The Director Compensation Project: Ameriprise Financial Inc.

This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2007’s Fortune 100 and using information disclosed in each company's 2008 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence. Meeting stock exchange requirements is mandatory for most listed companies.

Under NYSE Rule 303A.01, all listed companies must have a majority of independent directors sitting on their boards. Directors are not independent if they received over $100,000 in direct compensation, other than director’s fees, in any one year period over the last three years pursuant to Rule 303A.02(b)(ii). This is a looser restriction than the equivalent NASDAQ Rule, 4200(a)(15), which includes all compensation. Rule 303A.06 requires that, in addition to the general independence standards, audit committee members must comport with the requirements of Exchange Act Rule 10A-3 (C.F.R. §240.10A-3), also known as SOX 301.

One can see some of the effects of these rules when looking at the director compensation table from Ameriprise Financial Inc. (AMP-NYSE) 2008 proxy statement.

Name		Fees Earned or Paid in Cash ($)(1)			Stock Awards ($)(2)			All Other Compensation ($)(3)			Total ($)
Ira D. Hall		$	85,417		$	93,869		$	7,973		$	187,259
Warren D. Knowlton			87,500			93,869			1,298			182,667
W. Walker Lewis			93,959			93,869			2,973			190,801
Siri S. Marshall			92,500			93,869			13,021			199,390
Jeffrey Noddle			87,500			93,869			9,392			190,761
Richard F. Powers III			87,500			93,869			2,933			184,302
H. Jay Sarles			87,500			93,869			7,975			189,344
Robert F. Sharpe, Jr.			87,500			93,869			9,402			190,771
William H. Turner			98,958			93,869			7,991			196,318

Director Compensation -- Directors’ cash compensation at Ameriprise was less than $100,000 with total compensation under $200,000. Stock awards, which are considered director’s fees for purposes of exchange rules, were a uniform $93,869 in keeping with company policy to encourage stock ownership by board members. Other compensation includes use of company planes and gifts presented at meetings. The compensation policy was reviewed in 2007, as it had not been changed since incorporation in 2005.

Director Tenure -- Ameriprise was only spun off from American Express in 2005, thus, this is a relatively new board; all directors except one, who joined in 2006, have been together since 2005. The board met ten times, averaging 82% attendance, and all directors are members of at least one committee. Six directors are on as many as three other boards, and several are involved with charitable organizations.

CEO Compensation -- CEO James Cracchiolo earned just over $24 million, of which $850,000 was salary. His stock and options awards were $9 million, with cash incentive payments of $12.5 million. The company justified this performance bonus by noting that earnings were up 16.1% and return to shareholders up 2% against an overall S&P decrease of 19%. Mr. Cracchiolo also received $1,282,423 in “other” compensation, most of which was use of the corporate aircraft for personal travel. The 2008 proxy statement notes several times the company policy of “requiring” its chief executive to use the aircraft for personal travel for “safety” reasons.