Good morning. Thank you for joining us today, and welcome to our 2014 Annual Meeting of Shareholders. I'm Jim Cracchiolo, Chairman and Chief Executive Officer of Ameriprise Financial. Tom Moore, our Corporate Secretary and Chief Governance Officer, is with me to help conduct our meeting today. Let's get started, Tom.
Thank you, Jim. The Board of Directors has appointed the Carideo Group Inc. as Inspector of Elections for this meeting. Ms. Janice Dreiman, the representative of the Carideo Group, has subscribed her oath of office and filed it with me. The Board of Directors has fixed March 4th, 2014, as the record date for determining shareholders entitled to notice of and to vote at this annual meeting. Mr. Chairman, I present the following documents. A certified list of the holders of common stock of this company as of the close of business on March 4th, 2014. This list has been prepared by Computershare Trust Company, National Association, the company stock transfer agent and registrar.
An affidavit of Ms. Sally Lent, an employee of Broadridge Financial Solutions, as to the distribution, beginning on March 19th, 2014, to our shareholders of record as of March 4th, 2014, of a notice regarding the availability of proxy materials for the shareholder meeting to be held on April 30th, 2014, or paper copies of the proxy materials. The notice informed our registered shareholders of the availability online of the notice of meeting, the proxy statement for this meeting, and the 2013 Annual Report to Shareholders. Shareholders were also informed how to obtain these proxy materials in paper form or by email at no charge. The notice disclosed the date, time, and location of this meeting, as well as the items to be voted on. Copies of the proxy materials have been posted on the internet and provided in paper form to those shareholders who requested them.
I will file these materials with the minutes of this meeting. Jim?
The Inspector of Elections has reported the existence of a quorum. We'll proceed with the business of this meeting, which I now call to order. First, I'm pleased to introduce my colleagues on the board of directors who are with us today. We could not be a great company without their committed and steady stewardship. I ask you to please hold your applause until after I've requested all our directors to stand. Please remain standing until I've introduced all of you. I'll first introduce our two new directors, Dianne Neal Blixt and Amy DiGeso. The board of directors appointed Dianne and Amy as directors effective February 26th, and they are standing for election for the first time today. On behalf of everyone present, I extend a warm welcome to Dianne and Amy as they attend their first Ameriprise annual meeting.
I'll introduce my fellow directors who are standing with me for re-election today. Siri S. Marshall, please stand. Dianne, please continue to stand. Lon R. Greenberg, W. Walker Lewis, Jeffrey Noddle, H.J. Solz, Robert F. Sharpe, Jr., William H. Turner. In recognition of their efforts on behalf of Ameriprise and our shareholders, please join me in giving our board a warm and welcome deserved round of applause. Thank you. Next, I'd ask the members of my executive leadership team of Ameriprise Financial to please stand. The board and I rely upon your expertise, unique experience, and passionate leadership. Please join the board and me in giving my ELT colleagues a round of applause for their many contributions to our success. Thank you. I will now turn it back to Tom for the statement of order of business and the opening of the polls. It's all yours, Tom.
Thank you, Jim. To ensure the orderly conduct of the business of this meeting, the board of directors has adopted the order of business set forth in the agenda provided to each person as he or she entered. Accompanying the agenda are the meeting procedures approved by the board of directors. We ask that, in fairness to all shareholders attending this meeting, you please honor these rules. In a moment, I'll explain the six matters on the agenda for consideration during today's voting. The company has not received notice from any of its shareholders as required under its bylaws of any other matter to be considered at today's meeting. Therefore, no other proposal or nomination may be properly introduced by shareholders at this meeting. On behalf of the chairman, I now declare the polls open for voting at this annual meeting.
If you wish to vote at the meeting and have not yet done so, you may deliver your ballot to the Inspector of Elections. Inspector, please stand in order to identify yourself. Thank you. If you need a ballot, the inspector can give you one. The polls will remain open until immediately after the discussion on today's proposals. To promote the efficient conduct of the meeting, the chairman has waived the formalities of requesting motions and seconds from the audience and has declared the order of business as stated in the agenda to be accepted by those present in the meeting room. Each of the following proposals is described in the company's proxy statement dated March 17th, 2014. The first five proposals are presented at this meeting by the board of directors.
