the pool amount on achievement of the corporate EPS goal and 65% of the pool amount on achievement of that business line’s operating income goals that were contained in their 2008 financial plans. In determining the final funding for each portion of the pool, a pre-defined multiplier was used to magnify the positive or negative percentage correlation between actual results and the financial plan. The business lines in the aggregate achieved 99% of their operating income targets for 2008, which translated into 96% funding for the 65% portion of the cash bonus targets, or 62% of the total award target. Unlike the result of application of the bonus formula for the other managers and employees, which used a measure of EPS that excluded certain extraordinary financial events that occurred during the year, no part of the bonus amount was earned for managing committee members under the corporate EPS portion of the formula. The Compensation Committee determined that a cash bonus award of 62% of target was appropriate for these senior executive officers because the business lines in the aggregate delivered very near targeted financial plan results relative to revenues and expenses, resulting in operating income at near-target levels during exceptionally difficult economic times, and because the award was based on the same formulaic approach the Compensation Committee had approved for determining the incentive awards to other senior managers and employees.

 

Our chief executive officer and chief financial officer decided to decline the cash bonuses awarded to them by the Compensation Committee in light of the company’s financial results not meeting the 2008 financial plan, the depressed level of the price of the company’s common stock, and the general economic environment. The rest of the managing committee received their cash bonuses at the end of January 2009.

 

The Compensation Committee also reviews and sets targets for the Annual Incentive Plan, the Relationship Manager Incentive Plan and the Performance Bonus Plan. These annual bonus plans apply to our employees other than the executive officers named in the Summary Compensation Table below. Consistent with our pay for performance philosophy, all employees are eligible for some form of annual incentive opportunity. The Compensation Committee also considers the recommendations of the chief executive officer for the compensation of each of the other executive officers.

Under the ARRA, we expect there to be a prohibition on payment of cash bonuses with respect to performance for 2009 and during the remainder of the time period of our participation in the TARP. The Compensation Committee is considering the impact of the legislative and regulatory restrictions on its compensation program design.

 

Long-term Incentive Awards

 

Executive officers are also eligible for an annual long-term incentive compensation award. These awards are granted under the U.S. Bancorp 2007 Stock Incentive Plan, which is administered by the Compensation Committee. Stock options, restricted stock, restricted stock units and other performance-based stock awards may be granted under the plan. The range of the potential dollar amounts of the long-term incentive awards has been primarily based on the peer group compensation surveys discussed below. In prior years, initial award targets had been set above the 75th percentile of our peer group, which was intended to bring total target compensation levels up to approximately the 55th to 65th percentile level of the peer group if corporate and individual performance targets were met. Until 2009, individual long-term incentive awards had generally been above this range, bringing total direct compensation (total cash compensation and long-term awards) up to the 65th to 95th percentile of the peer group. The Compensation Committee determined that, for the grants made in 2009, the target award for long-term incentive compensation should be set at or near the 75th percentile of our peer group. This target level is reduced from that set in prior years, to compensate for the increase in the target level for base pay. U.S. Bancorp is at approximately the 55th percentile in terms of asset size, and 69th percentile in terms of market capitalization, within our peer group. The factors considered in setting individual awards include corporate performance and individual responsibilities and performance. The goal of the Compensation Committee in granting equity awards has been to encourage executives to take prudent and reasonable risks in managing the business and to make decisions based on long-term considerations for the shareholders, employees, customers and communities we serve.

 

For the four years prior to 2009, the entire long-term component of senior executive compensation was provided in the form of stock options that vest ratably over four years. In 2009, the Compensation Committee changed the form of the long-term component of compensation to a mix of 50% stock options and 50% performance-based restricted stock units. This change served several objectives of the Compensation Committee. The Compensation Committee recognized that equity grants in the form of 100% stock options created the potential for heightened levels of risk-taking behavior. The restricted stock units align the incentives of executives with those of the shareholders while providing certainty of some level of payment, which moderates the incentives for risk-taking by management. At the same time, the terms of the stock units provide a performance-based feature in the number of units ultimately earned under each grant, which enhances the pay-for-performance aspect of this form of compensation. The awards also provide retention value during periods of extreme stock market volatility, and the Compensation Committee took into consideration that including some form of full-value shares in the long-term portion of total compensation was more consistent with the compensation structures of our peers. The long-term incentive award continues to include a portion of stock options because they create value for the executive only if shareholder value is increased through an increased share price and are inherently performance-based. The Compensation Committee believes that the use of both restricted stock units and stock options creates a prudent balance between the certainty of some level of payment and risk of no payment.

