Compensation
Program Overview Business Results Summary Appendix Presentation overview
We are focused
on carefully managing expenses, including compensation 2011 operating income
increased 11% compared to 2010 and margins improved to 31.8% versus 27.7% in
2010 We more closely aligned compensation with shareholders’ and clients’
long-term interests Implemented a variable compensation program that is based
on pre-incentive operating income At least 85% of compensation for CEO and
named executive officers (“NEOs”) continues to be variable and “at-risk” CEO
compensation received attention in 2011, but should no longer be a
distraction to the business Dramatically reduced 2011 CEO compensation
Introduced CEO performance-based equity awards subject to stock performance
hurdles and a four-year vesting period Capped 2012 CEO compensation
opportunity at $10 million Tied a significant portion of 2012 CEO
compensation directly to Y/Y change in operating income Maintained CEO pay
mix in 2012 at 60% long-term incentive awards and 40% cash Mr. Weil
voluntarily terminated his severance agreement that covers severance benefits
prior to a change of control We take our fiduciary responsibilities to our
shareholders very seriously
We conducted a
comprehensive review of CEO pay in 2011 and made several changes Based in
part on company results, 2011 CEO compensation was materially reduced $6
million total compensation for 2011 was a 70% reduction in total pay as reported
in last year’s proxy Granted new performance share units: $1.2 million that
vest only if JNS stock price hurdles are attained subject to a four-year
vesting schedule (1) 50% is earned if the stock increases 27% 50% is earned
if the stock increases 58% 2012 and future changes: New performance-based
compensation: a significant portion of compensation will be determined by the
Y/Y change in operating income with a $2 million target 2012 pay mix will be
60% long-term incentive compensation and 40% cash CEO pay capped at $10
million in 2012 Change in JNS Operating Income Goal-Based Payout (% of
Target) Note: Hurdles are based on a starting price of $6.31, which was the
price per share on the date of grant. If the applicable stock price hurdle is
not exceeded for 20 consecutive trading days during the four years following
the grant, then the award will be forfeited. $20 $6 -70% -46% 0% TARGET CEO
Pay, 2010 – 2011 ($ in millions)
Our executive
compensation is predominately made up of compensation that is “at-risk” in
order to align our interests with the long-term interests of our shareholders
and clients Our executive compensation programs consist of three key
elements: (i) base salary; (ii) variable cash compensation; and (iii)
variable LTI awards that are granted in the form of restricted stock, mutual
fund units, performance shares or stock options 92% of total CEO compensation
was performance-based or “at-risk” in 2011 and 85% percent of the NEOs
compensation was “at-risk” Base 8% Variable Cash 32% Variable LTI 60% 92%
Variable Compensation 2011 CEO Pay Mix 2011 Average NEO Pay Mix
As a result of
changes in our executive team, our NEOs have changed We hired new executive
officers in 2010 and 2011 who are responsible for implementing our key
strategic priorities Given the new members on our executive team and new
decision-making processes under our CEO (hired in 2010), our NEOs have
changed for 2011:(1) Richard M. Weil, CEO Bruce L. Koepfgen, EVP and CFO
Robin C. Beery, EVP and Head of U.S. Distribution Augustus Cheh, EVP and
President of Janus International George Batejan, EVP and Global Head of
Technology and Operations Senior leaders reported in prior years, including
Jonathan Coleman, Gibson Smith and James Goff, are no longer responsible for
establishing Company-wide policies due to their increased focus on managing
Janus’ investment team and portfolio management duties We believe that
changes in compensation for former NEOs are in line with our 2011 performance
Note: Excludes Gregory A. Frost, former Executive Vice President and CFO, who
resigned on July 31, 2011.