The sixth and final proposal, relating to the disclosure of political contributions and expenditures, has been jointly submitted by four of our shareholders. The first proposal is the election or re-election of 10 directors. As we explained in our proxy statement, all of our director candidates are standing for election or re-election for a one-year term. Therefore, Mr. Cracchiolo and each of the other nine directors named in the proxy statement, and whom he introduced to you earlier in the meeting, are standing for election or re-election, each to serve until our 2015 annual meeting. The second proposal is a non-binding advisory vote to approve the compensation of the named executive officers. The named executive officers are those officers identified in the compensation disclosure tables included in the proxy statement for this meeting. This vote, commonly called a say on pay, is required by federal law for large public companies.
You'll again have the chance to vote on this proposal at our 2015 annual meeting and at each annual meeting through our 2017 annual meeting. At the 2017 annual meeting, you will have another opportunity to vote on how frequently you would like this proposal to be presented to our shareholders. The third proposal seeks shareholder adoption and approval of an amended and restated certificate of incorporation. If this proposal passes, our certificate of incorporation would eliminate all super majority voting rights. Briefly, our certificate of incorporation now requires a 75% vote of the combined voting power of our outstanding stock for shareholders to approve amendments to our certificate that are approved and recommended by our board of directors. The same 75% requirement, generally known as a super majority right or requirement, applies to shareholder amendments to our bylaws.
This proposal, if passed, would replace the 75% vote required with a majority voting requirement. The next proposal is the approval of the Ameriprise Financial 2005 Incentive Compensation Plan, as amended and restated. As part of this proposal, we are also asking shareholders to approve the material terms of the performance goals that may be used to award performance-based compensation that is designed to be tax-deductible under Section 162(m) of the Internal Revenue Code. The fifth proposal seeks ratification of the audit committee's selection of PricewaterhouseCoopers LLP as the company's independent auditors for the fiscal year ending December 31st, 2014. The sixth and final proposal relates to the disclosure of political contributions and expenditures and is set forth on pages 45 to 46 of our proxy statement.
The proposal is being presented by a qualified representative of the four shareholder proponents, I now ask her to please stand and wait for a microphone to be provided so that she may present the proposal. Millicent Budhai has traveled here from New York City to join us today. Welcome.
Thank you.
Ms. Budhai, it's good to have you with us, and we're sorry about the weather.
Thank you. Good morning. My name is Millicent Budhai, and I am here on behalf of New York City Comptroller, Scott M. Stringer, and the trustees of the New York City Pension Fund. I present the resolution calling on our company to disclose its policies and procedures for providing detailed information on the use of corporate resources to make both direct and indirect political contribution and expenditures. Without detailed disclosure and a system of accountability, company assets can be used for policy objectives that may pose risks to the long-term interests of the company and its shareholders. The 2010 Supreme Court ruling in Citizens United overruled two legislative precedents that restricted corporate political spending. The result has been an unleashing of money for influence in the recent election cycle, and with the rise of super PACs, and to support or oppose legislation such as the Affordable Care Act.
This ability to disproportionately influence elections and issues corrodes democracy. The lack of transparency also poses financial and reputational risks to companies. Target, for instance, faced a backlash of protests and boycotts after it donated to a politician that opposed same-sex marriage. Investors recognize the risks to long-term shareholder value and are filing an increasing number of shareholder resolutions on the issue each year. This now makes disclosure even more imperative. Agencies are pushing for such transparency. The Federal Communications Commission ruled in 2012 that television broadcasters are now required to post advertising expenditures on the FCC's website. Various groups, including law professors, are urging the SEC to address the issue. The SEC reported that it is now considering rulemaking on the disclosure of political contributions.
According to Commissioner Aguilar, it is one of the SEC's core functions to identify gaps in information that investors require and then close that gap as quickly as possible. These recent and future developments are compelling reasons why your company, in its best interest and that of its shareholders, should be proactive and establish the proposed good governance practice before legislation mandating full disclosure of political contributions is enacted. Over 100 companies have already agreed to do so. While Ameriprise provides some information on its political contribution activities, it falls short of best practices in a number of ways. For instance, it provides no information on trade association policy, disclosure of trade association memberships, dues, and political lobbying expenditures made by these groups with company funds. We urge you to support our proposal. Thank you.