 

The restricted stock units that make up 50% of the value of the 2009 long-term incentive award vest ratably over four years, and the number of shares subject to the award is initially based on the closing market price on the date of grant. However, the ultimate number of restricted stock units subject to the award is adjusted upward or downward at the end of the first year, based on corporate performance. At the time of grant, the Compensation Committee set one-year targets for the company’s ROE performance relative to its peer group and relative to the target contained in management’s financial plan. At the end of the first year following the grant date, the number of units subject to the grant may increase to as much as 150%, or decrease to as little as 25%, of the initial number of units, based on the company’s one-year performance against the ROE targets. These adjustments are determined by reference to a sliding scale that takes into consideration the amount of variance from the target ROE measures, which provides for a performance-based

award while mitigating some incentives for risk-taking that may accompany an “all-or-nothing” adjustment. The Compensation Committee determined to use ROE as the performance measure in the restricted stock units because that measure reflects both the condition of the company’s balance sheet and the strength of its earnings, requiring a balance between the preservation of capital and the creation of income. The Compensation Committee believes that achievement of the ROE goals necessary to earn 100% of the target award to be moderately challenging in order to create incentives for superior performance without incentivizing unreasonable risk-taking that could be encouraged by goals that are not realistically achievable.

 

The stock options that make up 50% of the value of the 2009 long-term incentive grant vest ratably over four years from the grant date and have a ten-year life. Their exercise price is equal to the closing market price on the date of grant. The number of option shares awarded was based on the same estimated value of an option to purchase one share of our common stock, determined using the Black-Scholes option-pricing model, used for financial reporting purposes under FAS 123R. These terms are the same as those of the options granted in 2008 and are the same as those granted to the approximately 2,700 other managers that are currently eligible for annual equity awards under the 2007 Stock Incentive Plan. The significant assumptions used in the calculation of the estimated Black-Scholes value of the March 2009 and January 2008 option awards were as follows:

 

 

Under the ARRA, we expect there to be a prohibition on payment of equity incentive awards, other than a limited amount of restricted stock, for 2009 compensation and during the remainder of the time period of our participation in the TARP. The Compensation Committee is considering the impact of the new legislative and regulatory restrictions on its compensation program design.

 

Compensation Determination and Policies

 

Determination of Compensation.  The Compensation Committee of the Board of Directors is composed entirely of independent outside directors and is responsible for setting our compensation policy. The Compensation Committee has responsibility for setting each component of compensation for the chief executive officer with the assistance and guidance of an independent professional compensation advisor. The Compensation Committee also sets the total compensation amount and composition for members of the Board of Directors. The chief executive officer and the executive vice president of human resources, with the help of an independent compensation consultant, develop initial recommendations for all components of compensation for the direct reports of the chief executive officer, and present their recommendations to the Compensation Committee for review and approval.

 

Use of Consultants and Peer Group Analysis.  Beginning in 2008, the Compensation Committee retained Frederic W. Cook & Co., Inc. to provide expertise regarding competitive compensation practices, peer analysis, and recommendations to the Compensation Committee for guidance in setting the pay of the chief executive officer and the other members of our managing committee. Using peer information as a point of reference, the Compensation Committee focuses on corporate and individual performance in determining each component of compensation. In setting the compensation of our chief executive officer and the other members of our managing committee, the Compensation Committee used the same financial services peer group for comparative compensation data that management uses for annual financial performance comparisons. For 2008, this peer group was comprised of the following companies: Bank of America Corporation, BB&T Corporation, Comerica Incorporated, Fifth Third Bancorp, KeyCorp, National City Bancorporation, The PNC Financial Services Group, Inc., Regions Financial Corporation, SunTrust Banks, Inc., Wachovia Corporation,

Washington Mutual, Inc. and Wells Fargo & Company. In light of the significant changes in the banking industry in the past year, the peer group for 2009 will be comprised of the following companies:

 

 

Most, but not all, of these peer group banks are also included in the Standard & Poor’s 500 Commercial Bank Index, which is used in the stock performance chart presented on page 117 of our 2008 Annual Report. The same peer group was used for comparative compensation data in setting the pay of our other executive officers. Peer group data for 2008 was based on annual survey information and publicly available data relating to the prior year’s compensation that is updated by the use of estimates, because the final compensation data for the peer group for the current calendar year was not yet available when the Compensation Committee made its determinations.

