Exhibit 10.2
EMPLOYMENT
AGREEMENT
THIS AGREEMENT, dated as of the Effective Date
specified below (this “ Agreement ”) is by and
between Janus Management Holdings Corporation, a Delaware
corporation (the “ Company ”) and Richard Gibson
Smith (the “ Executive ”), and shall be
effective as of January 1, 2007 (the “ Effective Date
”). Executive and the Company are sometimes referred to in
this Agreement as the “ Parties ,” or,
individually, as a “ Party .”
Recitals
1.
Prior to November 2006, the Company employed Executive as a
Portfolio Manager (“ PM ”). During
Executive’s service as a PM, the terms and conditions of
Executive’s employment were governed by a: (a) portfolio
manager compensation program; (b) cover letter from Gary D. Black
dated as of December 29, 2004 (the “ Cover Letter
”); (c) letter severance agreement dated as of December 29,
2004 (the “ Severance Agreement ”); and (d)
Portfolio Manager Change in Control Agreement dated as of December
29, 2004 (the “ PM Executive Change in Control
Agreement ”).
2.
As of November 6, 2006, Executive assumed the duties of Co-Chief
Investment Officer (“ Co-CIO ”) of Janus Capital
Management LLC (“ JCM ”) and the Company, the
operating subsidiaries of Janus Capital Group Inc., a Delaware
corporation (“ JCG ”), while continuing to
perform Executive’s duties as a PM.
3.
Executive and the Company desire to clarify the terms and
conditions of Executive’s employment during Executive’s
service as a PM and Co-CIO or Chief Investment Officer
(“CIO”), to provide for certain severance rights in the
event that Executive’s employment terminates under certain
circumstances during Executive’s service as a PM or Co-CIO,
and to provide for certain rights in the event of Executive’s
relinquishment of or removal from the PM, CIO or Co-CIO
position.
Agreement
1.
Term .
(a)
The Company hereby agrees to continue to employ Executive as its
Co-CIO and PM, and Executive hereby agrees to continue to serve as
the Company’s Co-CIO and PM, all on the terms and subject to
the conditions of this Agreement, for the period commencing on the
Effective Date and ending on December 31, 2008 (the “
Initial Term ”).
(b)
The Initial Term (and every subsequent twelve month extension as
set forth in this paragraph) shall automatically be extended for an
additional twelve months (the Initial Term and any twelve month
extension, “ Term ”), unless either Executive or
the Company gives written notice to the other of its intent not to
extend the then-current Term. Such notice must be given not later
than 90 calendar days before the expiration of the then-current
Term. If the Company elects to give notice not to extend the Term
pursuant to this Section 1(b), then, contemporaneously with such
non-renewal notice, the Company shall offer to Executive severance
rights that are no less favorable to Executive than the form of
severance rights then
generally in effect between the Company and its
PMs, which severance rights shall become effective immediately upon
the expiration of the Term.
(c)
If during the Initial Term, the Chief Executive Officer (“
CEO ”) of JCG as of the Effective Date ceases for any
reason to continue to serve as JCG’s CEO, then as of the
effective date of the appointment of the successor CEO (the “
Appointment Date ”), the Initial Term shall be
extended so that it shall expire 18 months following the
Appointment Date, and shall thereafter be subject to further
extension pursuant to Section 1(b) above.
2.
Position and Duties .
(a)
During the Term, Executive shall serve as CIO or Co-CIO, and shall
have the duties, authority and responsibilities commensurate with
such title and office, which shall include, but not necessarily be
limited to:
(i)
Day-to-day oversight of the investment team, including but not
limited to, final decisions related to hiring or firing investment
personnel, management of investment personnel performance and
compensation structure, design and allocations (subject to
parameters determined by the JCG Board of Directors (“ JCG
Board ”), the Compensation Committee of the JCG Board
(“ Compensation Committee ”) and the CEO),
portfolio construction and overlap, use of derivatives, trading
issues and similar issues;
(ii)
Serving as the primary interface between the PMs and Company
management;
(iii)
Participation in client meetings as necessary (including, without
limitation, meetings of the board of trustees of Janus Investment
Fund, Janus Adviser Series, Janus Aspen Series and the board of
Janus Capital Funds Plc);
(iv)
Participation on Executive Committee, Risk Management Committee and
Internal Compliance Controls Committee, and either participating in
or delegating responsibility for participating in, certain other
JCM committees, including without limitation, the Management
Committee, the Product Development Committee and the Ethics
Committee;
(v)
When necessary, completing final sign-off on product decisions that
come before Product Development Committee in accordance with the
applicable approval process;
(vi)
Upon request and with reasonable advance notice, attending meetings
and calls with prospects, consultants, brokers, industry ratings
agencies and the media and making presentations to trade groups,
industry ratings agencies and prospects; and
(vii)
As needed and with reasonable advance notice, attending internal
meetings and calls with executive management, sales, marketing,
operations, public relations, legal/compliance, finance personnel,
the JCG Board and its Committees.
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Notwithstanding any other provision of this
Agreement, Executive shall have the ability to delegate to another
Co-CIO or appropriate JCG or JCM executive officer responsibility
for compliance with Sections 2(a)(vi) and 2(a)(vii).
(b)
Executive and other Co-CIOs, if any, shall report directly to
JCG’s CEO. Executive, working in coordination with other
Co-CIOs, if any, shall have autonomy in managing JCG’s and
JCM’s investment business, subject to appropriate oversight
by the CEO, the JCG Board and applicable Committees
thereof.
(c)
During the Term, Executive may continue to act as a PM for the
portfolio(s) managed by Executive as of the Effective Date, subject
to the terms and conditions set forth below.
3.
Compensation and Benefits . During the Term, the Company
shall pay Executive: (i) an annual base salary (“
Annual Base Salary ”); (ii) compensation for
Executive’s work as Co-CIO or CIO (“ CIO
Compensation ”) for so long as Executive continues
performing as a Co-CIO or CIO; and (iii) compensation for
Executive’s work as a PM (“ PM Compensation
”) for so long as Executive continues performing as a PM, all
as and when specified in this Section 3.
(a)
Base Salary . Throughout the Term, the
Executive’s Annual Base Salary shall be in an amount
established by the JCG Compensation Committee, provided that such
amount shall not be less than $500,000.
(b)
CIO Compensation.
(i)
The Company shall pay Executive CIO Compensation as specified in
this Section 3(b), all of which is subject to the satisfaction of
Internal Revenue Code Section 162(m) performance criteria as
established by the JCG Compensation Committee annually (“
Section 162(m) Criteria ”).
(ii)
For 2007 and 2008, the CIO Compensation will be based 50 percent on
overall performance of all Janus-managed investment products, 20
percent on Janus-managed net long-term flows, 15 percent on
investment team leadership factors, and 15 percent on overall
corporate leadership factors, with specific goals to be established
by the CEO and JCG Compensation Committee at the beginning of each
year. For any year after 2008 during which the Term continues, the
CEO and the JCG Compensation Committee shall, following
consultation with Executive, establish criteria applicable to CIO
Compensation at the beginning of each year.
(iii)
Executive’s CIO Compensation range for 2007 shall be a
minimum of $2,000,000, a maximum of $3,500,000 and a target of
$2,750,000. Executive’s CIO Compensation range for 2008 shall
be a minimum of $2,500,000, a maximum of $4,500,000, and a target
of $3,500,000. On and after January 1, 2009 (assuming renewal of
the Term and subject to the satisfaction of Section 162(m)
Criteria), Executive’s CIO Compensation minimum, maximum and
target amounts shall be established in the discretion of the JCG
Compensation Committee, provided that the Company shall give
Executive written notice thereof no less than sixty (60) days
before the beginning of the year with respect to which such amounts
shall apply.
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(iv)
All CIO Compensation shall be payable after year-end at the same
time as bonus payments and LTI awards are made to other members of
the Company’s Executive Committee (the “ Peer
Executives ”). For 2007 and 2008, sixty percent of the
CIO Compensation shall be paid in cash, and the remaining forty
percent shall be in the form of LTI awards in the same manner and
type as granted to other Peer Executives.
(v)
As of the Effective Date, Executive shared the CIO’s
responsibilities with another Co-CIO. If, for any reason during the
Term, Executive becomes the Company’s sole CIO, the Company
shall adjust Executive’s CIO Compensation by an amount to be
determined in the discretion of the JCG Compensation Committee. If,
thereafter, during the Term another CIO is appointed to serve with
Executive, the Company may adjust Executive’s CIO
Compensation in an amount to be determined in the discretion of the
JCG Compensation Committee, subject to the minimums and ranges
specified in Section 3(b)(iii) above. If the fact that Executive
has become the Company’s sole CIO (other than during a
transitional, temporary period not exceeding 180 days; provided
that throughout such temporary period the Company shall be making
reasonable, continuous efforts to fill the Co-CIO vacancy)
substantially impairs Executive’s ability to continue to
effectively perform Executive’s material responsibilities as
both sole CIO and PM, and the Company fails to cure that condition
upon receiving no less than 90 days’ prior written notice
from Executive (which notice shall be given no more than 180 days
after Executive knows or should know of the circumstances giving
rise to the notice), then Executive may relinquish
Executive’s role as PM upon no less than 30 days’
written notice to the Company, in which case the Parties shall
negotiate in good faith concerning an amended compensation
arrangement as sole CIO. At any time before December 31, 2008, but
only after Executive has relinquished his role as PM pursuant to
the preceding sentence, Executive may elect, upon no less than 90
days prior written notice, to relinquish Executive’s role as
sole CIO and return to a position on the Company’s investment
management team. In such event, the Company shall make a reasonable
effort to reassign Executive to manage the portfolio(s) managed by
Executive before Executive relinquished the PM role or one or more
other portfolios with at least a comparable amount of assets under
management, in which case Executive’s rights and
responsibilities would be as specified in Section 4(a) below. In
the event the Company is unable through reasonable efforts to
reassign Executive to manage the portfolio(s) managed by Executive
before Executive relinquished the PM role or one or more other
portfolios with at least a comparable amount of assets under
management, then Executive shall be assigned to a position on the
Company’s investment team and, until the earlier of December
31, 2008 or the date on which Executive resigns, Executive shall be
compensated as if he had resumed management of the portfolio(s)
managed by Executive before Executive relinquished the PM role as
set forth above, and Executive’s rights and responsibilities
would be as specified in Section 4(a) below except as otherwise
specified in this subsection.