Thank you, Ms. Budhai, for your presentation. I'd now like to give our shareholders the opportunity to comment or ask questions of Ms. Budhai if they wish. Thank you. No questions being heard. Ms. Budhai, thank you again for traveling, and I wish you a safe trip home. We will now proceed with voting on each of the proposals I've described. The votes required for each proposal to be approved are described in the chart provided on page three of our 2014 proxy statement. We will close the polls immediately after any discussion on these proposals. If you wish to vote and have not yet done so, now is the time to record your proxy card or ballot to the inspector.
If you previously returned a proxy card or voted by means of the internet or telephone and do not wish to change your vote, you do not need to vote at this meeting. If you have not yet turned in your proxy card or if you are a shareholder of record and you wish to vote your shares in a manner different than you have indicated, please raise your hand now so that you may be provided with a ballot. We will provide an opportunity following the chairman's remarks for shareholders to raise questions not related to the proposals being voted on today. As we detail in our proxy statement, the audit committee of the board of directors approved the engagement of PricewaterhouseCoopers LLP for the 2014 fiscal year, subject to ratification by our shareholders. I would ask Mr. Bateman of PricewaterhouseCoopers to please stand and be recognized.
Before I declare the polls closed, are there any questions for Mr. Bateman as a representative of PricewaterhouseCoopers? Thank you, Mr. Bateman. If there are any questions regarding the voting procedures or if any shareholder wishes to comment on or raise any questions regarding the proposals being voted on, please raise your hand now. There being no further discussion of the proposals, we will now prepare to close the polls. Please return your ballots now if you have not already done so. On behalf of the chairman, therefore, I declare the polls closed. While we're waiting for the inspector's voting report, I will turn it back to our chairman for his report on the state of the business. Jim?
Thanks, Tom. I'm pleased to report that 2013 was a significant growth and record results for Ameriprise Financial. I'd like to cover how I'm feeling about the business as well as my perspectives of the year. Here are some highlights to take away. Ameriprise Financial is generating excellent growth and profitability. Our strong results and progress demonstrate that we've been executing our strategy well. With better markets and our focused growth efforts, client activity and assets have increased nicely. Assets under management and administration grew to a record $771 billion. We feel good about our ability to take advantage of the large opportunities before us and to steadily invest for the long-term success of Ameriprise. We have an excellent team of people, we've built a terrific company with unique capabilities, supported by a rock-solid foundation. In understanding 2013, it's important to consider the market environment.
Ameriprise, like the industry, benefited from strong U.S. and European equity markets as well as increased investor confidence. While these were clear positives, interest rates remained at historic lows and pressured our spread businesses. Overall, financial results were significant. Operating net revenues grew 7% to $10.9 billion. Operating earnings were $1.5 billion, up 17%. As a result of the combination of our business growth and effective capital management, we delivered a 26% increase in operating EPS. Our operating return on equity was 19.7%, excluding AOCI, one of the highest returns in the industry. Investors recognized our results. In 2013, the total return of Ameriprise common stock was 88%, far outpacing our peers. In fact, of the 81 companies in the S&P Financial Index, Ameriprise achieved the fifth highest total return last year. Our growth has been consistent over time as well.
For the five-year period from 2009 to 2013, the total return of Ameriprise stock increased 449%, the fifth highest return of all of the S&P Financials. Ameriprise is powered by the strength of our wealth management, asset management, and insurance businesses, as we advise, manage, and protect our clients' assets and income. Each business is a market leader on its own. However, it is the combination of our businesses, the long-term relationships that we develop with our clients, and the strength of our financial foundation that creates a powerful and resilient financial services firm. Let me start with wealth management. Retirement is one of the consumer's leading concerns and pressing needs. Ameriprise remains the leading financial planning firm in the U.S. Serve these needs. Ours is a people business built on referrals.
Our success comes from the deep relationships our advisors establish with clients and the fact that our clients stay with us a very long time. As a result, our client satisfaction remains very high, and we're being recognized for our approach and client relationships. Ameriprise was named number one in customer experience across investment firms, according to Forrester Research's 2014 Customer Experience Index. We placed third in trust across the investment firm industry in the annual Temkin Trust Ratings and in first in forgiveness. Fundamental to our success is our experienced and engaged field force. Our advisors are tenured and productive, and we continue to earn very high satisfaction rates. They value the tools, leadership, as well as the collaborative culture we've built together. We're seeing the benefit in our metrics and our financials. Ameriprise client assets grew to a record $409 billion.