 

Risk Analysis.  In view of the current economic and financial environment, the Compensation Committee undertook to review our executive compensation program to assess whether any aspect of the program would encourage any of our executives to take any unnecessary or inappropriate risks that could threaten our company’s value. In this regard, the Compensation Committee met with our chief financial officer, chief credit officer and chief risk officer in the fourth quarter of 2008 to develop deeper understanding of the material risks that the Company currently faces.

 

We operate in a highly complex business environment, where we compete with many well-established financial institutions. Our long-term business objectives require that we increase our revenues year-over-year, maintain profitability in each year, and increase our share of the financial market. We believe that if we are successful in achieving these objectives, the results will inure to the financial benefit of our shareholders. Accordingly, we have designed our executive compensation program to reward our executives for achieving annual and long-term financial and business results that meet these objectives. Specifically, the amount of incentive compensation received by our executive officers is directly related to both company and individual performance results.

 

We recognize that, in general, the pursuit of these objectives could lead to behaviors that focus executives on short-term performance to increase their individual compensation, rather than on our long-term welfare. If this were to occur, it could weaken the link between pay and performance, and therefore, result in less correlation between the compensation delivered to our executives and the return realized by our shareholders.

 

During 2008, the Compensation Committee reviewed the elements and design of our compensation plans and programs to ensure that they are consistent with appropriate levels of risk-taking for our executives. Certain elements of our compensation plans and programs that encourage appropriate levels of risk-taking by our executives, including some changes resulting from Compensation Committee deliberations occurring over the past several years, include:

 

 

 

Policies for Equity Award Grants.  Stock options have been a critical component of our compensation strategy and our goal of aligning management’s interests with those of shareholders. Stock option awards for members of the managing committee have historically been made once a year at the January meeting of the Compensation Committee. For 2009, the Compensation Committee changed the form of equity awards granted to a mix of 50% stock options and 50% performance-based restricted stock units, both of which have a four-year vesting period. Previously, the equity awards granted by the Compensation Committee had consisted of 100% stock options. For the awards granted in 2008, stock option awards to members of the managing committee were approved at the January 2008 Compensation Committee meeting and the grant date and price were set at the closing price on the first day of the trading window period immediately following the regularly scheduled January meeting of the Board of Directors of U.S. Bancorp. The trading window period is the period of time in each calendar quarter in which our directors and officers who are not in possession of material nonpublic information are free to buy or sell our securities. The trading window period is generally a period of 20 trading days commencing on the first trading day after the day on which we release our quarterly or annual operating results. For the awards granted in 2009, the dollar value of the individual equity awards to the members of the managing committee was determined by the Compensation Committee at its January 2009 meeting and promptly communicated to all executive officers, but the grant date was March 2, 2009, the day of an additional Compensation Committee meeting relating to these awards. The option exercise price and the initial number of shares subject to the restricted stock unit grant used the closing price on that date. Both Mr. Davis and Mr. Cecere declined to accept the long-term incentives awarded to them by the Compensation Committee in 2009.

 

Since 2007, equity grants to new employees have been made only four times during the year. The grant date and exercise price were based on the closing price on the first day of the next trading window period following the date of hire. We have never had a program or practice of timing our equity grants to the release of non-public information with the purpose of affecting the value of executive compensation. The number of shares subject to each grant is determined based upon our stock price at the close of trading on the grant date and the estimated value of an option to purchase one share of our common stock, as determined by the Black-Scholes option-pricing model. New hire grants are made using delegated authority from the Compensation Committee to our chief executive officer in his capacity as a director. All delegation complies with applicable state law, the charter of the Compensation Committee and our applicable equity compensation plans.

 

Delegated authority may not be used to make grants to anyone who is an officer described in Section 16 of the Securities Exchange Act or who is a covered executive under Section 162(m) of the Internal Revenue Code, as amended. Those grants must be, and are, made by the Compensation Committee.

 

The Compensation Committee has maintained a consistent policy against repricing stock options, and option repricings are prohibited by our 2007 Stock Incentive Plan without shareholder approval.

 

Tax Deductibility of Pay.  As a participant in TARP, U.S. Bancorp is subject to additional restrictions on tax deductibility of pay under Section 162(m) of the Internal Revenue Code. For the time period of our participation in TARP, compensation paid to certain senior executive officers (generally, the executive officers named in the Summary Compensation Table below) is not deductible to the extent it exceeds $500,000. Compensation paid to those officers after November 14, 2008, the date of our participation in TARP, is subject to this limitation. As a result of this limitation, a pro-rata portion of the 2008 base salaries, cash bonuses and the ultimate value realized from equity awards to the executive officers named in the Summary Compensation Table below will not be deductible for tax purposes. In evaluating whether to apply for TARP funds, management considered the extra tax cost of its existing compensation structure and practices. Given the current base salaries of the executive officers named in the Summary Compensation Table below, the portion

of their base salaries above $500,000, all of their cash bonuses, and all of the future value of their equity awards for 2009 will not be deductible.