(c)
PM Compensation . For Executive’s work as a PM, and
subject to the satisfaction of Section 162(m) Criteria, the Company
shall pay Executive individual performance-based PM Compensation
and Executive shall be eligible to participate in other
compensation for which PMs may be eligible in a manner consistent
with the terms of the Company’s then-current PM compensation
plan.
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(d)
Total Compensation . Subject to the satisfaction of Section
162(m) Criteria, Executive’s combined PM Compensation and CIO
Compensation for 2007 shall be a minimum of $3,500,000, and
Executive’s combined PM Compensation and CIO Compensation for
2008 shall be a minimum of $4,000,000.
(e)
Section 162(m) Performance Criteria . The Parties
acknowledge and agree that all compensation payable to Executive
(except Executive’s Annual Base Salary) under this Agreement,
including without limitation cash, shall be subject to and
conditioned upon such terms and conditions as are required to
obtain full deductibility under Section 162(m) of the Internal
Revenue Code, including without limitation the establishment, and
Executive’s attainment of, performance-based
criteria.
(f)
Satisfaction of Withholding Requirements . All grants and
payments to Executive under this Agreement are subject to and
conditioned upon satisfaction of all applicable tax withholding
requirements. Executive agrees to execute all documents and take
all action reasonably deemed necessary by the Company to ensure
compliance with all such withholding requirements.
(g)
Incentive, Savings and Retirement Plans . During the Term,
Executive shall be entitled to participate in all other incentive
plans, practices, policies and programs, and all savings and
retirement plans, practices, policies and programs, in each case on
terms and conditions no less favorable than the terms and
conditions generally applicable to the Peer Executives, as in
effect from time to time; provided that this Section 3(g) shall not
entitle Executive to any particular amount or value that the
Company may from time to time provide to other Peer
Executives.
(h)
Welfare Benefit Plans . During the Term, Executive and
Executive’s spouse and dependents, as the case may be, shall
be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices ,
policies and programs provided by the Company and its
affiliates (including, without limitation, medical, prescription,
dental, retiree health, disability, employee life, group life,
accidental death and travel accident insurance plans and programs)
on terms and conditions no less favorable than the terms and
conditions generally applicable to the Peer Executives.
(i)
Expenses . During the Term, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred
by Executive in accordance with the Company’s policies,
practices and procedures in effect for Peer Executives.
(j)
Fringe Benefits . During the Term, Executive shall be
entitled to fringe benefits on the same basis as those provided
generally at any time thereafter to the Peer Executives.
(k)
Vacation . During the Term, Executive shall be entitled to
paid vacation in accordance with the plans, policies, programs and
practices of the Company as in effect for the Peer
Executives.
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(l)
Executive Change in Control Agreement . Contemporaneously
with this Agreement, the parties shall execute an “
Executive Change in Control Agreement ” in the form
attached hereto as Exhibit A , which shall be substantially
identical to the Agreement offered by JCG to Peer
Executives.
4.
Termination of Service as CIO or Co-CIO Without Termination of
Employment .
(a)
Upon giving the Company no less than 90 days’ advance written
notice, at any time during the Term, Executive may for any reason
relinquish Executive’s responsibilities as CIO or Co-CIO and
return to performing only the duties of a PM managing such
portfolios as Executive managed immediately before the Transition
Date (defined below) or one or more other funds with at least a
comparable amount of funds under management, in which case: (i)
this Agreement and the Executive Change in Control Agreement shall
terminate as of the effective date of Executive’s
relinquishment of Executive’s CIO role (the “
Transition Date ”); and (ii) the Company shall pay
Executive, after year-end in accordance with and at the same time
as payment of bonus and LTI compensation to other Peer Executives,
pro rata fully earned but as yet unpaid CIO Compensation for any
period of time during that year that Executive served as Co-CIO;
and (iii) following the Transition Date, the terms and conditions
of Executive’s employment shall be governed by the
compensation plan(s), severance rights, change in control
agreement, policies, procedures and programs applicable generally
to the Company’s PMs, which Executive agrees promptly to
execute or acknowledge, as the case may be, at the Company’s
request, to be effective as of the day following the Transition
Date. If Executive relinquishes Executive’s responsibilities
as CIO or Co-CIO but thereafter continues to provide services to
the Company in another senior management role (other than PM), then
for the first year of Executive’s service in such other
senior management role Executive will receive a floor on
Executive’s total target compensation, but otherwise
established in the discretion of the JCG Compensation Committee,
acting in consultation with the CEO, but subject to applicable
Section 162(m) Criteria.
