By Andrew R. Johnson
Discover Financial Services (DFS) Chairman and Chief Executive
David Nelms received $9.96 million in compensation in fiscal 2012,
down 28.3% from the previous year due to lower stock awards.
Mr. Nelms' compensation in the year ending Nov. 30 included a
base salary of $1 million, $5.78 million in stock awards, $3.13
million in incentive-plan pay and other compensation, according to
Discover's annual proxy filed with the Securities and Exchange
Commission on Friday.
In the previous fiscal year, Mr. Nelms received $13.89 million.
The larger amount was mainly the result of stock awards totaling
$9.63 million, which included restricted stock and performance
share units granted for both fiscal 2010 and 2011 due program
changes Discover made in 2010. His most recent compensation
includes stock awards for fiscal 2012.
Discover cited Mr. Nelms, who has led the company as CEO since
2004, for helping the company "deliver record profits" in the most
recent fiscal year and strike deals to expand use of the company's
processing network domestically and abroad.
The Riverwoods, Ill.-based company is the sixth-largest U.S.
credit-card lender based on outstanding loans. Its stock price rose
60% in the last calendar year as loan-growth outpaced its peers and
its loss rates declined thanks to borrowers' improved payment
behavior.
Discover's profit increased 5.3% to $2.34 billion and revenue,
net of interest expense, increased 8.3% to $7.65 billion.
The company, like American Express Co. (AXP), is both a lender
to consumers and processor of transactions, unlike its other
competitors Visa Inc. (V) and MasterCard Inc. (MA), which operate
processing networks but do not lend or issue cards.
Discover has struck partnership to expand its payments network,
including a deal last year with eBay Inc.'s (EBAY) PayPal
subsidiary. Discover is working to expand acceptance of
PayPal--primarily a service for paying for transactions through
online merchants--in brick-and-mortar retailers.
The company also took steps to further expand beyond credit-card
lending, launching an online mortgage-origination business that is
currently focused on marketing home loans to existing customers. It
also has grown student and personal lending.
Discover suffered a setback last year when the Consumer
Financial Protection Bureau and Federal Deposit Insurance Corp.
ordered the company to refund $200 million to customers and pay $14
million in fines for allegedly mismarketing payment-protection
plans that allow cardholders to defer payments in the event of a
job loss or other hardship. The agencies alleged customers were
enrolled in the plans without their consent, were not given proper
information about the plans' costs before signing up and other
missteps.
The company, like other credit-card lenders, faces challenges
this year as the benefits from improving credit quality wane and
the uncertain economy weighs on consumers' willingness to spend, a
driver of loan growth.
Its shares are down 0.6% this year through Thursday's close of
$38.33 but are up more than 28% over the last 12 months.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires