Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.  )

 

 

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As an integrated, diversified financial services leader, Ameriprise is well positioned for future growth. Across our investor forums, we have communicated the strategic focus areas that make Ameriprise a compelling shareholder value proposition. These focus areas include:

In 2021, Ameriprise delivered excellent organic growth across our businesses, complemented by strategic actions.

We are proud of the high level of employee engagement our teams consistently demonstrate — it’s core to our caring culture.

Ameriprise has always managed the firm responsibly, putting our clients’ interests front and center and working to deliver for all of our stakeholders. As the field of sustainability has evolved, we have continued to build on this strong foundation, advancing our reporting to help our stakeholders understand our approach and be responsive to changing reporting frameworks. Our Responsible Business Report and other sustainability-related information can be found at www.ameriprise.com/about/responsible-business.

Our Responsible Business Report will remain our core disclosure document. We will update it annually and continue to provide other sustainability information on ameriprise.com. Here, and other places in this proxy statement, we reference or refer to materials available on our website at ameriprise.com. These materials are not incorporated in, and are not a part of, this proxy statement.

Ameriprise common stock performed well in 2021, with a total shareholder return of 58%, far outpacing the S&P 500 Financials Index and S&P 500 Index. Over a longer-term horizon, Ameriprise total shareholder return remains very strong both on a relative and absolute basis, with returns of 210% and 206% over the past three and five years, respectively. The time period in the graph below reflects a variety of economic and capital market headwinds and tailwinds, and we are pleased to have been able to deliver consistent results for our shareholders.

 

Ameriprise has a disciplined and quantitative approach to compensation. Our thoughtful and balanced pay-for-performance compensation strategy at all levels of the organization is designed to incent, motivate, engage and retain a highly effective, stable executive leadership team and workforce that consistently delivers exceptional organizational outcomes that create sustained shareholder value over the long-term while motivating and retaining top talent in the industry.

Our Compensation and Benefits Committee applies a disciplined, quantitative and transparent performance scorecard approach to determine short- and long-term incentive compensation for eligible executives, including named executive officers. Under this approach, the committee establishes specific financial and business performance measures and targets in line with the Company’s business and strategic plans. Our actual performance at the end of the year is assessed against the established scorecard goals, resulting in an incentive pool under which incentive compensation is then awarded to our executives.

 

Our Board has a strong focus on corporate governance and issues of interest to our shareholders:

Please see page 15 for the directors nominated to be elected this year.

We maintain a year-round dialogue with shareholders to gain their perspectives, which are incorporated into relevant Board discussions. Through these efforts, in 2021, we engaged with shareholders representing more than 60% of our outstanding shares. The input that we receive from shareholders as part of our engagement efforts has helped to inform our governance, responsible business and compensation practices. For additional information on our shareholder engagement program and certain actions the Company has taken based on shareholder feedback, see page 26.

We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of Directors of Ameriprise Financial, Inc. for the 2022 Annual Meeting of Shareholders and for any adjournment or postponement of the meeting. In this proxy statement, we may also refer to Ameriprise Financial, Inc. as “Ameriprise Financial,” “Ameriprise,” “the Company,” “we,” “our” or “us.”

This section highlights our corporate governance program and our Board of Directors. We provide details about these and other corporate governance policies and practices in other sections of the proxy statement and on our website on the Corporate Governance page at ir.ameriprise.com.

The Board believes a well-qualified and diverse mix of directors best positions the Board to effectively govern and achieve strong results. Our directors have a combined wealth of leadership experience derived from extensive service guiding large, complex organizations, and possess a diversity of qualifications, attributes and skills applicable to our business and long-term strategy.

We currently have nine directors on our Board. Mr. Noddle will not be standing for reelection at our Annual Meeting in accordance with our Corporate Governance guidelines. We thank Mr. Noddle for his significant contributions and service to the Company since 2005. The Board has set the size of the board at eight as of the time of the Annual Meeting, and eight nominees have been recommended by the Nominating and Governance Committee and nominated by the Board.

The Board believes that the mix of qualifications and the diversity of attributes and skills among the nominees enhances our Board’s effectiveness and is aligned with the Company’s long-term strategy. The Board believes that each of the nominees is qualified to serve as a director of Ameriprise and possesses the qualities and skills described in the section of the proxy statement captioned “Director Experience and Qualifications,” beginning on page 20.

Each nominee has indicated that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy may be voted for another person nominated by the Board or the Board may reduce the number of directors to be elected. If elected at the Annual Meeting, the nominees will hold office until the 2023 Annual Meeting of shareholders and until their successors have been elected and qualified.

Our director nominees exhibit a mix of skills, experience, diversity and perspectives.

 

C = Chair M = Member

Our Board regularly reviews its composition and its size to evaluate its overall effectiveness and alignment with our strategy. Consideration is given to the composition of our board to maintain a cohesive and diverse board that brings the right balance of experiences, perspectives, independence, skills, and expertise to support effective oversight. We believe it is appropriate to maintain a balance of longer tenured members who bring valuable Company-specific knowledge with a historical perspective, and newer members, who bring fresh viewpoints and new ideas.

The Board of Directors believes that maintaining and enhancing the Board’s diversity are important corporate governance goals. Diversity of backgrounds, experience and thought is important in ensuring effective risk oversight, and when reviewing potential board nominees, the Nominating and Governance Committee considers the holistic diversity of the Board, including gender, ethnicity and race. Our Corporate Governance Guidelines require the Board’s Nominating and Governance Committee to review the qualifications of the directors and the composition of the Board as a whole periodically. This assessment includes not only the independence of the directors, but also consideration of required minimum qualifications, diversity, age, skills and experience in the context of the needs of the Board.

Under our Corporate Governance Guidelines and NYSE rules, a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with the Company. In addition, the director must meet the bright-line test for independence set forth by the NYSE rules.

The Board has established categorical standards of director independence to assist it in making independence determinations. The Board’s categorical standards of independence are posted on our website on the Corporate Governance page at ir.ameriprise.com. The categorical standards generally classify as “not material”: relationships with our Company arising in the ordinary course of business; relationships with companies of which a director is a shareholder or partnerships of which a director is a partner; contributions made or pledged to charitable organizations with which a director has a relationship; certain familial relationships; and certain social and other relationships. In making independence recommendations, the Nominating and Governance Committee considered relationships and transactions between the director and the Company as described in annual directors’ questionnaires and in materials provided by management.

Our Board has determined that each of our directors is independent, other than Mr. Cracchiolo, who currently serves as our chairman and chief executive officer.

Only independent directors serve on these standing committees of the Board: Audit and Risk; Compensation and Benefits; and Nominating and Governance. Members of the Audit and Risk Committee also meet the independence standards of Rule 10A-3 of the Securities Exchange Act of 1934, as amended. Members of the Compensation and Benefits Committee are considered “non-employee directors” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended. On the Board’s Executive Committee, Mr. Cracchiolo serves as the committee’s chairman and our Presiding Director and the chairs of the three other standing committees serve as the Executive Committee’s other members.