(b)
Subject to the rights and restrictions under a termination for
“Good Reason” as defined in Sections 6(f) and 7(d)
below, at any time during the Term, the Company may for any reason
remove Executive from Executive’s CIO or Co-CIO title and
duties and direct that Executive return to the role of a PM,
managing such portfolios as Executive managed immediately before
the Transition Date or one or more other portfolios with at least a
comparable amount of assets under management. If the Company elects
to remove Executive from Executive’s CIO or Co-CIO title and
duties pursuant to this Section 4(b) and Executive remains a PM
without making an election under Section 6(f), then the Company
shall pay Executive, after year-end in accordance with and at the
same time as payment of bonus and LTI compensation to other Peer
Executives, a pro rata amount of the mid-range of Executive’s
then-current target CIO Compensation for the period of time during
the year of removal that Executive served as Co-CIO.
5.
Termination of Service as PM without Termination of
Employment .
(a)
Upon giving the Company no less than 90 days’ advance written
notice, at any time during the Term, Executive may for any reason
relinquish Executive’s responsibilities as PM and continue
thereafter to perform only the duties of CIO or Co-CIO, in which
case: (i) Executive shall be entitled to receive PM Compensation,
on the terms and conditions set forth in Section 3(c) above, only
through the effective date of Executive’s relinquishment of
Executive’s
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responsibilities as PM; and (ii) with respect
to Executive’s work following the effective date of
Executive’s relinquishment of Executive’s
responsibilities as PM, Executive shall be entitled only to
Executive’s Annual Base Salary and CIO
Compensation.
(b)
Upon giving Executive no less than 15 days’ advance written
notice, at any time during the Term, the Company may for any reason
discontinue Executive’s services as a PM and request that
Executive thereafter continue to perform only the duties of CIO or
Co-CIO, in which case:
(i)
Executive shall be entitled to receive PM Compensation, on the
terms and conditions set forth in Section 3(c) above, through the
effective date of Executive’s relinquishment of
Executive’s responsibilities as PM; and
(ii)
no later than 90 days following the effective date of the
discontinuation of Executive’s services as a PM, Executive
may, in Executive’s discretion, elect to either:
(A)
give the Company no less than 30 days prior written notice of
Executive’s resignation of employment with the Company and
its affiliates, and Executive shall thereafter be eligible to
receive the severance benefits set forth in Section 7(c) below,
conditioned upon Executive’s execution of the
Non-Solicitation Legal Release defined in such section;
or
(B)
if but only if the Company’s discontinuation of
Executive’s services as a PM and request that Executive
thereafter continue to perform only the duties of CIO or Co-CIO
becomes effective before January 1, 2009, then Executive may
continue serving as CIO or Co-CIO, in which case the Parties shall
negotiate in good faith concerning an amended compensation
arrangement such that Executive’s removal from the PM role
shall not reduce Executive’s total target compensation
minimum (as set forth in Section 3(d)) during the remainder of the
Initial Term of this Agreement (ending December 31, 2008); provided
that in the absence of an alternative, mutually agreed upon amended
compensation arrangement, if Executive makes an election under this
Section 5(b)(ii)(B), then Executive shall, beginning on the date
immediately after Executive’s last day of eligibility to earn
PM Compensation (the “ PM Transition Date ”), be
entitled to “ Special Transitional Compensation
,” payable quarterly during the remainder of the Initial Term
of this Agreement (ending December 31, 2008) and subject to the LTI
award component granted annually, at a rate equal to the quarterly
PM Compensation payment earned by Executive for the last full
calendar quarter before the PM Transition Date, but subject to the
satisfaction of all applicable Section 162(m) Criteria.
6.
Termination of Employment During Term .
(a)
Death or Disability . Executive’s employment shall
terminate automatically upon Executive’s death during the
Term. If the Company determines in good faith that a disability of
Executive has occurred during the Term, it may provide to Executive
written notice in accordance with Section 13(b) of this Agreement
of its intention to terminate Executive’s employment. In such
event, Executive’s employment with the Company shall
terminate effective on the 90th day after receipt of such notice by
Executive (the “ Disability
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Effective Date ”), unless,
within the 90 days after the receipt of such notice, Executive has
returned to full-time performance of Executive’s duties. For
purposes of this section, disability shall be as defined under, and
Executive must comply with, the Company’s then-current
long-term disability policy. Notwithstanding any other provision of
this Agreement, the Company’s appointment of an interim PM
during any period during which the Company determines in its
reasonable discretion that Executive is unable because of mental or
physical illness to manage the investment portfolio(s) then managed
by Executive shall not constitute Good Reason for purposes of
Section 6(f) of this Agreement.
(b)
Termination Without Cause . Subject to its obligations under
Sections 7(a) and 7(d) below, at any time during the Term the
Company may terminate Executive’s employment without Cause
upon written notice to Executive.
(c)
Termination for Cause . The Company may terminate
Executive’s employment during the Term for Cause.
