Janus Capital Group Inc. cut the total pay of chief executive Richard M. Weil by 70% and capped his potential annual compensation at $10 million in response to a negative say-on-pay vote last year, the company said in a preliminary proxy statement filed this month with the Securities and Exchange Commission.
Some 58% of shares were voted against Janus' executive compensation in nonbinding say-on-pay voting.
“Mr. Weil's total 2011 compensation was significantly re- duced to $6 million,” made up of a $500,000 base salary and $5.5 million of variable compensation, the statement said.
The change cut his total compensation by 70% from the amount reported in last year's proxy statement, or a 40% reduction from his total 2010 compensation if a one-time employment inducement award is excluded, the statement said.
Janus gave Mr. Weil a $10 million restricted-stock award to induce him to leave his post as global head of Pimco Advisory, a Pacific Investment Management Co. LLC unit. He joined Janus in February 2010.
The pay reduction was “in recognition of total company long-term net outflows and investment performance challenges in our large-cap-growth strategies,” the statement said.
"NOW A CEILING'
The compensation committee thinks that the $10 million cap on his annual total compensation “will provide him with a competitive and reasonable compensation opportunity, subject to performance,” the statement said.
“This maximum amount was also chosen as it was Mr. Weil's target compensation level at the time of his hiring. Therefore, the prior target compensation is now a ceiling,” the statement said.
Mr. Weil's “2012 pay mix will consist of 60% long-term-incentive awards and 40% cash awards, including base salary,” the statement said.
Janus changed its policy after its board's compensation committee re-evaluated the company's practices, taking into account the say-on-pay voting results and discussions with shareholders, as well as recommendations of compensation consultants.
Commenting in general because it hasn't issued its Janus report yet, Patrick McGurn, vice president and special counsel of Institutional Shareholder Services Inc., said: “It is rare to see any [company] roll out a maximum number” for a cap on CEO pay.
Some 41 companies in the Russell 3000 Index had a majority negative say-on-pay vote last year, he said.
“Most of the companies that had very significant opposition on say on pay have made fairly significant changes to their [executive] compensation programs in response to last year's vote,” Mr. McGurn said. “So I don't think it's a surprise that companies which got that feedback following the vote decided not to stick with the status quo in their executive pay policies.”
Mr. Weil, in a statement said: “We take our fiduciary responsibilities to our shareholders very seriously. The evolution of our compensation program and successful expense management reflect our commitment to serve as responsible stewards of our investors' capital.”
Janus expects to issue its completed proxy statement March 16. Its annual meeting is slated for April 26.
The $850 million American Federation of State, County and Municipal Employees Pension Plan filed a shareholder proposal included in the proxy statement calling for an independent chairman. Janus opposes the proposal, noting that Glenn S. Schafer, a director who will be chairman effective April 27, and chairman Steven L. Scheid are independent under New York Stock Exchange rules, according to the preliminary statement.
Thao Hua is a reporter for sister publication Pensions & Investments.
