Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o
Definitive Proxy Statement
x
Definitive Additional Materials
o
Soliciting Material under §240.14a-12
Janus Capital Group Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
Commencing April 12, 2012, Janus Capital Group Inc. will send the attached communication to certain shareholders.
Summary CEO
Compensation Compensation Program Business Highlights Specific Items in
Response to ISS Appendix Presentation overview
We believe
investors should vote in accordance with the recommendation of our Board of
Directors for several reasons: 2011 CEO compensation was dramatically reduced
and was approximately 30% below McLagan peer group median(1); additionally,
we meaningfully restructured CEO compensation for 2012 and beyond We further
aligned our compensation structure with shareholders and clients by
implementing a company-wide variable compensation program based on
pre-incentive operating income We made significant progress towards becoming
a stronger and more diversified company in 2011 Our Board relied on the
advice of 3 industry leading independent consultants, including ISSs
independent compensation division, all of whom concluded that ISS and
shareholders should support our executive compensation A no vote damages
our companys reputation, hurts the value of the firm and does not reflect
the steps we have taken to align compensation with performance and control
expenses The final pages of this document address specific items in response
to a recommendation from ISS that shareholders vote against this proposal
We are requesting shareholders vote FOR the Say-on-Pay Advisory Vote on
Executive Compensation in our 2012 Proxy Statement Note: McLagan peer group
includes AllianceBernstein L.P., Morgan Stanley Investment Management,
American Century Investments, Neuberger Berman Group, Delaware Investments,
Nuveen Investments, Eaton Vance Management, Oppenheimer Funds, Inc., Putnam
Investments, Invesco plc., MFS Investment Management and Western Asset Management.
Peer group for CEO compensation excludes Franklin Templeton Investments and
T. Rowe Price Associates, Inc. based upon potential compensation distortions
due to the applicable CEOs large equity ownership levels.
We conducted a
comprehensive review of CEO pay in 2011 and made material changes 2011 CEO
compensation structure changes: 2011 CEO compensation was materially reduced
$6 million total compensation for 2011 was a 70% reduction in total pay as
reported in last years proxy Granted new performance share units: $1.2
million (33% of LTI awards) that vest only if JNS stock price hurdles are
attained subject to a four-year vesting schedule (1) 50% are earned if the
stock increases 27% 50% are earned if the stock increases 58% Mr. Weil gave
up his severance agreement that provided severance benefits outside of a
change-in-control 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 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 Change in JNS Operating Income Goal-Based Payout (% of Target)
2011 executive
compensation was assessed against 14 peers approved by the Compensation
Committee with the advice of an independent consultant, McLagan Key factors
in determining this group include size, geographic scope, operating approach,
product breadth, operating complexity, distribution coverage, ownership,
history and performance The group includes publicly-owned asset management
firms, privately owned asset management firms and asset management
subsidiaries of larger financial services firms The McLagan surveys include
all of these peers and are considered the leading source of compensation
information in the asset management industry In determining CEO pay we
considered market compensation levels at our competitors McLagan Peer Group
for Janus Capital Group AllianceBernstein L.P. Morgan Stanley Investment
Management American Century Investments Neuberger Berman Group Delaware
Investments Nuveen Investments Eaton Vance Management Oppenheimer Funds, Inc.
Franklin Templeton Investments (1) Putnam Investments Invesco plc. T. Rowe Price
Associates, Inc. (1) MFS Investment Management Western Asset Management Note:
Considered in pay analysis for all NEOs, except for the CEO position. The two
exclusions were based upon potential compensation distortions for the CEO
role due to the applicable CEOs large equity ownership levels. AUM as of
12/31/2010 Peer Group Median $206.0B Janus $169.5B Context for Establishing
CEO Pay Opportunity Comparative analysis against this peer group conducted on
behalf of the Compensation Committee indicated that: 2011 total compensation
of $6 million would be in the bottom quartile of our peer group and 30% below
the peer group median The cap of $10 million in total compensation would be
approximately at the 75th percentile of our peer group
Our executive
compensation is predominately performance-based in order to align executive
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 Variable compensation is awarded based on company and
individual performance 92% of total CEO compensation was performance-based in
2011 and 85% percent of the other named executive officers (NEOs)
compensation was performance-based Notes: 1) Represents $750k of monthly cash
provided to Mr. Koepfgen as part of his new hire award Options Base 8%
Variable Cash 32% Variable LTI 60% 92% Variable Compensation 2011 CEO Pay Mix
We more closely
aligned compensation with shareholders and clients long-term interests by
implementing a variable compensation program that is based on pre-incentive
operating income We maintain other compensation practices that we believe
strongly align the interests of our executives with those of our shareholders
and clients We take our fiduciary responsibilities to our shareholders very
seriously Current Compensation Practices 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 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
We made
significant progress towards becoming a stronger and more diversified company
in 2011 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 & Poors
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 We hired new executive officers in 2010 and 2011
who are responsible for implementing our key strategic priorities Our
mathematical equity investment performance improved and our value equity
business maintained strong long-term performance However, we were adversely
impacted by challenges in the investment performance of our large cap growth