(d)
For purposes of this Agreement, “ Cause ” shall
mean:
(i)
the willful and continued failure by Executive to substantially
perform Executive’s duties with the Company (other than any
such failure resulting from Executive’s incapacity due to
physical or mental illness) that has not been cured within 30 days
after the Company delivers to Executive a written demand for
substantial performance, which demand specifically identifies the
manner in which the Company believes that Executive has not
substantially performed Executive’s duties;
(ii)
Executive’s willful engagement in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise;
(iii)
Executive’s material breach of any material provision of this
Agreement (including without limitation the covenants set forth in
Section 10 below) that has not been cured within 30 days after a
written demand for substantial performance is delivered to
Executive, which demand specifically identifies the manner in which
the Company believes that Executive has materially breached any
material provision of this Agreement; or
(iv)
Executive’s conviction of a felony (other than a traffic
related felony) or a guilty or nolo contendere plea by Executive
with respect thereto.
(e)
Executive’s termination of employment shall not be deemed to
be for Cause unless and until Executive has received a copy of a
resolution duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the JCG Board at a meeting
of the JCG Board called and held for such purpose (after Executive
is provided with reasonable notice to Executive and Executive is
given an opportunity, together with counsel, to be heard before the
JCG Board), finding that, in the good faith opinion of the JCG
Board, Executive is guilty of the conduct described in the
definition of Cause, and specifying the particulars thereof in
detail. For purposes of clauses (i) and (ii) of the preceding
definition, no act, or failure to act, on Executive’s part
shall be deemed “ willful ” unless done, or
omitted to be done, by Executive not in good faith and without
reasonable belief that Executive’s act, or failure to act,
was in the best interest of the Company. Any act, or failure to
act, based upon express written authority by the
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JCG
Board or the CEO with respect to such act or omission or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good
faith and in the best interests of the Company.
(f)
Good Reason . Subject to Sections 6 and 7, the
Executive’s employment may be terminated by Executive for
Good Reason. For purposes of this Agreement, “ Good
Reason ” shall mean in the absence of a written consent
of Executive:
(i)
the involuntary removal of Executive by the Company from
Executive’s position as CIO or Co-CIO;
(ii)
a material and non-temporary reduction in Executive’s
authority or duties that changes the fundamental character of
Executive’s job to such an extent as to constitute a de facto
demotion, or actual demotion, including the reassignment of
Executive to a role that is inconsistent with Executive’s
responsibilities as a PM or Co-CIO that materially and adversely
alters Executive’s status as PM or Co-CIO, but excluding for
this purpose: (A) the appointment of another Co-CIO (which shall
have the rights and consequences set forth in Section 7(e) below);
(B) any assignment of Executive to a mutual fund or portfolio with
a smaller amount of assets under management that may result in
reduced compensation, so long as Executive remains as a PM; (C) any
action not taken in bad faith and that is remedied by the Company
within 30 days after receipt of written notice of the material
reduction in Executive’s authority or duties given by
Executive as provided in Section 6(h) below; (D) any mere change of
JCG’s, JCM’s or the Company’s organizational
chart; (E) any mere change in title so long as the fundamental
character of Executive’s job is not changed to such an extent
as to constitute a de facto demotion; and (F) the mere fact that
JCG’s stock ceases to be publicly traded;
(iii)
the relocation of Executive’s principal place of employment
to a location more than 40 miles from Executive’s current
principal place of employment;
(iv)
during the Term, but prior to a “ change in control
” (as defined in the Executive Change in Control Agreement),
a substantial adverse change to the methodology used to calculate
Executive’s PM Compensation or CIO Compensation;
(v)
during the Term, but prior to a “ change in control
” (as defined in the Executive Change in Control Agreement),
a reduction in Executive’s Annual Base Salary or a reduction
in the established minimums for CIO Compensation, provided that
such compensation must satisfy the Section 162(m) Criteria and
therefore a failure to satisfy such Section 162(m) Criteria will
not trigger this Section 6(f)(v);
(vi)
the Company’s failure to cure, within 30 days, a material
failure to pay or provide to Executive any sum or benefit specified
by or due under this Agreement or the Executive Change in Control
Agreement;
(vii)
removal from the Executive Committee (other than in connection with
Executive’s removal from the role of CIO or Co-CIO in
accordance with Section 4 above); or
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(viii)
non-renewal of the Executive Change in Control Agreement other than
in connection with the termination or non-renewal of the Executive
Change in Control Agreement for similarly situated Peer
Executives.
Executive’s mental or physical incapacity
following the occurrence of an event described above in clause (i)
through (viii) shall not affect Executive’s ability to
terminate employment for Good Reason.