Our Guidelines on Corporate Governance provide that no person who will have reached the age of 75 will be nominated for election at the next annual shareholders meeting without an express waiver by the Board.

The Nominating and Governance Committee, with input from the Board, is responsible for nominating directors for election each year and for evaluating the need for new directors. The Nominating and Governance Committee considers each director’s skills and experiences, independence, diverse perspectives, and other characteristics. When it is prudent or necessary to find a new director, we cast a wide search and consider a candidate’s broad attributes, including a candidate’s experience in significant policy-making or operational responsibility, industry relevant experiences, and their potential to help steer the company into the future. Over the last six years, we added three new directors as we make it a priority to identify candidates with the skills needed to ensure effective oversight.

The Nominating and Governance Committee seeks advice from current directors when identifying and evaluating new director candidates. As part of this review, the Nominating and Governance Committee, in conjunction with the Board, establishes the desired criteria, skills and areas of expertise needed to continue to support the Board in advancing the Company’s business and strategy. The Nominating and Governance Committee also considers requirements for the Board’s independence, financial literacy qualifications, and professional experiences. Once the desired criteria are established, the Nominating and Governance Committee reviews director candidates. The Nominating and Governance Committee also considers candidates for election to the Board submitted by shareholders. Each member of the committee participates in the review and discussion of director candidates, which starts with the review of publicly available information regarding the potential candidates to assess if the candidates warrant further consideration. In addition, members of the Board of Directors who are not on the committee may meet with and evaluate the suitability of candidates. If the Nominating and Governance Committee believes a candidate should be considered further, then the Chair or other designated Nominating and Governance Committee member will contact the candidate. If a candidate is willing to continue in the process, then the Nominating and Governance Committee requests additional information and may conduct interviews.

 

Whenever the Nominating and Governance Committee engages a search firm to identify potential director candidates, the committee instructs the firm that diversity considerations are highly important. Similarly, whenever the committee considers candidates identified by other directors or shareholders, the same considerations apply. Because our Board of Directors is relatively small, it may not always be possible to recruit a director who has the skills and experience needed by the Board at that time and who also enhances the diversity of the Board. Nevertheless, considerations of gender, racial, and ethnic diversity will continue to be important factors in identifying and recruiting new directors.

The Nominating and Governance Committee applies the same standards in considering candidates submitted by shareholders as it does in evaluating candidates submitted by members of the Board of Directors, provided that the requirements explained under the caption “Director Experience and Qualifications” are satisfied. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders must follow the procedures described on page 79. Shareholders who wish to submit a candidate for consideration by the Nominating and Governance Committee may do so by sending the candidate’s name and supporting information to our Corporate Secretary, at the address shown on page 75 under “General Information.”

The Board believes that establishing and maintaining a constructive evaluation process is essential to maintaining Board effectiveness and best corporate governance practices. Accordingly, the Nominating and Governance Committee oversees an annual performance evaluation process for the Board and its committees to determine overall effectiveness. This process is aided by written discussion guides used to facilitate the assessments. Areas of focus may encompass many factors, including: culture; board composition; succession planning; processes, information and resources; and duties and responsibilities.

We believe that each director should have a substantial personal investment in the Company. A personal holding of Company shares or deferred share units having a market value of five times the amount of the current annual cash retainer upon attainment is recommended for each director. A decrease in the price of a share of our common stock after a director has attained the required ownership threshold will not negate the director’s satisfaction of this requirement. Directors are expected to attain this ownership threshold within five years of joining the Board. We disclose the dollar value of each outside director’s equity holdings as of February 28, 2022, on page 31. All directors who have served on the Board for more than five years are in compliance with our ownership threshold.

Our Board of Directors determines the leadership structure that best serves its needs and those of our shareholders. Currently, Mr. Cracchiolo serves as both the chairman of the Board of Directors and the chief executive officer of the Company. Mr. Sharpe currently serves as the Board’s presiding director.

The Board believes that Mr. Cracchiolo’s service as both chairman and chief executive officer has the following advantages for the Company given the specific characteristics or circumstances of the Company. Mr. Cracchiolo provides proven leadership ability, strong communication skills, and a deep understanding of the Company, the financial services industry and the Company’s long-term strategic direction. The chairman is often required to speak on behalf of the entire Board to shareholders, regulators, and other stakeholders and therefore must engender the trust and respect of the entire Board. As the leader of the Board, Mr. Cracchiolo must also be able to maintain an atmosphere of collegiality, encourage open and vigorous discussion and debate during Board meetings, and promote fairness in considering the views and opinions of all directors.

Recognizing that the Company’s or the Board’s circumstances may change, the Board has no policy with respect to the separation of the roles of the chairman and chief executive officer. As stated in our Corporate Governance Guidelines, “The Board believes that this issue is part of the succession planning process, which is overseen by the Compensation and Benefits Committee, and that it is in the best interests of the Company to make a determination when it elects a new chief executive officer.”

The Board recognizes that the Company’s and Board’s circumstances may change in the context of CEO succession planning and that having a separate chairman and CEO is an option that the Board will consider carefully in those circumstances.

The role of the Board’s presiding director is an important part of the Board’s leadership structure. In 2021, the Board of Directors separated the roles of presiding director and chair of the Nominating and Governance Committee. Previously, the Company’s Corporate Governance Guidelines provided that the then serving chair of the Nominating and Governance Committee would act as the Board’s presiding director.

The Board of Directors also re-appointed Mr. Sharpe to serve as the Board’s presiding director.

As part of the new presiding director structure, the Nominating and Governance Committee recommended, and the Board of Directors, approved a set of Presiding Director Guidelines to outline the authority and responsibilities of the role, including:

In addition to the presiding director, our Board has adopted a number of procedures and policies designed to preserve the effectiveness of the independent directors and the transparency of Board operations. For example, each Board agenda includes an executive session of the independent directors. Any director is free to suggest agenda items, to request additional time for an agenda topic, or to request information from management. The independent directors also have regular access to members of management other than the chief executive officer. In advance of each regular Board meeting, the corporate secretary asks the independent directors to submit any questions or topics that they would like the chairman and chief executive officer to address at the meeting.

Enterprise risk management and our risk management program are critical to how we manage our business. The Board has oversight of Ameriprise’s enterprise risk management policy and framework, which: (i) establishes a structure for effective enterprise risk management, including oversight and governance; (ii) delineates key constituent roles and responsibilities; and (iii) imposes a number of core risk management processes. The enterprise risk management policy is designed to manage risks that may impact Ameriprise, including capital, credit, market, liquidity, operational, strategic, reputational, legal and compliance, and product. The Board and its committees receive risk reporting on a regular basis to support the key role that the Board plays in its oversight of risk. The enterprise risk management policy is supported by underlying risk policies at each Ameriprise business unit that provide further detail on the business unit’s risk governance, appetite, and tolerance.

