Janus cuts CEO pay 40 pct after shareholder vote

Thu Mar 1, 2012 6:53pm EST

* Janus CEO Weil got $6.1 mln in 2011 - proxy

* Weil's pay down 40 pct vs 2010, ex $10 mln signing bonus

* Janus outlines pay reforms after failed "Say on Pay" vote

By Ross Kerber

March 1 (Reuters) - Janus Capital Group cut the pay of its chief executive sharply last year and put new compensation guidelines in place after it lost a shareholder "Say on Pay" vote, the Denver asset manager said in a proxy filing on Thursday.

The move shows the pressure big companies like Janus can face from the advisory votes on executive compensation that were required by Congress after the financial crisis.

Janus board members cut the pay of Chief Executive Richard Weil to $6.1 million in 2011 from $20.3 million in 2010, a figure that included a $10 million signing bonus after he joined the company from Pimco at the start of that year.

Excluding the bonus Weil's pay fell 40 percent last year, a drop the company said was determined by factors including the company's performance. The proxy filing says the compensation committee took into account the shareholder vote at its annual meeting held last April.

Proxy filings are the statements required to be sent to shareholders before they vote by proxy on various company matters.

Although the "Say on Pay" vote was only advisory, it made Janus one of the highest-profile companies whose shareholders voted against management in the contests mandated for most large public companies by the Dodd-Frank financial oversight law of 2010.

Janus, and many other companies where management lost the votes, have held meetings with shareholders and consultants in hopes of getting shareholder backing in the upcoming proxy season, where they can expect extra scrutiny.

Another company where investors rejected pay plans last year was Hewlett Packard Co. In its proxy filing last month, HP said it changed pay practices including for its new CEO Margaret "Meg" Whitman. In 2011 she received $16.5 million, almost entirely in stock options, the filing states.

OUTFLOWS CONTINUE

Despite Weil's arrival, Janus has reported outflows of investor cash from its funds every quarter since the middle of 2009. The outflows were driven both by the mixed performance of the funds and its heavy reliance on the out-of-favor equities category.

Its shares were down 34 percent for the twelve months ended Feb 29, compared with a drop of 13 percent for the Dow Jones index of U.S. asset managers over the same period. The company had $148.2 billion under management at the end of 2011.

In a separate statement filed to the Securities and Exchange Commission on Thursday discussing the pay changes, Weil said that "We take our fiduciary responsibilities to our shareholders very seriously."

He added that "The evolution of our compensation program and successful expense management reflect our commitment to serve as responsible stewards of our investors' capital."

Among other things, the new plan will set part of Weil's 2012 pay according to Janus' operating income. It will cap his future possible annual pay at $10 million, a figure that previously was only a target. Weil also has given up a written severance rights agreement, which had covered benefits prior to a change in control.

The proxy shows deference to shareholders in other ways. It offers an unusual defense of the $10 million signing bonus to Weil, which Janus says was needed to convince him "to leave a significantly larger annual compensation opportunity at his former employer (Pimco) than what Janus could offer..."

STAYING NEUTRAL

In addition, the proxy includes a shareholder proposal submitted by the pension plan of public-employee union the American Federation of State, County and Municipal Employees. It calls on the company to adopt a policy that its chairman be an independent director according to the rules of the New York Stock Exchange, part of a broader push by the union to encourage stronger board oversight of companies.

Janus said its current chairman, Steven Scheid, meets that definition, as does the independent director scheduled to replace him in April, Glenn Schafer.

Still, Janus said its board of directors has decided to remain "neutral" on the vote, and will study the non-binding results.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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