Ameriprise Financial: How High Would Pay Need to Be to Motivate the CEO?

Annual Meeting: April 26, 2023

Chairman and Chief Executive Officer James M. Cracchiolo compensation increased by over four million in 2022 to $22,847,623.  I’ve written in the past about the Compensation Committee’s apparent concern regarding Cracchiolo’s motivation level. This year, the Committee argues once again if they considered Cracchiolo’s ownership stake when granting new awards it could “reduce the motivation for continued high achievement.” The first year I ran across this phrase in the proxy statement I was amazed.

It is one of those sentences that offers a glimpse into the absurdities of executive compensation. I won’t harp on it this year but wanted to do a short post in reference to the newly disclosed information on “actual pay.” Again, I think this description is inaccurate, but it does offer some additional insight.

In 2020, when reported pay was $20.1 million the “actual” payment was $43.9 million; in 2021 when reported pay was $20.1 million the “actual” payment was $63.5 million. Recall that none of these figures include value of exercised shares. This year’s “actual pay” was $34 million and reported pay was $22.8.

Another point of note, this year the company gave Cracchiolo $406,250 in matching contributions to his 401k. People of good faith can disagree on many things about compensation: the right ratio of short term to long term, what metrics are best, and so on. But surely we can agree the company does not have to give a CEO nearly half a million dollars in matching retirement contributions. Also, if the CEO’s motivation is so perilous, perhaps it is worth trying something else. Sticker charts perhaps?