Our chief executive officer, chief financial officer, general counsel, chief risk officer and other members of senior management are responsible for identifying, assessing and managing our exposure to risk. Our Board is responsible for overseeing how management performs those functions. This oversight is directed primarily by the Audit and Risk Committee, whose membership includes five of our eight independent directors. As described in further detail in the Audit and Risk Committee section below, some aspect of risk management and oversight is discussed at virtually every Audit and Risk Committee meeting.

As a diversified financial services company, our business is subject to a number of risks and uncertainties. The Audit and Risk Committee and the Board as a whole receive regular reports from management and our independent auditors on prevailing material risks and the actions we are taking to address and mitigate them. Management also reports to the Audit and Risk Committee and the Board on how we are enhancing our risk management processes and controls to respond to evolving market, business and regulatory conditions. The Audit and Risk Committee and the Board also receive regular reports regarding our regulatory examinations, some of which address risk management topics.

As part of its ongoing responsibilities, the Audit and Risk Committee reviews and assesses the quality and clarity of the risk management information its members receive and, if necessary, makes recommendations to management for improving this reporting. In order to confirm that it is receiving candid and complete information, the Audit and Risk Committee holds regular separate executive sessions with members of executive management, our independent auditors, our general auditor and our chief risk officer.

Independent directors have access to individual members of management or to our employees on a confidential basis. Directors are authorized to conduct independent investigations and to hire outside consultants or experts at our expense. Directors also have access to our records and files, and directors may contact other directors without informing our management of the purpose or even the fact of such contact.

Our chairman and chief executive officer is ultimately responsible for the effectiveness of the Company’s risk management processes and is an integral part of the related day-to-day activities. He also attends most Audit and Risk Committee meetings and the Company’s chief risk officer reports directly to the chief executive officer. As a result, he is in an informed position to both lead our enterprise risk management program and assist in the Board’s oversight of that program.

In response to emerging best practices and regulatory guidelines, the Audit and Risk Committee and the Compensation and Benefits Committee have received reports focused on risks related to our Company-wide incentive compensation plans. We discuss this subject in more detail in the Compensation Discussion and Analysis under the heading “Risk and Incentive Compensation” beginning on page 56.

The Board and the Audit and Risk Committee are central to the oversight of the Company’s cybersecurity risk management program. Our executive vice president of technology and chief information officer, our chief information security officer, and other officers regularly review with our Board and the Audit and Risk Committee: the cyber threat landscape; the design, effectiveness and ongoing enhancement of our capabilities to monitor, prevent and respond to cyber threats and events; and any incidents that merit discussion.

During 2021 the Audit and Risk Committee also reviewed our identity theft prevention and privacy programs and discussed, among other topics: mandatory staff training on fraud prevention; identity theft experience and trends; the effectiveness of existing controls and planned enhancements to those controls; and key areas of focus for the identity theft and privacy programs.

Attracting, engaging and developing a diverse and high performing workforce is key to our long-term success. As part of its investment in creating an outstanding employee experience, the Company has created, with the Board’s support, a variety of initiatives and goals to invest in leadership development and a robust diversity, equity and inclusion curriculum. The Board has primary responsibility for CEO succession, and, additionally, the Board reviews our succession plans and broader talent development status in light of our corporate strategy at least annually, and frequently discusses talent issues at meetings. The Board and the Compensation and Benefits Committee are regularly updated on human capital management issues and dedicate time to reviewing and discussing our company culture, talent development, retention and recruiting initiatives, diversity, equity and inclusion strategy, and engagement survey feedback.

Ameriprise has a strategic Long-Range Plan that guides how we lead the Company to maximize long-term shareholder value creation, deliver competitively differentiated value to our clients, and attract and retain talent. We are also aware of the need to take into account the interests of our stakeholders. Briefly, our long-range strategy is to advise, manage and protect assets and income for retail, high net worth, and institutional clients. By fulfilling our strategy, we believe that we are not only creating long-term value for our shareholders, but also enabling our clients and their families to achieve their financial goals, including a confident retirement. Our executive team regularly revisits and updates the Long-Range Plan as appropriate. Our Board of Directors plays an important role in our strategic planning process as well. Executives and the Board hold joint detailed discussions on the Long-Range Plan at our annual long-range planning offsite meeting, as well as throughout the year as needed.

The Long-Range Plan also guides the development of our annual operating plan and budgets. Throughout the year, management and the Board hold regular discussions on the Company’s performance, progress on the annual plan and remaining goals in the context of our Long-Range Plan

The Board’s Audit and Risk, Compensation and Benefits, and Nominating and Governance Committees each operate under a written charter approved by the Board of Directors. Each committee charter satisfies the requirements of the New York Stock Exchange’s corporate governance listing standards. Each committee reviews and reassesses the adequacy of its charter at least annually. Each committee will recommend any proposed changes to the Board of Directors for consideration and approval. The committee charters are posted on our website on the Corporate Governance page at ir.ameriprise.com and additional information about each committee is contained in the sections following this summary.

The Executive Committee also operates under a written charter approved by the Board of Directors. The Executive Committee’s charter is posted on our website at the same location as the other committee charters.

The Board of Directors has approved Corporate Governance Guidelines. Among other topics, the Corporate Governance Guidelines address: director qualification standards; director responsibilities; director access to management and, as necessary and appropriate, independent advisors; director compensation; director orientation and continuing education; management succession; and the annual performance evaluation of the Board and its committees. The Corporate Governance Guidelines are posted on our website on the Corporate Governance page at ir.ameriprise.com.

We have adopted a Global Code of Conduct to guide ethical business behavior and decision-making. The Code applies to all of our officers, employees, financial advisors, and their employees, and individuals conducting business on behalf of us and our subsidiaries. Following our Global Code of Conduct and all applicable laws, regulations, and Company policies is a condition of employment or association with the Company, except as otherwise provided by the laws of a foreign jurisdiction.

The Board of Directors has adopted a Code of Business Conduct for Members of the Board of Directors of Ameriprise Financial, Inc. This Code is intended to focus each director on areas of potential conflicts of interest and provide guidance relating to the recognition and handling of ethical issues. The Code also provides mechanisms to report potential conflicts of interest or unethical conduct and is intended to foster a culture of openness and accountability.

Both of these Codes are posted on our website on the Corporate Governance page at ir.ameriprise.com.

Our Corporate Governance Guidelines state that directors are expected to attend the Annual Meeting of Shareholders. The corporate secretary reminds each director of this policy in writing in advance of each Annual Meeting of Shareholders. At our 2021 Annual Meeting of Shareholders, all directors then serving were in attendance.

The independent directors customarily meet in executive session without management present at each regularly scheduled meeting of the Board. The Board may decide, however, that such an executive session is not required at a particular Board meeting.

