How Is Ameriprise Financial's (NYSE:AMP) CEO Paid Relative To Peers?
This article will reflect on the compensation paid to Jim Cracchiolo who has served as CEO of Ameriprise Financial, Inc. (NYSE:AMP) since 2005. This analysis will also assess whether Ameriprise Financial pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Ameriprise Financial
How Does Total Compensation For Jim Cracchiolo Compare With Other Companies In The Industry?
Our data indicates that Ameriprise Financial, Inc. has a market capitalization of US$19b, and total annual CEO compensation was reported as US$25m for the year to December 2019. That's a slight decrease of 4.8% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$13m. This suggests that Jim Cracchiolo is paid more than the median for the industry. Furthermore, Jim Cracchiolo directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.0m | US$1.0m | 4% |
Other | US$23m | US$25m | 96% |
Total Compensation | US$25m | US$26m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Ameriprise Financial has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Ameriprise Financial, Inc.'s Growth
Ameriprise Financial, Inc. has seen its earnings per share (EPS) increase by 30% a year over the past three years. It saw its revenue drop 5.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Ameriprise Financial, Inc. Been A Good Investment?
Ameriprise Financial, Inc. has served shareholders reasonably well, with a total return of 24% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
Ameriprise Financial prefers rewarding its CEO through non-salary benefits. As we noted earlier, Ameriprise Financial pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Ameriprise Financial (1 is potentially serious!) that you should be aware of before investing here.
Switching gears from Ameriprise Financial, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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