 

Once we are no longer a participant in TARP, we will be subject to the standard limits of Section 162(m), which provides that compensation in excess of $1 million that is not paid pursuant to a plan approved by shareholders and does not satisfy the performance-based exception of Section 162(m) is not deductible as a compensation expense to U.S. Bancorp. Compensation decisions for the executive officers are made with full consideration of the implications of Section 162(m). Although the Compensation Committee intends to structure arrangements in a manner that preserves deductibility under Section 162(m), it believes that maintaining flexibility is important and reserves the right to pay amounts or make awards that are nondeductible. The EIP and the U.S. Bancorp 2007 Stock Incentive Plan were approved by our shareholders and include the provisions necessary to make payments and grant awards that satisfy the performance-based exception under Section 162(m). Annual incentive bonuses under the EIP and stock option awards granted under the 2007 Stock Incentive Plan are intended to meet the performance-based exception under Section 162(m).

 

Total Compensation and Tally Sheets.  The total annual compensation of the executive officers named in the Summary Compensation Table below is reviewed and approved by the Compensation Committee. Our peer group data would indicate that in 2008, the total annual compensation of these executive officers, other than our chief executive officer, generally fell within the 65th to 95th percentile range of total compensation for the comparable executives in the peer group. This positioning reflects a number of factors, including our relative size and market capitalization within our peer group. By this data, our chief executive officer’s total compensation was below the 25th percentile of the peer group. Prior year statistics, updated by the use of estimates, are used for comparative data because current year data is not available at the time of analysis. However, 2008 compensation amounts actually paid to executive officers in our peer group may differ significantly from these estimates, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

In addition to the review of total annual compensation, a tally sheet was prepared for the chief executive officer summarizing his total compensation for the past three calendar years, the current value of outstanding vested and unvested equity awards (both options and restricted stock) based on year-end fair market value (using the Black-Scholes option-pricing model for stock options), deferred compensation balances, pension benefits and the value of any perquisites. For the other executive officers named in the Summary Compensation Table below, the compensation amounts, equity awards, equity values, pension benefits and deferred compensation amounts for the tables in this proxy statement were reviewed by the Compensation Committee. The Compensation Committee believes these amounts were appropriate based on the compensation philosophy and structure described above.

 

During 2007, the Compensation Committee reviewed the change-in-control agreements we have with certain of our executive officers. The Compensation Committee compared the provisions of these agreements with the change-in-control agreements entered into by the companies in our peer group, and determined that the provisions of our current agreements are appropriate and should be kept in place. The Compensation Committee also took into account that we have a relatively young management team, including our chief executive officer, that the financial services industry is a consolidating industry, and that change-in-control agreements encourage executive officers to focus on long-term corporate growth and performance.

 

Recoupment of Annual Incentives.  The Compensation Committee has had a policy under which it would evaluate the facts and circumstances surrounding a restatement of earnings, if any, and, in its sole discretion, could recoup compensation of our chief executive officer, the members of the managing committee, and others as it deemed appropriate, attributable to incorrectly reported earnings. As required by the terms of the U.S. government’s investment in U.S. Bancorp under TARP, this policy has been strengthened so that, during the time prior to the repayment of TARP funds, U.S. Bancorp will recoup any cash bonuses or long-term incentive awards paid to the executive officers named in the Summary Compensation Table in that year’s

proxy statement, and to any of the next 20 most highly compensated employees, based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate.