The Company values its engagement with its shareholders to learn about the issues and concerns that are important to them. Open and ongoing communications with our shareholders can have a positive influence on our performance and allows us to incorporate our shareholders’ feedback into key areas of concern. Presentations at financial conferences, meetings with analysts and investment firms, regular outreach on governance topics and responding to inquiries are examples of the activities we employ to engage our shareholders. As appropriate our presiding director, executive leadership, senior management, or subject matter experts participate in these discussions.

During 2021 our governance outreach to our largest shareholders represented more than 60% of shares outstanding. Engagement topics included: diversity and inclusion initiatives; gender and racial diversity on the board of directors and management team; evolving labor market trends and investment in the employee experience; the effect of the global pandemic and our thoughtful return to office plans; continued enhancement of our ESG reporting including diversity metric disclosures; and our reporting on climate risk. In addition, we discussed governance matters, including amendments made to our by-laws in 2021, which we believe caused a proxy advisory firm to recommend against the election of the chair of our Nominating and Governance Committee at the 2021 Annual Meeting. Our shareholders conveyed understanding and support for the by-law amendments and expressed no concerns with respect to any of our directors.

The feedback from our discussions with shareholders and proxy advisors is collected and conveyed, as appropriate, to the entire Board, and influences and informs our policies and practices. For example, in the past few years based in part on investor input, the Company has continued to evolve our ESG reporting, publishing our first SASB Index in March 2022; provided EEO-level human capital disclosure in our Responsible Business Report; enhanced Board and management oversight of the Company’s trade association memberships and our dues payments to those trade associations; advanced our climate capabilities in coordination with our asset management business; and enhanced our “Compensation Discussion and Analysis” disclosure.

The Board of Directors has provided a means by which shareholders or other interested parties may send communications to the Board or to individual members of the Board. Such communications should be directed to the Company’s corporate secretary, who will forward them to the intended recipients. However, unsolicited advertisements or invitations to conferences or promotional material, in the discretion of the Company’s corporate secretary, may not be forwarded to the directors.

If a shareholder or other interested party wishes to communicate a concern to the chair of the Audit and Risk Committee about our financial statements, accounting practices, internal controls or business ethics or corporate conduct, the concern should be submitted in writing to the chair of the Audit and Risk Committee in care of our corporate secretary. If the concern relates to our executive compensation program, the concern should be submitted in writing to the chair of the Compensation and Benefits Committee in care of our corporate secretary. If the concern relates to our governance practices, the concern should be submitted in writing to the chair of the Nominating and Governance Committee in care of our corporate secretary. If the shareholder or other interested party is unsure as to which category his or her concern relates, he or she may communicate it to any one of the independent directors in care of our corporate secretary. The contact information for the Company’s corporate secretary is provided on page 75 under “General Information.”

Our “whistleblower” policy prohibits us or any of our employees from retaliating or taking any adverse action against anyone for raising a compliance or ethical concern in good faith. If a shareholder, employee or other interested party nonetheless prefers to raise his or her concern in a confidential or anonymous manner, the concern may be directed to our ethics hotline, at (800) 963-6395. This is a confidential, independent service that allows individuals to report compliance or ethical issues and concerns they may have concerning Ameriprise Financial. An ethics specialist will forward accounting and auditing issues to our general auditor and our general counsel, who will confirm that the matter is properly investigated and, if deemed appropriate, report the results to the Audit and Risk Committee.

During 2021, the Board of Directors met six times. All of our directors attended 95% or more of the meetings of the Board and the Board committees on which they served during the year. Every committee includes an executive session attended only by committee members on the agenda of each meeting, but committee members may decide that an executive session is unnecessary at any particular meeting.

This table shows the composition of our four standing Board committees and the number of committee meetings held in 2021.

The Audit and Risk Committee assists the Board by:

The Audit and Risk Committee may convene executive sessions with the general auditor, chief risk officer, representatives of our independent auditors, or representatives of management.

All of our directors have access to the Audit and Risk Committee’s meeting materials, including draft minutes, so they can remain informed about our risk oversight function. Similarly, the chair of the Audit and Risk Committee regularly reports to the entire Board on the Audit and Risk Committee’s activities and decisions. In addition, each presentation to the Audit and Risk Committee or the Board on any significant matter includes a summary of the related risk management issues to ensure directors are aware of key risk topics and management’s risk management strategies and processes.

The Board has determined that Ms. Blixt and Messrs. Greenberg, Shea, Walter and Williams are “Audit and Risk Committee financial experts” as defined by Securities and Exchange Commission regulations and that they have accounting or related financial management expertise, as the Board interpreted such qualification in its business judgment. The Board has also determined that all Audit and Risk Committee members are financially literate, as that term is interpreted by the Board in its business judgment.

The Audit and Risk Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s financial statements. The Audit and Risk Committee has appointed PricewaterhouseCoopers LLP as the Company’s independent external auditor for fiscal year 2022. We have retained PricewaterhouseCoopers LLP in this capacity since fiscal year 2011. The members of the Audit and Risk Committee and the Board believe that continuing to retain PricewaterhouseCoopers LLP as the Company’s independent external auditor is in the best interests of the Company and our shareholders.

In conjunction with the mandated rotation of PricewaterhouseCoopers LLP’s lead engagement partner, the Audit and Risk Committee is directly involved in the selection of the new lead engagement partner. In order to ensure continuing auditor independence, the Audit and Risk Committee periodically considers whether there should be a regular rotation of the independent external audit firm.

The Compensation and Benefits Committee’s primary purposes are to:

While the Compensation and Benefits Committee oversees our executive compensation program, the Nominating and Governance Committee has the authority to oversee the compensation and benefits of non-management directors and to make recommendations on such matters to the Board of Directors for approval. We provide information about the compensation of our outside directors beginning on page 31.

In connection with its responsibilities, the Compensation and Benefits Committee has the authority to:

The Compensation and Benefits Committee has delegated certain administrative authority to our chief human resources officer to promote the efficient and timely administration of our compensation and benefits plans.

Various executive officers help the Compensation and Benefits Committee determine the appropriate form and amount of executive compensation. Officers in our human resources department prepare meeting materials for the committee, including compensation tally sheets and other summaries of executive officers’ total compensation. These officers also may propose the adoption of new compensation or benefits plans or amendments to existing plans. The chief executive officer makes recommendations to the committee regarding compensation actions for executive officers other than himself. Our executive vice president of human resources discusses survey and benchmarking data related to executive compensation and other topics of interest to the committee. Our chief financial officer advises the committee about setting and calculating financial performance goals for certain executive compensation plans. No executive officer has the authority to approve his or her own compensation or to make equity-based grants to any executive officer.