We made
significant progress towards becoming a stronger and more diversified company
in 2011 We hired new executive officers in 2010 and 2011 who are responsible
for implementing our key strategic priorities Our operating income improved
11% from 2010 as a result of continued financial discipline and our operating
margin improved to 31.8% vs. 27.7% in 2010 We continued to strengthen our
balance sheet, which resulted in a restoration of our investment grade credit
rating from Standard & Poor’s We continued to diversify our business
through the build-out of our fixed income, international and institutional
businesses, while maintaining a focus on operational excellence Our mathematical
equity investment performance improved and our value equity business
maintained strong long-term performance Despite these accomplishments, we
were adversely impacted by challenges in the investment performance of our
large cap growth strategies and institutional clients’ reallocations away
from equity strategies
Appendix
We maintain
other compensation practices that we believe strongly align the interests of
our executives with those of our shareholders and clients Current
Compensation Practices A large majority of NEO compensation is variable: 92%
of our CEO’s 2011 total compensation and 85% of our other NEOs’ 2011 total
compensation At least 40% of our NEOs annual variable compensation consists
of long-term incentive awards We have substantial stock and mutual fund
ownership requirements for our NEOs (4x base salary) We now only grant
long-term incentive awards with a “double-trigger” change in control
provision Annual long-term incentive awards are largely made in less dilutive
restricted stock versus stock options We have a one-year, post-vesting
holding period on earned performance share units We mitigate potential
excessive risk taking with short-selling/hedging prohibitions, holding
requirements for performance unit shares, a clawback policy, granting
procedures for long-term incentive awards, and robust Board and management
processes to identify and monitor risk Our clawback policy allows us to
recapture long-term incentive awards paid to an executive who engages in
financial misconduct Compensation Practices We Avoid No excise tax gross-ups
No change-in-control agreements that provide “single trigger” benefits No
long-term incentive awards with “single trigger” vesting on a change in
control (granted on or after December 30, 2011) No excessive perquisites No
dividends or dividend equivalents on unvested or unearned performance shares
or units No repricing or replacing of underwater stock options without
shareholder approval
Additional
disclosure Janus Capital Group Inc. and its directors and officers may be
deemed to be participants in the solicitation of proxies from Janus Capital
Group Inc. shareholders in connection with the upcoming annual meeting of
shareholders. Information about Janus Capital Group Inc.’s directors and
executive officers and their ownership of Janus Capital Group Inc. stock is
set forth in the proxy statement for Janus Capital Group Inc.’s 2012 annual
meeting of shareholders. Investors can obtain more information when the proxy
statement relating to the 2012 annual meeting of shareholders becomes
available. This proxy statement, and any other documents filed by Janus
Capital Group Inc. with the Securities and Exchange Commission (“SEC”), may
be obtained free of charge at the SEC web site at www.sec.gov and from the
Company’s web site at http://ir.janus.com. Investors should read the proxy
statement carefully, when it becomes available, before making any voting
decision because it will contain important information. Certain statements in
this presentation constitute “forward-looking statements”. Such
forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Statements preceded by, followed by or that
otherwise include the words “believes”, “expects”, “anticipates”, “intends”,
“projects”, “estimates”, “plans”, “may increase”, “may fluctuate”, “forecast”
and similar expressions or future or conditional verbs such as “will”,
“should”, “would”, “may” and “could” are generally forward-looking in nature
and not historical facts. Any statements that refer to expectations or other
characterizations of future events, circumstances or results are
forward-looking statements. These statements are based on the beliefs and
assumptions of Company management based on information currently available to
management. Various risks, uncertainties, assumptions and factors that could
cause future results to differ materially from those expressed by the
forward-looking statements included in this press release include, but are
not limited to, risks specified in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2011 included under headings such as “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and in other filings and furnishings made by the
Company with the SEC from time to time. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events discussed
in this press release may not occur. Many of these factors are beyond the
control of the Company and its management. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of
the date stated, or if no date is stated, as of the date of this press
release. Except for the Company’s ongoing obligations to disclose material
information under the applicable securities law and stock exchange rules, the
Company undertakes no obligation to release any revisions to any
forward-looking statements, to report events or to report the occurrence of
unanticipated events.
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