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Janus Capital Keeps Aside Severance Payments for Executives


Janus Capital Group, Inc. JNS kept aside around $55.5 million as potential severance payments for its five senior executives, critical in making the Janus-Henderson merger successful, as reported by the Financial Times.

These payments are usually made in case of a merger, if an executive’s responsibility is changed considerably or the annual pay is reduced. Companies use this as a strategy to retain key people and to encourage them to cater to the shareholders’ needs.

Janus Capital set aside $26.4 million in favor of Enrique Chang, head of investments. This amountwillbe paid to him in case he loses his job after the merger. Further, Dick Weil, chief executive officer, stands to get $17.9 million. The chief financial officer, Jennifer McPeek and Janus’ president, Bruce Koepfgen, stand to receive $5.4 million and $3.2 million, respectively.

President of Janus International, Augustus Cheh will receive $2.6 million as his position has been given to the current executive chairman of Henderson.

The agreement shall become invalid after two years of the merger completion. The company does not expect to make any other payment as four of the five executives have been offered new roles in the combined company, Janus Henderson Global Investors plc.

Per the report, this move has led to resentmentin the staffon account of the large amount involved. The combined company is expected to achieve $110 million of annual cost savings by laying off about 2200 employees from both the companies.

The merger agreement is expected to result in revenue growth opportunities. While the company’s efforts to expand business through strategic investments are encouraging, escalating expenses remain an undermining factor.

Shares of Janus Capital have gained 2.2% over the last six months, underperforming 8.0% growth for the Zacks categorized Financial – Investment Management industry.

Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space includeLazard Ltd LAZ, Principal Financial Group, Inc. PFG and The Carlyle Group LP CG. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lazard’s current-year earnings estimates have been revised 1.8% upward, over the last 30 days. Also, its shares gained 34.1% over the last one year.

Principal Financial’s current-year earnings estimates have been revised 2.8% upward, over the last 30 days. Its shares gained 33.7% in the last one year.

Carlyle Group’s earnings estimates for the current year have been revised 32.1% upward, in the last 30 days. Further, its shares gained 15.2% over the last one year.

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