Wrap net inflows were $13 billion, another record high. Per advisor productivity grew 14% to $440,000 when excluding former banking operations. Our Advice and Wealth Management segment pre-tax operating earnings grew 36%, with our pre-tax operating margin increasing from 11.2% to a very competitive 13.8%. Over the past few years, more than 1,000 experienced advisors have moved their practices to Ameriprise, which includes a good year for recruiting in 2013. The advisors who join us are increasingly productive. As we continue to add experienced advisors each year, earlier classes are growing their production in meaningful ways. In terms of product solutions, we've also enhanced our product portfolio, including adding to our managed account platform, introducing new volatility control funds within our variable annuities, growing our fixed income offerings, and adding to our solution set to meet the needs of our clients.
In addition to products and services we offer, what's key to our success is how advisors work with clients. As I mentioned, we're focused on ensuring that advisors have the capabilities and the support they need to serve clients well and grow strong practices. We developed our Confident Retirement approach to simplify the conversations our advisors are having with their clients. It makes complex topics easier to discuss and act upon. We've had excellent response so far. In fact, from our initial research among those clients who have experienced our approach, 93% feel more confident about retirement, 96% feel the advice addressed their needs, and our advisors who are using it are increasingly productive. Technology also plays an essential role in our experience and growth plans. We invest to help advisors deliver the service clients want, achieving leading productivity and run efficient modern practices.
We provide our advisors industry-leading tech capabilities. From our online tools to the mobile capabilities and client website, our advisors can conduct business in a virtually paperless environment. We recently transformed our brokerage platform, earning the number 2 ranking for full-service brokerage firms in the 2013 Corporate Insight Survey. In another survey, we ranked 3rd place for full-service investment online brand. Our advisors find that our technology platform helps them serve clients better while increasing their efficiency and productivity. With regard to our brand, we continue to promote Ameriprise and our retirement expertise, working with award-winning actor Tommy Lee Jones. Today, Ameriprise brand awareness is at an all-time high. Earlier this year, we launched our Real Questions. Real Answers. campaign. It brings to life important questions people have about retirement and how Ameriprise can help them answer them.
As clients build their wealth and work towards a secure retirement, their goals evolve from asset accumulation to asset preservation and creating retirement income. Ameriprise has strongly rated insurance and annuity businesses that provide excellent product capabilities that support our financial planning model. In an extended period of low interest rates, our insurance and annuity businesses are performing well, with good sales growth in the Ameriprise channel, strong risk characteristics and steady returns. In annuities, we continue to optimize the risk characteristics of our variable book. Our clients and advisors have had a very positive reaction to our new funds that are designed to help them manage volatility. We've experienced significant asset flows into them, which continues today. We also are focused on offering clients variable annuities without living benefits as our clients look to generate tax-deferred savings.
On the fixed annuity side, we're not growing it, given the continued low client demand due to the rate environment. That said, I'm pleased with the performance of the book. In terms of insurance, we have a sizable business with $194 billion in life insurance in force. Last year, we experienced good sales growth in our life business, with strong sales of our recently introduced Index Universal Life product and improved sales of Variable Universal Life. These are important product solutions for our clients' protection and long-term accumulation needs. With healthcare concerns increasingly on the minds of consumers, we introduced RiverSource. An innovative universal life product with long-term care benefits. In auto and home, we generated steady increases in policies and premiums. One of the items that impacted earnings was weather-related losses that also affected others in the industry.
The business is being recognized for high customer satisfaction, and we remain focused on targeted opportunities in both direct and affinity channels. Now let's move to asset management, where we're generating competitive financial results as we position the business for long-term growth. In 2013, we grew assets under management 10% to $501 billion. We've earned top 10 positions in the U.S. and the U.K., and we're expanding distribution in Europe, the Middle East, and Asia. We continue to deliver competitive financial results and invest in the business, while we manage through a period of outflows. Pre-tax operating earnings grew 29% to $691 million, and our adjusted net pre-tax operating margin grew to competitive 36.5%. With Columbia and Threadneedle, we built a good platform for which we can grow. The business is well-positioned with a strategic balance of equity and fixed income assets, broad capabilities, and improving distribution.
