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T. Rowe Price Group Inc.’s ( TROW - Analyst Report ) Chief Executive Officer (CEO), James A.C. Kennedy, got a 10% hike in his total compensation package. His salary had been increased to $7.8 million in 2011 from $7.1 million, according to a Securities and Exchange Commission filing last week.
In addition to this, T. Rowe Price’s chairman and chief investment officer, Brian C. Rogers, got a pay hike in 2011. Rogers’ compensation package surged 12% to $7.7 million in 2011 from $6.8 million in 2010.
The pay hike of executives at T. Rowe was a result of certain factors, including the company’s performance in 2011. The company’s net income climbed 15% to $773.2 million or $2.92 per share in 2011.
After Kennedy’s appointment as CEO in 2007, T. Rowe price has reported an increase in assets under management to $489.5 billion as of December 2011 from $400 billion in 2007. Moreover, for full year 2011, the company recorded 12.5% year-over-year rise in total revenue.
However, due to the economic slowdown, many of the senior banking executives had been facing a pay slash. Large U.S. banks such as Bank of America Corporation ( BAC - Analyst Report ) , Morgan Stanley ( MS - Analyst Report ) and Goldman Sachs Group Inc. ( GS - Analyst Report ) are trimming the compensations of their CEOs. However, the CEO of JPMorgan Chase & Co. ( JPM - Analyst Report ) still has the benefit of a steady pay structure.
T. Rowe Price’s financial stability has the potential to take advantage of the improving economy and benefit from the growth opportunities in the domestic and global AUM. With a debt-free position, higher return on earnings and improving investor sentiment witnessed in 2011 as a whole, we believe that the fundamentals will remain strong.
Furthermore, the performance of relative mutual fund was also positive. However, higher operating expenses and stringent regulatory norms could be the prime causes of concern.
T. Rowe Price currently retains its Zacks #3 Rank, which translates to a short-term Hold rating. Considering the fundamentals, we are also maintaining a Neutral recommendation on the stock.
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