(g)
Sunset on Right to Terminate for Good Reason . If
circumstances arise giving Executive the right to terminate this
Agreement for Good Reason, Executive shall within 60 days after
Executive knew or should have known of such circumstances notify
the Company in writing of the existence of such circumstances, and
the Company shall have an additional 30 days within which to
investigate and remedy the circumstances, after which 30 days
Executive shall have an additional 30 days within which to exercise
the right to terminate for Good Reason. If Executive does not
timely do so the right to terminate for Good Reason shall lapse and
be deemed waived, and Executive shall not thereafter have the right
to terminate for Good Reason unless further circumstances occur
giving rise independently to a right to terminate for Good Reason,
in which case the provisions of this Section 6(g) shall once again
apply, but in which case no consideration shall be given to other,
prior circumstances that precipitated a notice by Executive of a
purported right to terminate for Good Reason. The 60 and 30 day
periods specified above for Executive to give notice or exercise
Executive’s right to terminate for Good Reason, respectively,
shall be tolled for any period not exceeding 90 days in the
aggregate during which a properly qualified physician certifies
that Executive is medically incapacitated from performing
Executive’s duties hereunder.
(h)
Notice of Termination . Any termination by the Company for
Cause, or by Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 6(g) of this Agreement. For purposes of this
Agreement, a “ Notice of Termination ” means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of
such notice). The failure by Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not
constitute a waiver of any right of Executive or the Company,
respectively, hereunder or preclude Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
Executive’s or the Company’s rights
hereunder.
(i)
Date of Termination . “ Date of Termination
” means (i) if Executive’s employment is terminated by
the Company for Cause, or by Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein within 30 days of such notice, as the case may be, (ii) if
Executive’s employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies Executive of such termination
and (iii) if Executive’s employment is terminated by reason
of death or Disability, the Date of Termination shall be the date
of death of Executive or the Disability Effective Date, as the case
may be.
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7.
Obligations of the Company Upon Termination . Except for the
Accrued Obligations set forth below or as otherwise expressly
specified in this Agreement, Executive’s right to severance
and/or welfare benefits under any subsection of this Agreement
cannot be cumulated with any right to severance or welfare benefits
arising under any other subsections of this Agreement. Accordingly,
the Parties agree that Executive shall only be entitled to
severance benefits under only one subsection of this Agreement in
connection with any event of termination or change in duties. In
addition and notwithstanding anything to the contrary in this
Agreement, if any amounts payable to the Executive under this
Section 7 cannot be paid in the manner provided for in this
Agreement without subjecting the Executive or the Company to
additional tax, interest or penalties under Section 409A of the
Internal Revenue Code, any such payment which is payable during the
first six months following the Executive’s termination of
employment shall be made in a lump-sum payment within the first ten
(10) business days of the seventh calendar month immediately
following the month in which Executive’s date of termination
occurs.
(a)
Upon any termination of Executive’s employment, the Company
shall pay to Executive, in a lump sum in cash within 30 days after
the Date of Termination, the sum of
(i)
Executive’s Annual Base Salary through the Date of
Termination; and
(ii)
any fully earned and vested but yet unpaid CIO Compensation and PM
Compensation through the Date of Termination (collectively “
Accrued Obligations ”).
(b)
Death or Disability . If, Executive’s employment is
terminated by reason of Executive’s death or disability
during the Term, the Company will pay to Executive or
Executive’s estate or beneficiaries (as applicable) the full
amount of any Accrued Obligations and an amount equal
to Executive’s total cash compensation earned in the four (4)
full calendar quarters immediately prior to the date of death or
disability, as the case may be.
(c)
Termination as PM by Company (but not CIO or Co-CIO) and
Executive Elects to Terminate Employment . If Executive
terminates Executive’s employment under Section 5(b), then
conditioned upon Executive’s execution (and non-revocation)
of a legal release in substantially the form attached hereto as
Exhibit B (the “ Non-Solicitation Legal Release
”), the Company will:
(i)
pay to Executive, in a lump sum cash payment, severance
compensation in an amount equal to Executive’s total cash
compensation earned by Executive as a PM ( i.e. ,
Executive’s Annual Base Salary and PM Compensation) for the
four (4) full calendar quarters immediately prior to the Date of
Termination;
(ii)
make available to Executive three (3) months of outplacement
services at no cost to Executive through a provider of such
services selected by the Company to be used by Executive at any
time during the applicable non-solicitation restriction period;
and
(iii)
arrange to provide Executive and Executive’s dependents with
medical, dental and vision insurance benefits substantially similar
to those provided to Executive and Executive’s dependents
immediately prior to the Date of Termination; provided that
benefits
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otherwise receivable under this paragraph will
be reduced to the extent benefits of the same type are received by
or made available to Executive during the twelve (12) month period
following Executive’s Date of Termination of employment
(which such benefits Executive undertakes to promptly report to the
Company); and provided further that any such health insurance
benefits shall run concurrently with and will be offset against any
continuation coverage under Part 6 of Title I of Employee
Retirement Income Security Act of 1974, as amended.
