In 2005 Jim Cracchiolo was appointed CEO of Ameriprise Financial, Inc. (NYSE:AMP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jim Cracchiolo's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Ameriprise Financial, Inc. has a market cap of US$18b, and reported total annual CEO compensation of US$26m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Ameriprise Financial, Inc. pays Jim Cracchiolo more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Ameriprise Financial has changed over time.
Is Ameriprise Financial, Inc. Growing?
Ameriprise Financial, Inc. has increased its earnings per share (EPS) by an average of 22% a year, over the last three years (using a line of best fit). It achieved revenue growth of 2.7% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Ameriprise Financial, Inc. Been A Good Investment?
I think that the total shareholder return of 56%, over three years, would leave most Ameriprise Financial, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Ameriprise Financial, Inc. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Ameriprise Financial (free visualization of insider trades).
If you want to buy a stock that is better than Ameriprise Financial, this free list of high return, low debt companies is a great place to look.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.