The Compensation and Benefits Committee engaged the firm of Semler Brossy Consulting Group (“Semler Brossy”) as its independent compensation consultant as of June 5, 2019. The committee maintains a Compensation Adviser Policy, which addresses the relationship between the committee and its compensation advisers; the criteria that the committee uses to select its consultant; the consultant’s duties; how the committee evaluates its compensation consultant; the factors the committee will apply in determining whether its consultant is independent of the Company’s management; and the related disclosure to be provided to our shareholders. The Compensation Adviser Policy is available on the Corporate Governance page of our website at ir.ameriprise.com. You can request a free copy of the Compensation Adviser Policy by writing to our corporate secretary using the contact information included under “Requests for Copies of Materials” below.

Semler Brossy works for and reports directly to the Compensation and Benefits Committee, not the Company’s management, with respect to executive compensation matters. The committee recognizes that its consultant will necessarily work with representatives of management but does so as the committee’s representative and solely on the committee’s behalf. The committee annually reviews and discusses Semler Brossy’s performance in executive session, without representatives of Semler Brossy present.

In its capacity as the committee’s consultant, Semler Brossy’s services include the following:

One or more representatives of Semler Brossy attend committee meetings as needed.

At a meeting held on February 24, 2022, the Compensation and Benefits Committee confirmed that Semler Brossy is independent of the Company’s management (applying the independence standards established in the Compensation Adviser Policy). In making this determination, the committee considered relevant issues, including the following six specific factors prescribed by the Securities and Exchange Commission and New York Stock Exchange corporate governance listing standards:

Based on this review and information provided by Semler Brossy, the committee determined that no conflict of interest exists that would preclude Semler Brossy from independently representing the committee.

The Compensation and Benefits Committee chair reports to the entire Board regarding each committee meeting. When appropriate, these reports and related discussions are conducted in executive session, without management present. Before the committee makes final decisions regarding compensation for the chief executive officer, it first discusses its proposed actions with the independent directors, without management present.

Management discusses the proposed agenda for each committee meeting with members of the committee in advance. The committee chair has the authority to add or delete items from any proposed agenda, and to call special meetings of the committee at any time.

No member of the Compensation and Benefits Committee is a former or current officer or employee of the Company or any of its subsidiaries or is an executive officer of another company where an executive officer of Ameriprise Financial is a director.

The Board is not required to have an Executive Committee, but has established one to allow the timely and efficient exercise of the Board’s authority in the intervals between regularly scheduled meetings of the Board, subject to certain limitations. Under the committee’s charter, the Chairman of the Board serves as the committee chairman and the then serving chairpersons of the Audit and Risk, Compensation and Benefits, and Nominating and Governance Committees and the presiding director serve as members. Mr. Cracchiolo is permitted to act as chairman of the committee even though he is not an independent director. The committee meets only as required, upon the call of its chairman, and is not required to meet a minimum number of times each year.

The Nominating and Governance Committee’s purpose is to:

A Statement of Principles Governing Corporate Political Spending, approved by the Board based on the committee’s recommendation, along with the Company’s annual corporate political spending report, is posted on the Corporate Governance page of our website at ir.ameriprise.com. The Statement of Principles Governing Corporate Political Spending was last amended and restated in March 2020 to enhance Board and management oversight of the Company’s trade association memberships and our dues payments to those trade associations.

Each of the Board’s standing committees is guided by a written charter. These charters, which are regularly reviewed by the committees themselves and the Board as a whole, are available on the Corporate Governance page of our website at ir.ameriprise.com.

You may request copies of any of the documents referred to in this section of the proxy statement by calling our corporate secretary, Wendy B. Mahling at (612) 671-3603. You may also write to her by email at ampsecretarysofficemailbox@ampf.com or by mail at 1098 Ameriprise Financial Center, Minneapolis, MN 55474. We will provide the copies at no cost to you.

We compete with other companies for executive talent, as we explain in the Compensation Discussion and Analysis later in this proxy statement. We must also compete for persons with the ability, integrity, experience and judgment required to serve on the board of a public company. We need to attract and retain directors who meet the high qualification standards set by our Board of Directors. In order to do so, we must offer a compensation package that is both competitive and fair in view of the significant time commitment and responsibilities that come with a director’s job. Only outside directors receive compensation for serving on our Board. Mr. Cracchiolo does not receive additional compensation for his service as a director.

We believe that our outside directors should have a substantial personal financial stake in the Company. Accordingly, a significant portion of our directors’ compensation package is equity-based. Also, a director is expected to have an equity holding in the Company with a market value of five times the amount of the current annual cash retainer upon attainment. A decrease in the price of a share of our common stock after a director has attained the required ownership threshold will not negate the director’s satisfaction of this requirement. A director is expected to reach this goal within five years of joining our Board. Shares of our common stock and deferred share units both count toward this goal. Using a closing price of $299.79 for a share of our common stock on February 28, 2022, the value of the common stock and deferred share units beneficially held by our outside directors (excluding shares held by a charitable organization) on that date was as follows, rounded to the nearest dollar: Mses. Blixt ($3,221,193); and DiGeso ($2,968,170); and Messrs. Greenberg ($6,641,029); Noddle ($15,727,266); Sharpe ($19,178,014); Shea ($1,820,242); Walter ($1,558,630); and Williams ($2,684,550). As is true for our executive officers, we prohibit our directors from hedging against a decline in the value of our stock.

The Board’s Nominating and Governance Committee is responsible for overseeing the compensation and benefits paid to our outside directors. The committee periodically reviews the outside directors’ compensation package to ensure it is market based, aligned with shareholder interests, and consistent with our compensation principles, including with respect to equity-based compensation, being within the shareholder-approved limitation on director compensation under our Amended and Restated 2005 Incentive Compensation Plan.

At its meeting held on September 29, 2021, the Nominating and Governance Committee reviewed and discussed an analysis of non-management director compensation prepared by Semler Brossy, which also serves as the independent compensation consultant to the Compensation and Benefits Committee. Among other matters, Semler Brossy’s report: reviewed the design and competitiveness of our non-management director compensation program; compared the program to the company’s peer group that is also used in connection with our executive compensation program; and recommended changes to the amount of certain components of the program. Semler Brossy advised that increases in the annual Board cash retainer, the annual Board equity award, the presiding director retainer and the annual cash retainer for the chair of the Audit and Risk Committee were appropriate in order to align compensation with peer group competitive levels.

Based on the market information presented by Semler Brossy, the committee recommended, and the Board approved, the following changes to its compensation program, to be effective as of January 1, 2022: the annual cash retainer is increased from $100,000 to $110,000; the annual equity retainer is increased from $150,000 to $190,000; the presiding director’s annual retainer is increased from $20,000 to $40,000; and the Audit and Risk Committee chair retainer is increased from $25,000 to $30,000. In all other respects the Company's compensation program for non-management directors remains unchanged.