(d)
Termination by Company Without Cause or by Executive for Good
Reason . If, during the Term, the Company terminates
Executive’s employment without Cause or Executive resigns
Executive’s employment for Good Reason, then, conditioned
upon Executive’s execution (and non-revocation) of a
Non-Solicitation Legal Release, the Company will:
(i)
pay Executive, in a lump sum within 14 business days following the
Date of Termination, an amount equal to one times the
Executive’s Annual Base Salary, plus the greater of: (A) one
year of CIO Compensation at the mid-range of target compensation
for the calendar year of termination, or (B) the remaining total
CIO Compensation calculated at the mid-range of target compensation
for the initial two-year Term of this Agreement to the extent then
unpaid (for purposes of this Section 7(d)(i), CIO Compensation
shall include all cash and non-cash compensation, including the
cash value of the LTI component, if any, of CIO
Compensation);
(ii)
make available to Executive three (3) months of outplacement
services at no cost to Executive through a provider of such
services selected by the Company to be used by Executive at any
time during the applicable non-solicitation restriction period;
and
(iii)
arrange to provide Executive and Executive’s dependents with
medical, dental and vision insurance benefits substantially similar
to those provided to Executive and Executive’s dependents
immediately prior to the Date of Termination; provided that
benefits otherwise receivable under this paragraph will be reduced
to the extent benefits of the same type are received by or made
available to Executive during the twelve (12) month period
following Executive’s Date of Termination of employment
(which such benefits Executive undertakes to promptly report to the
Company); and provided further that any such health insurance
benefits shall run concurrently with and will be offset against any
continuation coverage under Part 6 of Title I of Employee
Retirement Income Security Act of 1974, as amended.
(e)
Appointment of Additional Co-CIO(s) . If during the Term
another person is appointed to serve as Co-CIO (other than Jonathan
D. Coleman) and the new appointee’s duties overlap to any
material extent with Executive’s duties as Co-CIO as of the
time immediately before the appointment, then upon 60 days prior
written notice, Executive may, at Executive’s option, either:
(i) relinquish Executive’s role as a Co-CIO and Executive
shall return to the role of a PM, managing such portfolios as
Executive managed immediately before Executive’s election
under this Section 7(e)(i) or one or more other portfolios with at
least a comparable amount of assets under management; or (ii)
resign Executive’s employment with the Company (a “
Special Resignation ”). In the event of a Special
Resignation, conditioned upon Executive’s execution (and
non-revocation) of a Non-Solicitation Legal Release, the Company
shall pay Executive, in a lump sum within 14 business days
following the Date of Termination, a Special Resignation cash
payment equal to $2,000,000.
12
(f)
Change in Control . Executive’s rights and the
Company’s obligations to make any compensation or severance
payments after a change in control of JCG shall be provided for and
subject to the terms of the Executive Change in Control Agreement
entered into by Executive and the Company, and such Executive
Change in Control Agreement shall supersede any conflicting terms
or agreements; provided however, the parties agree that the
Executive Change in Control Agreement during its term shall not
cause the reduction of any compensation or benefits that are
provided for in this Agreement. To the extent that severance benefits become
payable under the Executive Change in Control Agreement, no
severance benefits will be payable pursuant to this
Agreement.
(g)
Cause . If the Executive’s employment shall be
terminated for Cause during the Term, this Agreement shall
terminate without further obligations to the Executive other than
the obligation to pay to the Executive the Accrued Obligations to
the extent theretofore unpaid.
(h)
Voluntary Departure by Executive (Not for Good Reason) with
Non-Compete Obligations . If, during the Term, the Executive
voluntarily decides to end his employment with the Company (not for
Good Reason under Section 6(f)) and is in “good
standing,” then, conditioned upon Executive’s execution
(and non-revocation) of a two-year non-compete including the terms
set forth in the Non-Solicitation Legal Release substantially in
the form attached as Exhibit C (collectively, the “
Non-Compete Release ”), all unvested equity long-term
incentive awards granted to Executive on or after December 30, 2004
(“ equity long-term incentive awards ” shall
include without limitation unvested shares of Janus restricted
stock, unvested options to purchase Janus stock, and awards
consisting of unvested mutual fund share investment units) will
continue to vest and/or be paid, as applicable, in accordance with
the original vesting schedule provided for in the applicable award
agreement, and any stock options will, from and after such vesting,
remain exercisable for the remainder of their respective terms,
subject to compliance with the terms of the above Non-Compete
Release and as limited by the terms of the agreement(s),
certificate(s) and/or incentive plans underlying each such grants;
provided however, any vesting events scheduled to occur for the
applicable long-term incentive awards during the two-year,
non-compete period will not be delivered or transferred to
Executive until the expiration of such two year period and
Executive’s satisfactory compliance with the Non-Compete
Release, subject to applicable tax withholding obligations of the
Janus Entities. The Company may elect in its sole discretion to
accelerate the vesting of any unvested equity award granted to
Executive after the two-year, non-compete period but prior to the
completion of its original vesting schedule. For purposes of this
subsection, “ good standing ” shall mean
that the CEO has approved the continuation of vesting and has
certified that Executive has not engaged in any conduct, action or
omission that would constitute grounds for terminating
Executive’s employment for Cause.