 

Performance of Individual Named Executive Officers

 

Mr. Davis

 

Mr. Davis serves as our Chairman, President and Chief Executive Officer. Mr. Davis’s base pay in 2008 was $900,000, an increase of $50,000 (5.9%) over his pay in 2007. For 2009, Mr. Davis, along with the other managing committee members, elected to reduce his base salary by 5% as part of an effort to reduce corporate expense. Mr. Davis’s base pay is below the 25th percentile of the base salary range for a chief executive officer in our peer group. The Compensation Committee awarded Mr. Davis a cash incentive bonus of $1,255,500 under our EIP for the year ended December 31, 2008. This represented 62% of his target award. As discussed above, the Compensation Committee awarded to all members of the managing committee cash bonuses in an amount of 62% of their target awards. However, Mr. Davis declined to accept the award and received no cash bonus for 2008. His total cash compensation for 2008 was therefore $900,000, an increase of $50,000 (5.9%) over 2007. Like our other managing committee members, Mr. Davis did not receive a cash bonus in 2007. However, in 2007 he received a special award of restricted stock valued at $850,000 in lieu of a cash bonus. Considering this special award, his 2008 compensation, before the long-term incentive component, was lower by $800,000 than his 2007 compensation. Based on the data available for the chief executive officer peer group analysis, his total cash compensation for 2008 was below the 25th percentile level, primarily because Mr. Davis declined to accept the cash incentive bonus awarded to him by the Compensation Committee. If he had accepted the cash incentive bonus, his total cash compensation would have been at approximately the 35th percentile level using that analysis. However, 2008 cash and equity compensation amounts actually paid to executive officers in our peer group will likely differ significantly from prior year data, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

The Compensation Committee awarded to Mr. Davis a long-term incentive award in January 2009, valued at $5,000,000, the same value as his 2008 award (made in January 2008). Mr. Davis declined to accept this award and therefore received no long-term incentive grant in 2009. This award would have consisted of stock options to acquire shares of our common stock with an estimated Black-Scholes value of $2,500,000, and a performance-based restricted stock unit award with a grant date value of $2,500,000. Mr. Davis’s total direct compensation for 2008 therefore consisted solely of his base pay of $900,000, a decrease of $5,800,000 (87%) over his total direct compensation in 2007.

 

Mr. Cecere

 

Mr. Cecere serves as our Vice Chairman and Chief Financial Officer. Prior to March 2007, he served as our Vice Chairman, Wealth Management. Mr. Cecere’s base pay in 2008 was $564,375, which was an increase of $118,525 (26.6%) over 2007. All members of our managing committee except our chief executive officer received a 15% base pay increase on July 1, 2008, as part of the change in compensation design discussed above. On a full-year basis, his 2008 base salary was $603,750. In addition to the increase due to our compensation design change, the increase reflected Mr. Cecere’s strong performance as our chief financial officer. However, for 2009, Mr. Cecere, along with the other managing committee members, elected to reduce his base salary by 5% as part of an effort to reduce corporate expense. After these salary adjustments, Mr. Cecere’s annual base pay is at approximately the 60th percentile of the base salary range for a chief financial officer in our peer group. The Compensation Committee awarded Mr. Cecere a cash incentive bonus of $525,000 under our EIP for the year ended December 31, 2008. This represented 62% of his target award. As discussed above, the Compensation Committee awarded to all members of the managing committee cash bonuses in an amount of 62% of their target awards. Like Mr. Davis, Mr. Cecere declined to accept the award and received no cash incentive bonus for 2008. His total cash compensation for 2008 was therefore $564,375, an increase of $118,525 (26.6%) over 2007. Like our other managing committee members, Mr. Cecere did not receive a cash bonus in 2007. However, in 2007 he received a special award of restricted stock valued at

$440,000 in lieu of a cash bonus. Considering this special award, his 2008 compensation, before the long-term incentive component, was lower by $321,475 than his 2007 compensation. Based on the data available for the chief financial officer peer group analysis, his total cash compensation for 2008 ranked below the 25th percentile of total cash compensation for chief financial officers, primarily because Mr. Cecere declined to accept the cash incentive bonus awarded to him by the Compensation Committee. If he had accepted the cash incentive bonus, his total cash compensation would have been at approximately the 55th percentile level using that analysis. However, 2008 cash and equity compensation amounts actually paid to executive officers in our peer group will likely differ significantly from prior year data, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

The Compensation Committee awarded to Mr. Cecere a long-term incentive award in January 2009, valued at $3,000,000, the same value as his 2008 award (made in January 2008). Mr. Cecere declined to accept this award and therefore received no long-term incentive grant in 2009. This award would have consisted of stock options to acquire shares of our common stock with an estimated Black-Scholes value of $1,500,000, and a performance-based restricted stock unit award with a grant date value of $1,500,000. Mr. Cecere’s total direct compensation for 2008 therefore consisted solely of his base pay of $564,375, a decrease of $3,321,475 (85%) over his total direct compensation in 2007.