strategies and institutional clients reallocations away from equity
strategies
ISS has used an
inappropriate peer group in evaluating Janus CEO compensation JANUS: We are
a pure asset management firm and the peers our Compensation Committee
considers for our executive pay programs and levels are also asset management
firms The Compensation Committee engages an independent consulting firm,
McLagan, to assist in developing a peer group for Janus; McLagan maintains
the most prominent database of pay information in asset management, much of
which is provided to it by private firms or subsidiaries of larger firms who
are not required to report data publicly ISS has used 14 companies in their
analysis, most of whom have little relevance to what we do; only 2 of the 14
companies listed in ISSs peer group use Janus as a peer for their
compensation practices (1) ISSs peer group includes 10 companies that are
not asset managers and only 1 company similar to our peer group (2) McLagan
Peer Group for Janus Capital Group AllianceBernstein L.P. Morgan Stanley
Investment Management American Century Investments Neuberger Berman Group
Delaware Investments Nuveen Investments Eaton Vance Management Oppenheimer
Funds, Inc. Franklin Templeton Investments (3) Putnam Investments Invesco
plc. T. Rowe Price Associates, Inc. (3) MFS Investment Management Western
Asset Management Notes: Companies that list Janus as part of their peer group
in most recent proxy statements include AllianceBernstein L.P. and Affiliated
Managers Group, Inc. Companies in ISSs peer group that are considered asset
mangers are Affiliated Managers Group, Inc., AllianceBernstein L.P., American
Capital, Ltd. and Lazard Ltd. Considered in pay analysis for all NEOs, except
for the CEO position. The two exclusions were based upon potential
compensation distortions for the CEO role due to the applicable CEOs large
equity ownership levels. ISSs Peer Group Affiliated Managers Group, Inc.
Moodys Corporation AllianceBernstein L.P. Lazard Ltd. American Capital, Ltd.
Oppenheimer Holdings Inc. BGC Partners, Inc. Piper Jaffray Companies GFI
Group Inc. SEI Investments Company INTL FCStone Inc. Stifel Financial Corp.
Investment Technology Group, Inc. W.P. Carey & Co, LLC Q: ISS has used a
peer group to analyze Janus CEO Pay and Performance that includes 14
companies. How do these differ from the peers you report having considered in
your proxy statement?
By using an
irrelevant peer group in comparisons of executive compensation ISSs
conclusions are not meaningful Q: ISS analysis shows Janus 2011 CEO pay at 1.46x the median of the ISS peer group. How does
this line up with Janus own peer group? JANUS: Using the most recently
available data from McLagan, our 2011 CEO pay level of $6 million was in the
bottom quartile of our asset management peer group and was 30% below the
median of our peers; the multiple of median, to use the ISS term, was 0.70x
Q: ISS also criticized Janus for having above median pay that was
substantially determined at the Board Compensation Committees discretion,
and questioned the rigor of the Committees decision-making given the above
median outcome. How did the Committees discretion factor into the 2011 CEO
pay decision? JANUS: This above median conclusion is based on peers that
have little relevance to our business 2010 total CEO compensation was $10
million (excluding Mr. Weils inducement award), the Compensation Committee
decided to reduce 2011 CEO compensation by 40% to $6 million based on the
business results and other factors, resulting in an outcome that was 30%
below the peer group median We believe this clearly shows that the Committee
applies real rigor in its discretionary decision-making
Changes we made
to compensation practices further align our compensation structure with
shareholders and clients long-term interest Q: How can shareholders count
on the Compensation Committee using the same rigor that was applied in 2011
to assessing CEO compensation in the future? JANUS: We have made two
substantial changes to CEO compensation for 2012 and beyond that should go
even further in giving comfort to shareholders: The Compensation Committee
has established a cap in compensation where they will not award more than $10
million in pay to our CEO; this level is approximate to the 75th percentile
of our peer groups CEO pay levels The Compensation Committee has also
established a formulaic component of CEO compensation tied directly to Y/Y
change in operating income as we fundamentally believe that our management
team should be accountable for increasing the firms profitability We believe
shareholders should consider these two changes as evidence of a continuing
commitment to ensure CEO rewards are aligned with performance and responsibly
determined In addition to these changes to CEO compensation, in 2011 we also
implemented a company-wide variable compensation program based on
pre-incentive operating income, which further aligns the interest of our employees
with the long-term interests of our shareholders and clients
Appendix
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 investment 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
changes in compensation for the three former NEOs are in line with our 2011
performance 2011 compensation levels for the three former NEOs ranged from
flat to more than a 70 percent reduction from 2010 levels Note: Excludes
Gregory A. Frost, former Executive Vice President and CFO, who resigned on
July 31, 2011.
Additional
disclosure This information is being provided to certain shareholders in
addition to Janus Capital Group Inc.'s proxy statement dated March 16, 2012,
that has been available since such date. Please read the complete Proxy
Statement and accompanying materials carefully before you make a voting
decision. Even if voting instructions for your proxy have already been given,
you can change your vote at any time before the annual meeting by giving new
voting instructions as described in more detail in the Proxy Statement. The
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 Companys web site at
http://ir.janus.com. 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. 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 Companys Annual Report on Form 10-K for the year ended
December 31, 2011 included under headings such as Risk Factors and
Managements 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
Companys 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.
Skip the spreadsheet. Track your investments automatically.