Investors rebuke Ameriprise over executive compensation

Ameriprise Financial Inc. shareholders voted against its most recent executive compensation plan, a nonbinding but clear rebuke by major investors in the Minneapolis financial services firm.

Ameriprise announced the vote total, in which 75 percent of the shares went against the way it handled 2017 compensation, in a filing with the Securities and Exchange Commission late Friday. The vote occurred at the company's annual meeting on Wednesday.

Investors at U.S. companies are asked each year to make so-called "say-on-pay" advisory votes about the compensation of top executives. Many companies easily clear such votes, though some that are losing money or enduring difficulties encounter investor resistance. While the votes have no direct impact on the compensation, corporate boards tend to pay attention when support dips below 90 percent.

In recent years, Ameriprise shareholders routinely endorsed the company in say-on-pay votes. In 2014, 2015 and 2016, investors gave no less than 96 percent support to Ameriprise's compensation of executives. Last year, support fell to 81 percent and, this year, several major shareholder advisory firms recommended voting against Ameriprise's compensation.

Chief Executive James Cracchiolo's realized pay in 2017 was $60.5 million, up from $15.1 million in 2016, according to calculations by the Star Tribune. They include the value of previously issued long-term equity awards that vest or are exercised in a year. His 2017 total included $47.6 million worth of realized long-term equity awards, and $7.2 million worth in 2016. Shareholders vote on a total in the proxy's summary compensation table that includes grant date value of equity awards.

After this week's vote was disclosed, Ameriprise said in a statement, "We appreciate the constructive dialogue we have with our shareholders. The board will consider this feedback and continue to assess our program to ensure alignment between our executives' compensation and shareholder value creation."

The company added that its compensation of top executives "reflects our pay for performance philosophy with a strong governance framework structured to provide independent oversight, appropriate risk management and transparency."

In additional proxy material ahead of the meeting, Ameriprise defended its compensation plan, noting strong shareholder returns and operating results and specifically asked shareholders to support this year's say-on-pay vote.

Ameriprise's total shareholder return has risen and fallen in recent years. In 2017, the company provided a 56 percent return to shareholders. Over the three years that ended in 2017, the return to shareholders was 38.4 percent. Over the five years that ended in 2017, however, the return was 205 percent.

Even so, independent shareholder advisory firms suggested to Ameriprise shareholders that they vote against the say-on-pay plan this year.

Before Wednesday's vote, Ameriprise responded to the negative recommendation of advisory firm Institutional Shareholder Services by saying that it "was in large part influenced by a specific quantitative test involving our relative three-year TSR [total shareholder return] performance and did not take into account our exceptional operating performance."

Failing votes on say-on-pay, those with less than 50 percent support, are rare but there have been more of them this year. Through Wednesday, 2.6 percent of Russell 3000 companies that have held say-on-pay votes this year have failed, according to Semler Brossy, an independent executive compensation consulting firm. That was up from 1.5 percent at the same time a year ago.

Among Twin Cities companies, TCF Financial Inc. failed say-on-pay votes in 2014 and 2015; Regis Corp. did in 2011; and Best Buy did in 2012. Target Corp. nearly failed its vote in 2013.

Patrick Kennedy • 612-673-7926