 

Mr. Chenevich

 

Mr. Chenevich serves as our Vice Chairman, Technology and Operations Services. Mr. Chenevich’s base pay in 2008 was $537,525, which was an increase of $62,525 (13.2%) from 2007. All members of our managing committee except our chief executive officer received a 15% base pay increase on July 1, 2008, as part of the change in compensation design discussed above. On a full-year basis, his 2008 annual base salary was $575,000. However, for 2009, Mr. Chenevich, along with the other managing committee members, elected to reduce his base salary by 5% as part of an effort to reduce corporate expense. After these salary adjustments, Mr. Chenevich’s annual base pay is at approximately the 60th percentile, based on our peer group data. Mr. Chenevich received a $416,500 cash incentive award for 2008 under our EIP. This represented 62% of his target award. As discussed above, the Compensation Committee awarded to all members of the managing committee cash bonuses in an amount of 62% of their target awards. His total cash compensation for 2008 was $954,025, an increase of $479,025 (101%) over 2007. This is primarily due to the fact that, like our other managing committee members, Mr. Chenevich did not receive a cash incentive award in 2007. However, in 2007 he received a special award of restricted stock units valued at $300,000 in lieu of a cash incentive bonus. Considering this special award, his 2008 compensation, before his long-term incentive component, increased by $179,025. Based on the data available for executive officers in our peer group, his 2008 incentive bonus brought his total cash compensation up to approximately the 45th percentile among vice chairmen serving as a chief information officer with operations responsibilities. However, 2008 cash and equity compensation amounts actually paid to executive officers in our peer group will likely differ significantly from prior year data, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

Mr. Chenevich also received a long-term incentive award on March 2, 2009, valued at $2,250,000, a $250,000 decrease over his 2008 award (made in January 2008). This long-term equity award consisted of stock options to acquire 309,917 shares of our common stock with an estimated Black-Scholes value of $1,125,000, and a performance-based restricted stock unit award with a grant date value of $1,125,000. The number of restricted stock units initially granted, based on the closing market price of our common stock on the date of grant, was 85,878 units. As described in more detail above under “Components of our Compensation Program—Long-term Incentive Awards,” the number of units under this award is subject to increase or decrease after one year based on the company’s performance against certain predetermined performance targets. This total equity award was estimated to be among the highest for a vice chairman serving as a chief information officer with operations responsibilities. His total direct compensation for 2008

(base pay, annual cash incentive award and 2009 long-term incentive award) was $3,204,025, a decrease of $70,975 (2%) over his total direct compensation in 2007.

 

Mr. Hartnack

 

Mr. Hartnack serves as our Vice Chairman, Consumer Banking. Mr. Hartnack’s base pay in 2008 was $564,375, which was an increase of $54,375 (11%) from 2007. All members of our managing committee except our chief executive officer received a 15% base pay increase on July 1, 2008, as part of the change in compensation design discussed above. On a full-year basis, his 2008 annual base salary was $603,750. However, for 2009, Mr. Hartnack, along with the other managing committee members, elected to reduce his base salary by 5% as part of an effort to reduce corporate expense. After these salary adjustments, Mr. Hartnack’s annual base pay is at approximately the 65th percentile, based on our peer group data. Mr. Hartnack received a $490,000 cash incentive award for 2008 under our EIP. This represented 62% of his target award. As discussed above, the Compensation Committee awarded to all members of the managing committee cash bonuses in an amount of 62% of their target awards. His total cash compensation for 2008 was $1,054,375, an increase of $544,375 (107%) over 2007. This is primarily due to the fact that, like our other managing committee members, Mr. Hartnack did not receive a cash incentive award in 2007. However, in 2007 he received a special award of restricted stock valued at $360,000 in lieu of a cash incentive bonus. Considering this special award, his 2008 compensation before his long-term incentive component increased by $184,375. Based on the data available for executive officers in our peer group, his 2008 incentive bonus brought his total cash compensation up to approximately the 45th percentile for executive officers with responsibilities similar to Mr. Hartnack’s. However, 2008 cash and equity compensation amounts actually paid to executive officers in our peer group will likely differ significantly from prior year data, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

Mr. Hartnack received a long-term incentive award on March 2, 2009, valued at $1,600,000, the same as his 2008 award (made in January 2008). This long-term equity award consisted of stock options to acquire 220,386 shares of our common stock with an estimated Black-Scholes value of $800,000, and a performance-based restricted stock unit award with a grant date value of $800,000. The number of restricted stock units initially granted, based on the closing market price on the date of grant, was 61,069 units. As described in more detail above under “Components of our Compensation Program—Long-term Incentive Awards,” the number of units under this award is subject to increase or decrease after one year based on the company’s performance against certain predetermined performance targets. This total equity award was estimated to be at the 75th percentile of long-term equity awards for executives in similar positions in our peer group, again based on prior year data, updated by estimates, available at the time of analysis. His total direct compensation for 2008 (base pay, annual cash incentive award and 2009 long-term incentive award) was $2,654,375 an increase of $184,375 (7.5%) over 2007.

