Janus Capital Group Inc.’s JNS Chief Executive Officer (CEO) Richard Weil’s total compensation had been increased to $8.1 million in 2014, up 73% year over year. Notably, this is the first pay raise received by the CEO since his arrival in 2010.
The total compensation for 2014 includes a salary of $0.5 million, stock awards worth $4.5 million, cash bonus of $3 million and other compensation of about $0.2 million, according to a proxy filing which calculated pay using U.S. Securities and Exchange Commission rules. Notably, Weil’s base salary was increased by $75,000 in 2014.
In addition to this, Janus Capital’s President Bruce Koepfgen was awarded with $2.9 million in 2014, up from $2.5 million in 2013. Moreover, Chief Financial Officer – Jennifer McPeek was paid $1.4 million, increasing from $947,830 in 2013.
The filing states that the CEO’s pay is based on 30% on investment performance, 30% on financial results for shareholders and 40% on results for shareholders and clients.
The pay raise of the CEO at Janus Capital followed certain factors, including the company’s financial performance in 2014. Plagued by an uncertain market environment, Janus Capital faced challenges in reducing its net outflows. Nevertheless, overall net outflows stood at $4.9 billion in 2014, reflecting a whopping 75% decline from $19.7 billion in 2013.
Further, Janus Capital has taken several initiatives to strengthen its businesses during Weil’s tenure. Notably, period-end fixed income assets recorded a 3-year CAGR (2012-2014) of 14.2% and came in at $31.3 billion as of Dec 31, 2014. Further, the fixed income business is set to strengthen as the company hired ‘legendary bond king’ Bill Gross in Sep 2014.
Apart from hiring Gross, the company completed the acquisition of VS Holdings Inc., the parent company of VelocityShares, LLC in Dec 2014. Connecticut-based VelocityShares is a major provider of institutionally-focused exchange-traded products (ETPs), including exchange-traded funds (ETFs), that are focused on offering volatility management solutions. The acquisition reflected efforts of the company to tap opportunities in the growing ETF market as well as comes in line with the company’s strategy of “intelligent diversification.”
All these have caused investors to become optimistic about Janus Capital’s growth prospects. Notably, the company’s share price rose nearly 36.8% in 2014.
However, among some banking giants, Bank of America Corp’s BAC Chairman as well as CEO Brian Moynihan is expected to receive $13 million as total compensation for 2014, which reflects a decline of over 7% from the pay awarded to him in 2013. This move did not come as a surprise, given the company’s struggling profitability throughout the year.
Moreover, Citigroup Inc. C CEO Michael Corbat received about a 10% pay cut in his total compensation package. His annual salary has been cut to $13.1 million in 2014 from $14.5 million. JPMorgan Chase & Co.’s JPM Chief Executive Jamie Dimon earned $20 million in 2014, unchanged from 2013.
Janus Capital has the best-in-class investment boutique with the potential for AUM and revenue along with competitive leverage growth.
Though fixed income and global businesses are improving, headwinds persist and the company’s equity-heavy portfolio exposes it to the equity market volatility. Further, a low interest rate environment affects money market business. Nevertheless, given its healthy balance sheet, we believe Janus Capital has the potential to outperform its peers in the long run.
Janus Capital currently carries a Zacks Rank #3 (Hold).
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