We have important client relationships that create a steady base of earnings. Our investment talent is excellent, and we're delivering good performance, ending the year with 117 4-star and 5-star Morningstar rated funds. With our strong local presence, our teams at Columbia and Threadneedle are increasingly working together across multiple aspects of the business to position the business to compete globally. Columbia and Threadneedle have built strong positions in our core markets, and by working together, we're now able to present our full capabilities as we serve individual, institutional, and high-net-worth clients in the U.S., Europe, Middle East, and Asia. Ultimately, we're focused on moving the business to net inflows, and while we're making progress here, we recognize we have more to do to overcome outflows from our former parent relationships. That said, we ended the year with good underlying momentum.
Our institutional business is growing with good win rates and a healthy pipeline of new business. European retail net inflows were quite strong. In the U.S. intermediary, we focused on competing to earn a higher share of business. We recognize we have more work in front of us to drive consistent, profitable net flows. Let me now turn to how we manage expense, risk, and our capital base, core disciplines that underpin our firm. We continue to manage expenses effectively as well as re-engineer our processes, which frees up dollars to reinvest. Last year, re-engineering helped fund over $200 million of growth investments, and we were able to invest at that level while keeping general and administrative expenses flat. With regard to our balance sheet, it's extremely healthy and remains a key differentiator of Ameriprise.
We have approximately $2 billion in excess capital, and we have long maintained strong credit ratings, good liquidity levels, and a high-quality, diversified investment portfolio. We've also committed to returning capital to you. Last year, we returned about $2 billion to shareholders through share repurchases and another increase in our dividend, the sixth increase since 2010. This puts our dividend payout ratio in the high 20% range. For the third year in a row, we've committed at least 130% of our operating earnings to shareholders. We're able to commit to this level of return because of the free cash flow our model generates, as well as the proactive steps we've taken to reduce our capital requirements and manage risk. In 2013, 57% of our pre-tax operating earnings were driven by our advisory and asset management businesses. That's up from 30% in 2008.
We built a business that generates a good mix of earnings with an increasingly contribution from our less capital-demanding businesses and solid contributions from annuities and protection. Let's talk about 2014 now. We released first quarter earnings on Monday, and we had a very good start to the year. Revenues and earnings were up nicely, and we delivered another record high operating ROE, excluding AOCI, breaking into the 20% range. We also announced another increase in our regular quarterly dividend, raising it 12%, the seventh increase since 2010. We authorized an additional $2.5 billion share repurchase program as we have nearly completed our current authorization a year early. I'd like to close by saying that I am pleased with the progress Ameriprise is making across multiple dimensions. This year will mark a significant milestone, our 120th year as a company of helping clients achieve their financial goals.
We have the right strategy, growth objectives, and the team of people to continue to take advantage of the opportunities in the marketplace. Our employees are dedicated and motivated by how they can help make a difference in our clients' lives. Our employee engagement far exceeds financial industry norms. For the fifth consecutive year, Ameriprise was named as the best place to work. We continue to transform the company as our advisors build even stronger, more productive practices. We have terrific products and solutions and have put in place excellent capabilities and resources to differentiate Ameriprise and our advisors. We're making a difference in our neighborhoods and communities. Ameriprise was once again named as one of the leading community-minded companies in the nation in the second edition of The Civic 50.
On behalf of all of us at Ameriprise, I'd like to thank you for your continued support, your trust, confidence in our company. We will do everything we can to continue to earn it and reward it. With that, I will pass it back to Tom.
Thank you, Jim. Mr. Chairman, the Inspector of Elections has handed me a preliminary report showing that all directors standing for election or re-election have received the required number of votes under our majority voting standard. All other proposals submitted by management have passed. Specifically, the say on pay proposal passed with 97% of the votes cast being voted for. The Ameriprise 2005 Incentive Compensation Plan proposal passed with a vote of 86%. The amendment to the certificate of incorporation and PricewaterhouseCoopers affirmation both passed with more than 99% of the votes cast. Finally, the shareholder proposal presented earlier today garnered a vote of 31% and therefore did not pass. The chairman will now welcome any questions or comments from our shareholders. We ask that you please observe the meeting procedures in the agenda, including the five-minute time limit for questions.