 

Mr. Mitau

 

Mr. Mitau serves as our Executive Vice President and General Counsel. Mr. Mitau’s base pay in 2008 was $413,875, which was an increase of $38,875 (10.4%) over 2007. All members of our managing committee except our chief executive officer received a 15% base pay increase on July 1, 2008, as part of the change in compensation design discussed above. On a full-year basis, his 2008 annual base salary was $442,750. However, for 2009, Mr. Mitau, along with the other managing committee members, elected to reduce his base salary by 5% as part of an effort to reduce corporate expense. After these salary adjustments, Mr. Mitau’s annual base pay is at approximately the 55th percentile, based on our peer group data. Mr. Mitau received a $308,000 cash incentive award for 2008 under our EIP. This represented 62% of his target award. As discussed above, the Compensation Committee awarded all members of the managing committee cash bonuses in an amount of 62% of their target awards. His total cash compensation for 2008 was $721,875, an increase of $346,875 (92%) over 2007. This is primarily due to the fact that, like our other managing committee members, Mr. Mitau did not receive a cash incentive award in 2007. However, in 2007 he received a special award of restricted stock units valued at $225,000 in lieu of a cash incentive bonus. Considering this special

award, his 2008 compensation, before his long-term incentive component, increased by $121,875. Based on the data available for executive officers in our peer group, his 2008 incentive bonus brought his total cash compensation up to approximately the 50th percentile for executive officers in similar positions. However, 2008 cash and equity compensation amounts actually paid to executive officers in our peer group will likely differ significantly from prior year data, as a result of turbulence in the industry and in peer corporate performance during 2008, and therefore these estimates of benchmark positioning may not prove to be as accurate as they have been in prior years.

 

Mr. Mitau also received a long-term incentive award on March 2, 2009, valued at $1,200,000, a $100,000 decrease from his 2008 award (made in January 2008). This long-term equity award consisted of stock options to acquire 165,289 shares of our common stock with an estimated Black-Scholes value of $600,000, and a performance-based restricted stock unit award with a grant date value of $600,000. The number of restricted stock units initially granted, based on the closing market price on the date of grant, was 45,802 units. As described in more detail above under “Components of our Compensation Program—Long-term Incentive Awards,” the number of units under this award is subject to increase or decrease after one year based on the company’s performance against certain predetermined performance targets. This total equity award was estimated to be among the highest in the peer group for his position. His total direct compensation for 2008 (base pay, annual cash incentive award and 2009 long-term incentive award) was $1,921,875, an increase of $21,875 (1.2%) over his total direct compensation in 2007.

 

The Compensation Committee has reviewed and evaluated the compensation arrangements of U.S. Bancorp for the executive officers named in the Summary Compensation Table in this proxy statement with the chief financial officer, chief credit officer, and chief risk officer of U.S. Bancorp to determine whether such arrangements encourage excessive and unnecessary risk for U.S. Bancorp. The Compensation Committee certifies that is has reviewed with senior risk officers the compensation arrangements that apply to the executive officers of U.S. Bancorp named in the Summary Compensation Table in this proxy statement and has made reasonable efforts to ensure that such arrangements do not encourage excessive and unnecessary risks that threaten the value of U.S. Bancorp. A further discussion of the Compensation Committee’s risk review and evaluation is included above under the heading “Compensation Determination and Policies—Risk Analysis.”

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in our 2008 Annual Report on Form 10-K.

 

Compensation and Human Resources Committee of the Board of Directors of U.S. Bancorp

 

 

The following table shows the cash and non-cash compensation for each of the last three fiscal years awarded to or earned by individuals who served as our chief executive officer or chief financial officer and each of our three other most highly compensated executive officers during fiscal year 2008.

 

Summary Compensation Table

 

 

 

 

The following table summarizes the equity and non-equity plan-based awards granted in 2008 to the executive officers named in the Summary Compensation Table. This table does not include the equity awards granted in 2009, which are discussed above. The first line of information for each executive contains information about the 2008 cash awards (paid in January 2009) that each executive was eligible for under our 2006 Executive Incentive Plan, and the remaining information relates to restricted stock, restricted stock units, and stock options granted under our 2007 Stock Incentive Plan.

