Janus Departure Evokes Shakespeare
It appears to have been a busy weekend in Denver, judging by this exhibit to an 8-K that Janus Capital Group (JNS) filed with the SEC yesterday.
On Sunday, Chief Executive Officer Gary Black’s employment with Janus was “terminated by mutual agreement.” And – based on the parting package that Black is getting – we would understand if he bade his former colleagues adieu with Juliet’s famous line from Act II, “Good night, good night! Parting is such sweet sorrow….”
Here’s what made Black’s departure seem pretty sweet to us: First, he’ll get a lump sum cash payment of almost $6.8 million within 30 days after his right to revoke the agreement expires. Next, if the directors and shareholders agree to reduce the strike price of the company’s outstanding stock options, then the price of Black’s options will fall, too. Janus agreed to pay for Black’s COBRA premiums for a year and may pay for other insurance premiums, as well. His restricted common stock options and mutual fund unit awards will vest immediately. And – last but not least - the company will pay up to $50,000 for Black to relocate to New Jersey, and it will pay the attorney’s fees he spent to negotiate the agreement.
Wouldn’t it be nice if every exit had such a soft landing? According to this article, Black had fought “for more than three years to rebuild the mutual-fund company and cut the pay and influence of individual investment managers.” Indeed, it’s been quite awhile since we last footnoted the executive comings and goings at Janus — all the way back in footnoted’s early days of 2004.
At least he’s leaving amid some good news for the company, though. As this article reports, 2nd quarter earnings were better than expected. We’ll have to wait and see what happens to Black – and Janus – in the next act.
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Posted in Tags: 8Ks, CEOs, executive exits |
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July 15th, 2009 at 10:15 am
There are still Sell recos on this one.
“Janus Capital posts $2.3 billion in net inflows”
Also “Janus will pay Black a total of $12.1 million in severance and other payments, which will be reflected in the company’s third-quarter results.”
Janus’ shares fall as chief executive resigns
10:05a ET July 15, 2009 (MarketWatch)
SAN FRANCISCO (MarketWatch) — Shares of Janus Capital Group fell 7% on Wednesday, under pressure as the asset manager’s chief executive resigned unexpected and as it plans to raise about $300 million of new capital.
Gary Black resigned as CEO, the company said Tuesday. He will be replaced by Tim Armour, a Janus Capital director, who will fill the position on an interim basis.
“The announcement that Gary Black had stepped down as CEO … was a surprise,” Keefe Bruyette & Woods analyst Robert Lee said on Wednesday.
“That the company is just now intending to start a search for a replacement suggests to us that this was a recent decision, although we ultimately expect the change in CEO to have limited effect as the investment teams and process are likely to be unaffected,” Lee added.
Janus also said it’s raising roughly $300 million by selling new common stock and convertible debt.
The firm reported second-quarter net income from continuing operations of $15.8 million, or 10 cents a share, compared with a net loss from continuing operations of $818.1 million, or $5.22 a share, in the first quarter of 2009 and net income from continuing operations of $65.6 million, or 40 cents a share, in the second quarter of 2008, Janus said.
Results in the first quarter of 2009 included a goodwill and intangible asset-impairment charge of $856.7 million, or $5.21 a share, and other charges.
The company said second-quarter operating profit margin was 23.5%, down from 34.5% in the year-earlier quarter.
Janus also said that it’s offering $150 million of new common stock and $150 million principal amount of convertible senior notes due in 2014. The notes will be convertible, under certain circumstances, into cash, shares of Janus Capital common stock or a combination of cash and Janus common, at the company’s election, it explained.
Janus said it will grant the underwriters an option to purchase up to an additional 15% of the share offering and an extra $22.5 million principal amount of the convertible notes to cover over-allotments, if any.
Janus will use the money along with other cash to buy back up to $400 million of the aggregate principal amount of the firm’s outstanding 2011, 2012 and 2017 senior notes in a tender offer, the company said.
“Everything being equal, the equity and convertible offering, while relatively neutral to earnings in the near term, are nevertheless dilutive to returns to equity holders and eventually we presume the convertible security will convert to stock,” Lee said.
July 15th, 2009 at 1:59 pm
Wow! Its like Black jumped off a suede couch onto a memory foam love sack. I really couldn’t think of a better exit strategy than anonymity in Colorado with a 6.8 million price tag.
July 19th, 2009 at 11:18 am
Nice to know that after Black had fought “for more than three years to rebuild the mutual-fund company and cut the pay and influence of individual investment managers.”, he took such a large pay out for himself to leave. His previous agreement must not have been enough reward for doing his job.