The 2021 compensation program for our outside directors is outlined below. In connection with the approval on April 28, 2021, of the new structure under which the Presiding Director role was decoupled from the role of Nominating and Governance Committee chair, the Board approved a $20,000 annual retainer for the Presiding Director. We do not pay meeting fees or grant stock options or restricted stock to our outside directors.

All of our outside directors participate in the Ameriprise Financial Deferred Share Plan for Outside Directors. Each outside director receives an annual grant of deferred share units immediately following the Annual Meeting of Shareholders. A deferred share unit is a phantom share of our common stock that tracks the value of our common stock. A deferred share unit receives deemed dividends in the same amount paid on a share of our common stock, but it has no voting rights. Outside directors may also choose to defer part or all of their annual cash retainer and any committee retainer under the plan.

This table shows the total compensation earned by or paid to our outside directors during 2021.

This table shows the number of deferred share units issued to outside directors during 2021. In order to simplify the presentation, we have rounded the numbers shown to the nearest unit. Directors’ accounts were credited with deemed dividends on the deferred share units at the same rate as the dividends paid on a share of our common stock. These deemed dividends were reinvested in additional deferred share units.

Our outside directors receive occasional perquisites or personal benefits of reasonable value, such as: commemorative items in connection with their Board service; welcoming gifts at the hotel where they stay during Board meetings or events; holiday gifts; and recreational or other services and amenities when attending an off-site Board long-range planning meeting. We do not provide our directors with a tax gross-up amount on any gifts or other items given to them. We pay for or reimburse our outside directors for their reasonable travel, lodging, food and other expenses related to their attendance at Board, committee or annual shareholder meetings. Our outside directors may use our corporate aircraft for Board-related travel, subject to the aircraft’s availability and other restrictions. In extraordinary or unusual circumstances, such as a family emergency, we may make our corporate aircraft available to our outside directors on an exception basis; for 2021, the aircraft was not provided to any director on an exception basis. Our outside directors are eligible to participate in our charitable gift matching program on the same basis as employees. We will match a director’s personal contributions to one or more qualifying charitable organizations subject to an annual aggregate limit, which is currently $1,500. Directors’ requests for matching gifts are processed by the same outside vendor that we use for employee matching gift requests.

The table below shows how many Ameriprise common shares certain individuals and entities beneficially owned on February 28, 2022. These individuals and entities include: (1) owners of more than 5% of our outstanding common shares; (2) our current directors and director nominees; (3) the five executive officers named in the compensation tables included in subsequent sections of this proxy statement; and (4) all current directors and executive officers as a group. A person has beneficial ownership over shares if the person has or shares voting or investment power over the shares or the right to acquire such power within 60 days of February 28, 2022. Investment power means the power to direct the sale or other disposition of the shares. Each person has sole voting and investment power over the shares, except as we describe below.

The column captioned “Deferred Share Units and Restricted Share Units” shows DSUs and RSUs owned by non-management directors through the Outside Directors Deferred Share Plan and phantom units owned by the executive officers under the Company’s Supplemental Retirement Plan and Deferred Compensation Plan. The information in this column is not required by the rules of the Securities and Exchange Commission because these units carry no voting rights and will be settled in shares of common stock that the recipient does not have the right to acquire within 60 days of February 28, 2022. Nevertheless, we believe that this information provides a more complete picture of the financial stake that our directors and executive officers have in the Company.

The Compensation and Benefits Committee will review the results of the vote on this proposal carefully with the aid of its independent compensation consultant. Depending upon the results of that review, the committee will take such action, if any, as it deems appropriate. Because this vote is advisory, however, it is not binding on us, our Board of Directors, or the Board’s Compensation and Benefits Committee. Also, a negative vote will not overrule decisions made by the Compensation and Benefits Committee.

Before you vote on the resolution below, please read the Compensation and Benefits Committee Report on page 39 and the Compensation Discussion and Analysis beginning on page 40. The Compensation Discussion and Analysis contains important information about our executive compensation program. It also explains how and why the Compensation and Benefits Committee made specific decisions about the named executive officers’ compensation for their 2021 performance. The section of the Compensation Discussion and Analysis on page 41 describes the committee’s consideration of the results of the vote on this proposal at our 2021 Annual Meeting.

You should also review the tables that immediately follow the Compensation Discussion and Analysis, together with the related narrative disclosure and footnotes.

The Audit and Risk Committee’s job is one of oversight as set forth in its charter. It is not the duty of the Audit and Risk Committee to prepare the Company’s consolidated financial statements, to plan or conduct audits or investigations or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s consolidated financial statements and for establishing and maintaining effective internal control over financial reporting. The Company’s management is also responsible for its assessment of the effectiveness of internal control over financial reporting. The independent registered public accounting firm is responsible for the audit of the Company’s consolidated financial statements and the audit of the effectiveness of the Company’s internal control over financial reporting. In addition, the independent registered public accounting firm is responsible for the audit of management’s assessment of the effectiveness of internal control over financial reporting.

In the performance of its oversight function, the Audit and Risk Committee has reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements. The Audit and Risk Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission. In addition, the Audit and Risk Committee has received the written disclosures and the letter from its independent accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accounting firm’s communications with the Audit and Risk Committee concerning independence and has discussed with the independent accounting firm its independence.

The Audit and Risk Committee discussed with the Company’s general auditor and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit and Risk Committee meets with the general auditor and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. In addition, the Audit and Risk Committee meets with the chief executive officer and chief financial officer of the Company to discuss the Company’s control environment and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Audit and Risk Committee recommended to the Board of Directors, and the Board has approved, that the Company’s audited financial statements be included in the Company’s 2021 Annual Report to Shareholders and, for filing with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

PricewaterhouseCoopers LLP was our independent accounting firm for the 2021 fiscal year and the Audit and Risk Committee has engaged the firm for our 2022 fiscal year. We disclose the fees paid to PricewaterhouseCoopers for their services in our 2020 and 2021 fiscal years in this section.

We provide important additional information about the Audit and Risk Committee’s oversight of PricewaterhouseCoopers in the External Auditors section on page 28. We are asking shareholders to ratify the Audit and Risk Committee’s engagement of PricewaterhouseCoopers, subject to the limitation stated in the last sentence of the following paragraph.

The members of the Audit and Risk Committee and the Board of Directors believe that the continued engagement of PricewaterhouseCoopers as our independent registered public accounting firm is in the best interests of the Company and its shareholders. In the event the shareholders do not ratify the appointment, the Audit and Risk Committee will consider other accounting firms for 2022. The Audit and Risk Committee will be under no obligation, however, to appoint new independent auditors.

One or more representatives of PricewaterhouseCoopers will be present at the meeting with the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

The following presents the aggregate fees billed for professional services by PricewaterhouseCoopers, the Company’s independent registered public accounting firm for the year beginning January 1, 2021, in fiscal year 2021, and for the year beginning January 1, 2020, in fiscal year 2020, for these various services:

The audit fees set forth above consist of fees for professional services during each fiscal year in connection with the audit of the Company’s annual financial statements, review of financial statements included in the Company’s Quarterly Reports on Form 10-Q and services that were provided in connection with statutory and regulatory filings or engagements.

