Should You Worry About Ameriprise Financial, Inc.’s (NYSE:AMP) CEO Pay Cheque?
Jim Cracchiolo has been the CEO of Ameriprise Financial, Inc. (NYSE:AMP) since 2005. 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.
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How Does Jim Cracchiolo’s Compensation Compare With Similar Sized Companies?
Our data indicates that Ameriprise Financial, Inc. is worth US$15b, and total annual CEO compensation is US$24m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Ameriprise Financial has changed from year to year.
Is Ameriprise Financial, Inc. Growing?
Over the last three years Ameriprise Financial, Inc. has grown its earnings per share (EPS) by an average of 13% per year (using a line of best fit). It achieved revenue growth of 6.2% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Ameriprise Financial, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Ameriprise Financial, Inc. for providing a total return of 34% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
We compared the total CEO remuneration paid by Ameriprise Financial, Inc., and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Ameriprise Financial.
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.