Please raise your hand. We'll be happy to bring a microphone to you. Please state your name and city of residence and indicate whether you are a shareholder or a proxy for a shareholder. You may ask a question or offer a comment only if you are a shareholder or a proxy for a shareholder. If you have a question or concern that is not relevant to the interests of all shareholders, please see one of the attendants at the back of the room. He or she will be happy to help you. With that, I'll turn it over to our chairman, who will open up the meeting for shareholder questions and comments. Jim?
Thank you, Tom. Are there any questions or comments? Yes.
I said before, the meeting shouldn't be complete without a question from the shareholders. I'm Steve Peterson. I'm a shareholder. Thank you for that comprehensive report. Congratulations for another successful year.
Thank you.
If I read your letter to shareholders correctly in the annual report, you referred to our tenured advisors. My question is, how does an advisor achieve tenure? A second question is, could you comment on the difference in the career path of the employee advisor from the independent contractor advisor? Lastly, have you entered into any agreements with our competitors not to poach other advisors?
Okay, let me start with the first question, which is, how does our advisors become tenured? What we look to do is when we're bringing in new people to the business and the industry, we help them develop their book of business. As you would imagine, it usually takes them up to 3-4 years to really build a level of productivity that they can both stand on their own and derive what we would consider a productive practice. Having said that, also, we have recruited other advisors from other platforms into Ameriprise now, both in the employee and the experience channel. Usually, it takes them about anywhere from 1-2 years to be able to migrate their book and become more fully productive in the Ameriprise channel. That's when we usually talk about the more tenuring of the advisors.
As you would imagine, we have a very strong and stable advisor force, we have a very tenured advisor force because our retention is so strong. I think that was your first question. The second question, could you repeat that one?
Sure. The career path of the independent contractor advisor from the employee advisor.
As you would recollect, many years ago, we always recruited new people into our system, and we had them as employees for the first stage of their career, then they all moved over to become independent. A number of years ago, we felt that it was appropriate for us to both have a tenured employee channel as well as continuing the significant activities we had as an independent franchisee system. In that regard, today, as we recruit advisors more into the employee channel, they can now stay in that channel and become highly productive as an employee for the long term. The career path is one where it's self-selected by the advisor of whether they want to be an employee and supported more so by the company and our branch offices, et cetera, and the assistance of leadership on a more day-to-day basis.
Would they rather be independent, set up their own practices, their offices, hire their own sales support, and actually run it as a little bit more of a business owner of their enterprise. Both of them actually still experience the same benefits of Ameriprise because we use the same brand, technology, capabilities, and support. One has more support from a leadership, our offices, in-house service. As an independent advisor, they actually either hire those people themselves, pay their own rent, lease their own offices, et cetera. They still get the same networking capabilities, the same solutions, the value proposition, whether they're employee or a franchisee. It's all up to the advisor to choose which would be better for them. Okay? I think your third question is, do we have no-poach contracts with other firms? The answer is no.
We recruit in, people recruit from us. We have had a very stable and good retention because our advisors are highly productive. They have a great client satisfaction as part of Ameriprise, and we have a very good, strong culture here. Thank you for your question. Any other questions or comments?
Thank you, Mr. Chairman. My name is Mike Telford. I'm from near Des Moines, and I'm here on behalf of the nation's pig farmers and the National Pork Producers Council, which is a shareholder. We just want to thank the staff, management, and the board of directors for Ameriprise for your continued efforts in supporting our family pork producers through your strong investment and financing efforts, which you obviously do so well. I want all the shareholders to know that the nation's family pig farmers have made many improvements in animal care and production practices, and like Ameriprise, they are committed to continuous improvement. We hope Ameriprise will always remain diligent in consideration of requirements on production practices and their impact on the supply chain and family farmers. We certainly want to work with you and appreciate your efforts. There is much information about our industry at porkcares.org.
Ameriprise and our family producers are clearly committed to building stronger communities and improving our local, state, and national economy. I just hope everyone here will assist me in thanking the staff and management for your continued investing and financing efforts and achievements. Thank you.