Home » Behavioural Investing » Discover Financial Up 60% but CEO Comp Down. Whats the Plan with David Nelms? $DFS

Discover Financial Up 60% but CEO Comp Down. Whats the Plan with David Nelms? $DFS

Discover Financial Services (NYSE:DFS) stock has appreciated some 60% in the past year. So what happens to the Chairman and Chief Executive David Nelms? He has held the job for nearly ten years now and the compensation committee cuts his pay cheque back.

According to SEC documents David Nelms received $9.96 million in compensation in fiscal 2012, down 28% from the previous year due to lower stock awards. No one is holding a tag day but the strategy is interesting.

Discover cited Mr. Nelms for helping it “deliver record profits”. Then the company said its board’s compensation and leadership development committee approved changes to its executive-compensation program for 2013 to “align with shareholder interests” and strengthen its “risk-balancing features.”

Among other issues changes include the ability to alter proposed stock unit awards if the company’s corporate risk officer determines an executive behaved recklessly.

So in this confusing context Mr Nelms is recognized for good work and then sees his pay cheque cut back.

Something is not aligning between the real mechanics of the program and the way it is communicated to the shareholders and investing public.

The chairman of the compensation committee is Gregory Case 50 who is now President and CEO of AON as well as a director. He spent some seventeen years at McKinsey and headed up their financial services practice. The two other members are Jeffrey Aronin 45 who has been President and CEO of numerous pharmaceutical companies and Richard Lenny 61 who has a DNA from Hershey’s and has been on the boards of Kraft and McDonald’s.

David Nelms 52 is relatively young. So is this a short-term bob and weave to appease current political winds? How much longer will David Nelms stay on board?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski