Schafer: Two similar firms differ wildly on CEO pay

  • Article by: LEE SCHAFER , Star Tribune
  • Updated: March 16, 2014 - 6:17 AM

Outside Ameriprise Financial headquarters in Minneapolis. Ameriprise markets itself as the fifth-largest branded broker-dealer.

Photo: David Denney, Star Tribune

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Thrivent Financial and Ameriprise Financial are far more alike than they are different, both big financial services firms with headquarters just a block from each other in downtown Minneapolis.

Both manage money and sell financial products like annuities through a network of representatives.

There are big differences, of course. Thrivent is organized for the benefit of its members. Ameriprise’s stock trades on the New York Stock Exchange. But there’s maybe no difference quite as striking as this:

The top job at Ameriprise pays 25 times more than the top job at Thrivent.

A well-intentioned communications staff member at Ameriprise pointed out that the company’s large size really distorts such comparison, as Ameriprise is ranked 263 on the latest Fortune 500 list.

Yes, but Thrivent is ranked at 325, not that far down.

“Oh,” he said.

Ameriprise did not make a board member available to comment, as the spokesman pointed out that its proxy statement issued to shareholders contains pages of explanation about how it compensates company officers.

But he wanted to make sure to explain just how complicated Ameriprise is as a global business. By measures such as assets under management, it’s also a lot bigger than Thrivent, too.

But Thrivent board Chairman Dick Moeller used similar language to discuss the complexity of his company and how “blessed” the company is to have someone with the skills required to effectively run it.

Maybe the most interesting aspect is that both organizations approach the question of how much to pay the same way. Ameriprise benchmarks pay and performance with other companies and hires a compensation consultant to help. Turns out, Thrivent does pretty much the same thing. Both companies say salary is based on fairness — rewarding leaders for the value they bring to the organization and for achieving financial and strategic goals.

And, Moeller said, Thrivent CEO Brad Hewitt certainly appears pleased with his deal.

“Brad is a real humble, servant leader who cares a lot more about the mission of Thrivent than he does his personal comp,” Moeller said.

How Ameriprise CEO Jim Cracchiolo views his total compensation isn’t known. Given the numbers, it would be bad form to complain.

His 2013 total was calculated by the Star Tribune at just over $92 million, including nearly $11 million in bonus pay and realized stock-option gains of $76.4 million.

The company’s disclosures on pay are about as clear and complete as such things get. In addition to what’s required, Ameriprise presents its own calculation of what its officers actually make. In this table, Cracchiolo earned total direct compensation of $20.7 million for 2013 and between $15 million and $16 million for each of the previous two years.

The reason the 2013 compensation figure got to $92 million is the strong performance of the stock, which had made stock options granted in prior years far more valuable.

As the company reported in its proxy, the five-year total return for Ameriprise common stock was 449 percent, and since becoming an independent, publicly traded company in 2005, the stock of Ameriprise has delivered the second-highest total return in Standard & Poor’s index of 81 financial companies.

  • related content

  • Brad Hewitt, Thrivent Financial’s CEO, made $3.55 million in salary and incentive pay in 2012.

  • Ameriprise Financial Inc. CEO Jim Cracchiolo received $92 million in pay and bonuses in 2013.

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