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Continued: Schafer: Two similar firms differ wildly on CEO pay

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

Making a lot of money on options granted in the past also doesn’t mean that Cracch­iolo is ineligible for new grants. The compensation committee of the board of directors “believes that reducing or limiting current stock option grants, restricted stock awards or other forms of compensation because of prior gains realized by an executive officer would unfairly penalize the officer for high past performance and reduce the motivation for continued high achievement.”

To keep Cracchiolo properly motivated, the company made an additional grant in 2013, and he has almost certainly gotten another one already in 2014, based on the schedule of grants that the company publishes on its website.

Thrivent can’t offer stock options, of course, as a fraternal benefit organization. But Thrivent still wants its CEO to have a compensation plan that includes pay tied to long-term performance. Thrivent provided Hewitt’s compensation for 2012 with assurances that when available, 2013’s numbers will look pretty similar.

In 2012 he earned a base salary of just over $808,000. His bonus and other incentive compensation was $1.54 million. The part that would be analogous to an equity-based award, presented under the heading of retirement and deferred compensation, was $1.16 million.

Moeller, Thrivent’s chairman, described the process that determined that amount, and it looks a lot like what Ameriprise does.

And if Cracchiolo did well because Ameriprise is performing well, the same argument could be made at Thrivent. Revenue in 2013 of $8.5 billion was a record, and what could best be called operating income was up 30 percent.

To figure out what the market pays, Thrivent uses data from a list of big nonprofits like the Mayo and a list of 29 comparable financial services companies that includes mutual insurance companies as well as investor-owned financial services companies. Genworth Financial, Hartford Financial, MetLife and Principal Financial are among the firms on Thrivent’s list that are also on list that Ameriprise uses.

Moeller said Thrivent isn’t going to meet the market for executive pay at big public companies. Instead, it seeks to recruit leaders who are motivated by being part of what Moeller called “a mission-driven, not-for-profit business helping our members be wise with their money, lead generous lives and work to serve the greater community.”

Since he joined the board in 2005, he can’t think of an executive who left just to be paid more money.

But just like at other companies, Moeller described a tension between the board of directors and the management team over compensation — what he called “a balancing act.”

“I’m sure if you asked Brad,” he said, “He would say, ‘You don’t need to pay me any more money, and I don’t need a raise every year.’ ”

 

lee.schafer@startribune.com • 612-673-4302

  • related content

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

  • 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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