The audit-related fees set forth above consist of fees for attest, assurance and related services that were reasonably related to the performance of the audit or review of the Company’s internal controls, including custody rule examinations, service organization control reports, comfort letters, employee benefit plan audits and agreed upon procedures engagements.

The tax fees set forth above consist of fees for tax services during each fiscal year. Of the $191,000 in 2021 tax fees, $99,000 was paid for tax planning and consulting services and $92,000 was paid for tax preparation services.

All other fees set forth above consist of fees for miscellaneous advisory and consulting services other than audit, audit-related or tax services.

PricewaterhouseCoopers provided other services to associated organizations of the Company that were charged directly to those organizations. These amounts included $12,476,000 and $10,227,000 for services provided by PricewaterhouseCoopers in 2021 and 2020, respectively, primarily for performing audits and tax compliance services for mutual funds, collective funds and alternative investment funds.

Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the terms of the engagement of the Company’s independent registered public accounting firm are subject to the specific pre-approval of the Audit and Risk Committee. All audit and permitted non-audit services to be performed by the Company’s independent registered public accounting firm require pre-approval by the Audit and Risk Committee in accordance with pre-approval procedures established by the Audit and Risk Committee.

The procedures require all proposed engagements of the Company’s independent registered public accounting firm for services of any kind to be directed to the Company’s general auditor and then submitted for approval to the Audit and Risk Committee or to the Audit and Risk Committee chair prior to the beginning of any services. The Audit and Risk Committee has delegated such approval authority to its chair, to be exercised in the intervals between committee meetings.

In 2021, 100% of the services provided by PricewaterhouseCoopers for the Company and its subsidiaries were pre-approved by the Audit and Risk Committee or its chair.

Dear Fellow Shareholders:

As members of the Compensation and Benefits Committee we are responsible for ensuring that our executive compensation program:

Ameriprise continues to successfully navigate the global pandemic, related economic impacts, and our return to office. At the same time, we made significant progress against our five strategic focus areas, achieving results that exceeded our key measures, while also making meaningful financial and resource investments in major initiatives. Importantly, the Company made strong progress in advancing our long-term strategy. Additionally, our leadership team maintained focus on protecting our employees and advisors and serving our clients and supporting our communities. At the same time, our proven track record of outperformance with our strong foundation allowed us to execute on our business strategy, continue to return capital to shareholders and reinvest in the business.

The Compensation and Benefits Committee applies a transparent, formulaic and performance-based approach to executive compensation decisions, which are based on our performance scorecard, consisting of both financial and business/strategic goals. Ameriprise’s performance measures and targets are set in line with business and strategic plans and assessed at year end against those measures. The compensation program is structured to provide a balance of quantitative and qualitative assessments for our executives, well suited for the current environment. Ameriprise has not modified our executive compensation program or made special awards as a result of the impact of COVID-19. The Board and management team have prioritized creating an outstanding employee experience, which is essential to our long-term success. To ensure a direct alignment with compensation decisions, attracting, engaging and developing talent is a core component of the Performance Scorecard.

Our Compensation Discussion and Analysis that follows highlights the disciplined pay-for-performance strategy that has been developed and enhanced as a result of shareholder feedback and an evolving compensation and competitive landscape across the industry. Our robust shareholder engagement program, responsive actions, and transparent disclosures led to shareholders overwhelmingly approving our program at the 2021 Annual Meeting. We believe the evolution of our program reflects shareholder feedback and ensures that the compensation of our executive team is aligned with our long-term strategic goals and competitive benchmarks. Our committee is and will remain steadfast in maintaining an executive compensation program that is informed by ongoing dialogue with our shareholders and meets intended objectives.

The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions, the committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s 2021 Annual Report on Form 10-K.

In this section of the proxy, we describe our philosophy and material elements of our executive compensation program and explain how our Board’s Compensation and Benefits Committee makes compensation decisions, including the changes the committee made based on engagement with our shareholders.

The following are our named executive officers, or NEOs, for 2021.

Ameriprise has a disciplined, balanced approach to compensation utilizing a Performance Scorecard approach to determine short- and long-term incentive compensation for eligible executives, including named executive officers (”NEOs”). Under this approach, the Compensation and Benefits Committee establishes the performance measures and sets targets at the beginning of each year considering the Company’s business, financial and strategic plans. Actual performance at the end of the year is assessed against the established scorecard goals resulting in a company rating. Incentive compensation awards are then determined for our CEO and NEOs based on the quantitative and qualitative metrics in our scorecard.

Each year, Ameriprise provides shareholders with a non-binding say-on-pay vote on its executive compensation programs. Of the votes cast at our 2021 Annual Meeting, 88% were in favor of our executive compensation programs and policies. The Compensation and Benefits Committee evaluated results of the say-on-pay vote, and in light of the broad shareholder support of our executive compensation programs, decided to maintain the core design of our compensation programs.

Beginning with fiscal 2019, and in direct response to shareholder feedback, our CEO’s equity compensation is awarded outside of the incentive pool and assessed against separate long-term strategic measures. This brings our approach in line with market practice and provides greater transparency and less volatility in pay outcomes. Beginning with fiscal 2021, the pay framework for our other NEOs was aligned to the structure in place for the CEO, separating equity compensation from the leveraged incentive pool.

For the CEO and NEOs, individual annual incentive targets and long-term incentive award ranges are reviewed and approved on an annual basis by the Compensation and Benefits Committee.

Individual compensation targets are informed by several inputs including external competitive data, overall experience and internal impact of the CEO and NEOs. At the end of each year, pool funding for the Annual Incentives is leveraged based on the performance scorecard achievement (ranging from 0% to 175%). Individual award decisions for the Annual Incentives will range based on quantitative and qualitative assessment of their performance against established scorecards. LTIA award decisions are not leveraged and are based on overall performance, in addition to demonstrated leadership and achievements against long-term business results.

Our executive compensation philosophy is to align the financial outcomes of executives with those of shareholders. The executive incentive program incentivizes leadership outcomes which create sustainable long-term shareholder value. Strong, stable senior leadership is a critical driver of success for our business and for the financial services industry more broadly. The executive compensation program is designed to attract, motivate, engage, reward, and retain executives whose leadership is exemplary and whose vision, strategy and executional excellence drives sustained shareholder value by achieving the Company’s financial and strategic goals.

The Financial Performance and Business and Strategic Performance ratings determine the level of funding for our cash target incentives. Based on our exceptional 2021 performance outcomes, our Financial, Business and Strategic scorecard results calculated a company rating/score of 4.9, which equates to a funding leverage of 172.5% for the annual cash incentive pool for both the CEO and named executive officers. Individual cash awards are made within a determined range and based on performance outcomes and leadership impact as detailed in the “Individual Compensation Decisions and Compensation for 2021” starting on page 47.

