Company: USB-PA
Filing Date: 2025-03-05
Form Type: DEF 14A
Source: 0001104659-25-020883
Chunk: 50

Company: US BANCORP \DE\
Filing Date: 2025-03-05
Form: DEF 14A
Chunk 50
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 | U.S. Bancorp 2025 Proxy Statement | ​ | ​ | 49 | ​ |

TABLE OF CONTENTS Compensation discussion and analysis Selecting the performance metrics for the 2024 PRSU awards As part of its 2024 PRSU design review, the Committee determined that it was appropriate for the number of PRSUs earned at the end of the three-year performance period to continue to be determined by a formula that uses a comparison of our actual ROE result to target-level ROE, as well as our ROE performance relative to our peer financial institutions. ROE is used as the performance metric because: ▶ it directly reflects the return generated by the company on our shareholders’ investment; ▶ it encompasses profitability, efficiency, balance sheet management and financial leverage, and is among the most widely used indicators of financial performance in our industry; ▶ achieving a high ROE requires an appropriate balance between achieving the highest return on invested capital and managing risk within the company’s established risk tolerance levels; and ▶ using ROE as a performance metric aligns the interests of the executives with those of long-term shareholders because sustaining a high ROE is a primary driver of strong earnings growth and long-term valuation. Consistent with prior years, the Committee uses a performance matrix, illustrated below, that reflects both absolute and relative ROE scales to determine the final PRSU award amounts earned during the performance period. Target levels of both absolute and relative ROE are established, with maximum and minimum levels also identified. Earned amounts are determined using straight-line interpolation. The Committee believes that the PRSU earn-out structure provides an important balance between rewarding the achievement of absolute performance goals and strong relative performance. Executives are not rewarded for poor performance simply because members of our financial peer group have even worse performance, nor are they rewarded for exceeding expectations if performance relative to peers is substandard. In addition, by using a sliding scale for each ROE performance metric, the matrix takes into account the amount of variance from the ROE target and peer group ROE results, rewarding performance while mitigating the incentive for excessive risk taking that may result from an “all-or-nothing” award. Setting the levels of absolute and relative ROE for the 2024 PRSU performance matrix The target and maximum ROE levels selected by the Committee for the three-year performance period are based on the ROE range included in the company’s profitability goals publicly communicated prior to the grant date. The company’s ROE result may be adjusted from reported results to normalize the