 

Grants of Plan-Based Awards

 

 

 

 

The following table shows the unexercised stock options and the unvested restricted stock and restricted stock units held at the end of fiscal year 2008 by the executive officers named in the Summary Compensation Table.

 

Outstanding Equity Awards At Fiscal Year-End

 

 

 

 

The following table summarizes information with respect to stock option awards exercised and restricted stock and restricted stock unit awards vested during fiscal 2008 for each of the executive officers named in the Summary Compensation Table.

 

Option Exercises and Stock Vested

 

 

 

 

Defined Benefit Pension Plans.  The U.S. Bancorp Pension Plan was created through the merger of the former U.S. Bancorp’s career average pay defined benefit plan, known as the “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. Bancorp Pension Plan, 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. Substantially all employees are eligible to receive benefits under the U.S. Bancorp Pension Plan. Participation requires one year of service with U.S. Bancorp or its affiliates, and vesting of benefits under the plan requires five years of service.

 

Although no new benefits are accrued under the former Cash Balance Pension Plan and Firstar Corporation’s plan 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 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. This non-qualified plan also provides additional supplemental benefits for certain of our executive officers.

Messrs. Davis and Chenevich earned benefits under the former Firstar Corporation’s plan that will be included in their ultimate retirement benefits. Messrs. Cecere and Mitau earned benefits under the former U.S. Bancorp Cash Balance Pension Plan that will be included in their ultimate retirement benefits. Mr. Hartnack became an employee in 2005 and did not earn benefits under either of these prior plans.

 

Supplemental Retirement Benefits.  Certain of our executive officers, including all of the officers named in the Summary Compensation Table in this proxy statement, are eligible for a supplemental benefit that augments benefits earned under the U.S. Bancorp Pension Plan and the non-qualified excess benefits discussed above. Except for Mr. Hartnack, the supplemental benefit ensures that eligible executives receive a total retirement benefit equal to a fixed percentage of the executive’s final average compensation. For purposes of this supplemental benefit, final average compensation includes annual base salary, annual bonuses and other compensation awards as determined by the Compensation Committee. As discussed below, Mr. Hartnack’s supplemental benefit is a fixed annual amount. Eligibility for these supplemental benefits is determined by the Compensation 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 Committee. Mr. Davis is eligible for an amount of total retirement benefits at age 62 equal to 60% of the average compensation during his five consecutive years of service in which he is most highly compensated, and he is fully vested in these benefits. Mr. Chenevich is eligible for an amount of total retirement benefits at age 65 equal to 55% of the average compensation during his five consecutive years of service in which he is most highly compensated, and he is fully vested in these benefits. Mr. Hartnack is eligible for an amount of total retirement benefits at age 65 of $500,000 per year, reduced by benefits he earned at his former employers, Union Bank of California and First Chicago Corporation, which are estimated to provide benefits of approximately $400,000 per year. He will become vested in the supplemental benefit at age 65. Messrs. Cecere and Mitau are eligible for an amount of total retirement benefits at age 65 equal to 55% of the average compensation during their final three years of service, reduced by their 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. Mitau is fully vested in his entire supplemental benefit. Under the terms of the U.S. Bancorp Non-Qualified Retirement Plan, Mr. Mitau received five additional years of credited service applicable to his supplemental benefits upon reaching age 60. For Messrs. Davis, Chenevich and Hartnack, the standard form of payment of the supplemental benefit is a ten-year certain, single life annuity. For Messrs. Cecere and Mitau, the standard form is either a lump sum or a joint and survivor annuity, depending on the size of the award. Alternatively, each of Messrs. Davis, Cecere, Chenevich, Hartnack and Mitau have the option of electing to receive (i) a lump sum distribution of their supplemental retirement benefits or (ii) various forms of joint and survivor annuity benefits. These elections must be made 12 months prior to the applicable officer’s retirement date. The amount of the lump sum distribution equals the actuarial equivalent of the annuity form of payment and is calculated using the same actuarial assumptions for our pension plan obligations discussed in Note 17 to our consolidated financial statements included in our 2008 Annual Report on Form 10-K. To the extent any lump sum election is made after December 31, 2008, the ultimate payment of the benefit will be delayed for five years from the executive’s retirement date. The means of calculating the various joint and survivor annuity benefits are described in the pension plan.

Pension Benefits Table.  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 executive officers named in the Summary Compensation Table.

 

Pension Benefits