 

The Financial Performance component includes five measures and is weighted at 70% to reflect the committee’s view that these objective measures are the most important indicators of the Company’s success. This includes net revenues, earnings, EPS and ROE as well as a Balance Sheet Quality measure that is driven by the effective management of core balance sheet fundamentals and our comprehensive enterprise risk management process. This provides Ameriprise with financial flexibility through all kinds of market cycles, enabling it to capitalize on business and growth opportunities and optimize the return of capital to shareholders.

The committee considered a number of factors when setting targets for the year, including the Company’s near and long-term strategic plans and objectives, the external market environment (equity markets, interest rates, volatility, etc.) and prior year performance levels.

The following shows 2021 performance for the financial measures relative to established targets, along with the resulting performance rating.

Ameriprise results reflect strong core business performance and organic growth. Financial results for the full year exceeded our planned expectations. Primary drivers of our performance included robust client and advisor activity levels in Advice & Wealth Management leading to record levels of client net flows and improved transactional-based fees as well as positive net flows in Asset Management as a result of good fund performance and strong gross sales. In addition, improved sales in Retirement & Protection Solutions, along with continued mix-shift into variable universal life and non-living benefit products, helped to reduce our risk exposure.

Balance Sheet Quality was also very strong in 2021 with above target performance as reflected below.

 

The Business and Strategic Performance measures, weighted at 30%, align to our five strategic focus areas and are designed to assess key non-financial accomplishments that contributed to the Company’s results in the year, consistent with our long-range plan. The committee evaluated performance against established targets to determine the final performance rating. In addition to key measures that are evaluated within each objective, the ongoing global pandemic created additional complexity, which the committee considered in its evaluation.

While continuing to successfully navigate the global pandemic, related economic impacts and our return to office, we made significant progress in generating record results that exceeded our scorecard metric targets. In addition, we continued to make meaningful investments in the business to support both current and long-term results. Importantly, the Company made strong progress in achieving its long-term strategy.

The following shows performance considerations, results, and the rating for each of the Business and Strategic scorecard components.

Ameriprise believes in transparency and discloses relevant information to help investors understand our executive compensation program. However, we believe that disclosing the components and individual targets incorporated in the Balance Sheet Quality and the Business and Strategic Performance objectives would result in competitive harm to the Company. Such disclosure could provide our competitors with insight regarding confidential business strategies without meaningfully adding to our shareholders’ understanding of the metric. Furthermore, we also determined it was prudent not to disclose the three-year goals for ROE and EPS growth used for PSUs on a prospective basis. We do disclose the goals and actual performance on a retrospective basis for PSUs that vest each year.

In making its compensation decisions each year, the committee reviews the total direct compensation for the CEO and each of our NEOs, as well as the aggregate value of the total incentives being awarded, ensuring that each component appropriately reflects Company and executive performance. CEO and NEO performance is assessed based on achievement of enterprise, business and individual goals, which are established at the beginning of the year and align to our strategic focus areas, as appropriate for each role. The following details key achievements and compensation-related considerations for each of our NEOs.

In the 2019 performance year, the CEO incentive program was revised by the Compensation and Benefits Committee, reflecting shareholder feedback. The annual cash incentive award was decoupled from the total incentive award. Starting in 2019 and for each year thereafter, the committee will set an annual cash incentive target and target range for the value of the CEO’s LTIA award. For 2021, the committee approved an annual cash incentive target of $3.9 million and a range of $10-$13 million for LTIA. On this and following pages, we report the committee's decisions for 2021 and explain the inputs and rationale behind those decisions. In total, the committee regarded 2021 as a year of remarkable success in both achieving near-term results and positioning Ameriprise for strength in years to come. The committee decided to award Mr. Cracchiolo the maximum annual incentive under its framework (175% of the target award, a slight uptick from the overall company score of 172.5%) and the maximum award in its LTIA range, resulting in an 11% year-over-year increase in the total compensation decision.

For plan year 2021, the Compensation and Benefits Committee awarded our CEO an annual cash incentive award of $6.8 million to reflect the exceptional financial and operational results of the firm, as detailed below. The annual cash incentive award reflects 175% of target. The committee arrived at this decision on the basis of the financial results achieved, the quality of those results and the execution against strategic initiatives, which position the Company for future performance.

The actual LTIA award is based upon the financial and strategic factors reflected on the previous pages and the key achievements listed below. In addition to the financial and strategic factors, the Compensation and Benefits Committee considered Mr. Cracchiolo’s essential leadership to further transform the business, execute on key initiatives, attract, engage and retain top talent, and continue to create shareholder value.

Accordingly, for plan year 2021, the Compensation and Benefits Committee awarded our CEO an LTIA award with a grant date value of $13.0 million: 50% of this was awarded in PSUs, which are then subject to the attainment of performance metrics over the next three years; 29% was awarded in RSUs; and 21% was awarded in stock options. The PSU Awards have a minimum payout of 0% and a maximum payout of 150% of target based on average return on equity and earnings per share growth, with a total shareholder return modifier up or down by up to 25 percentage points.

For plan year 2021, the NEO pay framework was modified to align with the pay structure for the CEO. Individual cash targets and LTIA ranges were reviewed and approved by the Compensation and Benefits Committee in 2021. Individual cash and LTIA award decisions were made at year-end based on the Chairman and CEO’s assessment of performance scorecard financial and strategic business results, in addition to the leadership impact and results of each NEO. The Chairman and CEO reviews his assessment of performance with the committee.

Leverage of 172.5% was applied to the individual NEO targets to formulate the available incentive pool. (The pool was formulaically calculated based on Ameriprise’s financial and business results). Individual cash awards were made within the established framework but varied based on business and individual metrics and results. LTIA awards for each NEO were made within the established range guidelines and were also based on business and individual results, with an emphasis on leadership impact and results. In addition, the Chairman and CEO and the Compensation and Benefits Committee considered the exceptional results of our key business initiatives in 2021, which included the BMO EMEA Asset Management business acquisition, the planned bank conversion, the fixed annuity reinsurance transaction and the return to office efforts. More detail regarding the results for each NEO which determined the cash and LTIA award decisions is included below.

Consistent with our pay-for-performance philosophy, Ameriprise continues to have a significant portion of pay for both the CEO and NEOs tied directly to business and financial results. At least 90-95% of pay is “at risk” and delivered in variable elements and of that, a significant portion is further deferred into restricted shares, stock options and performance share units. The restricted shares and stock options vest on a pro-rata basis over three years. The highest percentage of deferred compensation is delivered in performance share units, which cliff-vest after three years and whose value is tied directly to earnings per share and return on equity with a modifier applied for total shareholder return, continuing to align the financial interests of our senior executives directly to shareholder value.