Last year was a good one for Baltimore money manager T. Rowe Price Group Inc. and its CEO, whose pay increased 51 percent after the company reported record assets under management.
James A.C. Kennedy was paid a total of $7.1 million for 2010, according to a Securities and Exchange Commission filing on Friday. In 2009, Kennedy was paid $4.72 million. Kennedy, 57, has been with T. Rowe Price since 1978 and was named a director in 1996 and CEO in January 2007.
The $7.1 million includes Kennedy’s base salary, option awards, a cash incentive bonus and other compensation. Kennedy’s base salary remained at $350,000.
The biggest change came from the amount paid out under an annual cash incentive award. In 2009 Kennedy received a $3.3 million bonus under the plan, and in 2010 that figure jumped to $5 million.
For the year, Kennedy’s stock option awards rose to $1.7 million, compared to $1.02 million the previous year.
In addition to Kennedy, Brian C. Rogers the chairman and chief investment officer, and Edward C. Bernard, vice chairman and president of T. Rowe Price Investment Services, saw increases in pay. Rogers earned $6.88 million in 2010, compared to $4.72 million in 2009. Bernard was paid $7 million in 2010, an increase from his 2009 pay of $4.42 million.
Their increases were also pegged to company performance, with most of the money coming from the annual incentive plan.
“Financial services people get paid a lot, and the increase in pay seems reasonable for the performance,” said compensation expert Don Delves, with the Delves Group. “But, it is a lot of money compared to other companies in their range in other industries. All things considered though, given the level of profits they’re producing, it’s supportable.”
For the quarter ending Dec. 31, T. Rowe reported net revenue of $647.5 million and net income of $191.6 million with diluted earnings per common share of 72 cents. Net revenues were $542.6 million in the fourth quarter of 2009 and net income was $152.5 million.
Investment advisory revenues also increased 21 percent compared to the fourth quarter of 2009. This led to cash inflows at T. Rowe in the quarter of $6.9 billion. For the year, net cash inflows from investors totaled $30.3 billion.
At the end of 2010, T. Rowe Price saw its assets under management hit a record $482 billion. That amounted to a more than 20 percent increase from 2009.
T. Rowe Price spokesman Edward Giltenan said executives saw their pay drop in line with company performance, especially after 2008 when the company’s assets under management dipped to $276.3 billion. In 2008, Kennedy was paid a total of $5.7 million including, a $3.8 million incentive bonus. That was down from 2007 — his first year as CEO — when he earned a total of $7.74 million. In 2006, Kennedy earned $5.68 million.
“We really spend a lot of time making sure that salaries really are in line with how the company is doing,” Giltenan said.