(i)
Termination at the End of the Term or Thereafter . If the
Executive’s employment shall terminate for any reason at the
end of the Term or thereafter, the Company shall pay to the
Executive the Accrued Obligations to the extent theretofore
unpaid.
(j)
Excise Tax . Notwithstanding any other language to the
contrary in this Agreement or in this Section 7, the Company shall
not be obligated to pay and shall not pay that portion of any
payment or distribution in the nature of compensation within the
meaning of
13
Section 280G(b)(2) of the Internal Revenue Code
to the benefit of Executive otherwise due or payable Executive
under this Agreement or this Section 7 if that portion would cause
any excise tax imposed by Section 4999 of the Internal Revenue Code
to become due and payable by Executive.
8.
Non-Exclusivity of Rights . Except as otherwise specifically
provided in this Agreement, nothing in this Agreement shall prevent
or limit Executive’s continuing or future participation in
any plan, program, policy or practice provided by the Company for
which Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under any
contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits, which consist of any
compensation previously deferred by Executive, or which Executive
is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company at or
subsequent to the Date of Termination (“ Other
Benefits ”) shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement. Notwithstanding any other
provision of this Agreement, Executive shall not be entitled to
receive any payments or benefits under any severance program other
than that which are described and anticipated under this Agreement
or under any Change of Control Agreement.
9.
Full Settlement . The Company’s obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall be subject to any lawful
indebtedness owed by Executive to the Company, and to any valid
legal claim for set-off or recoupment. In no event shall Executive
be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to Executive under any of
the provisions of this Agreement and, such amounts shall not be
reduced whether or not Executive obtains other
employment.
10.
Restrictive Covenants .
(a)
Executive acknowledges that Executive’s employment as a
senior officer of the Company and JCM creates a relationship of
confidence and trust between Executive and the Company and its
Affiliates (as defined below) (collectively “ Janus
Entities, ” individually, a “ Janus Entity
”) with respect to confidential and proprietary information
applicable to the business of the Janus Entities and their clients.
Executive further acknowledges the highly competitive nature of the
business of the Janus Entities. Accordingly, it is agreed that the
restrictions contained in this Agreement are reasonable and
necessary for the protection of the interests of the Janus Entities
and that any violation of these restrictions would cause
substantial and irreparable injury to the Janus
Entities.
14
(b)
Protection of Confidential Information .
(i)
Definition of Confidential Information . “
Confidential Information ” means all information
(whether in paper or electronic form, contained in
Executive’s memory, or otherwise stored or recorded) relating
to or arising from a Janus Entity’s business operations,
plans, products, strategies, employees, clients, relationships, or
compensation programs, including, without limitation, trade secrets
used, developed or acquired by a Janus Entity in connection with
its business. “Confidential Information” does not
include information that is in the public domain through no
wrongful act on the part of Executive, nor does it include
information, knowledge and know-how already within
Executive’s possession or memory before Executive’s
employment with a Janus Entity or one of its predecessors.
(ii)
Executive’s Use of Confidential Information . Except
in connection with and in furtherance of Executive’s work on
a Janus Entity’s behalf, Executive shall not, without the
Company’s prior written consent, at any time, directly or
indirectly: (a) use any Confidential Information for any purpose;
or (b) disclose or otherwise communicate any Confidential
Information to any person or entity.
(iii)
Records Containing Confidential Information . “
Confidential Records ” means all documents and other
records, whether in paper, electronic or other form, that contain
or reflect any Confidential Information. All Confidential Records
prepared by or provided to Executive are and shall remain the Janus
Entities’ property. Except in connection with and in
furtherance of Executive’s work on a Janus Entity’s
behalf or with a Janus Entity’s prior written consent,
Executive shall not, at any time, directly or indirectly: (a) copy
or use any Confidential Record for any purpose; or (b) show, give,
sell, disclose or otherwise communicate any Confidential Record or
the contents of any Confidential Record to any person or entity.
Upon the termination of Executive’s employment with the
Company, or upon a Janus Entity’s request, Executive shall
immediately deliver to the Company or its designee (and shall not
keep in Executive’s possession or deliver to any other person
or entity) all Confidential Records and all other Janus Entity
property in Executive’s possession or control.
(c)
Noninterference Covenants . During Executive’s
employment with the Company, and for a period of one year following
the Date of Termination for any reason, Executive shall not (nor
shall Executive cause, encourage or provide assistance to, anyone
else to):
(i)
interfere with any relationship which may exist from time to time
between a Janus Entity and any of its employees, consultants,
agents or representatives; or
(ii)
employ or
otherwise engage, or attempt to employ or otherwise engage, in or
on behalf of any Competitive Business, any person who is employed
or engaged as an employee, consultant, agent or representative of a
Janus Entity, or any person who was employed or engaged as an
employee, consultant, agent or representative of a Janus Entity
within the six month period immediately preceding the Date of
Termination; or
15
(iii)
solicit directly
or indirectly on behalf of Executive or a Competitive Business, the
customer business or account of any investment advisory or
investment management client to which a Janus Entity shall have
rendered service during the six month period immediately preceding
the Date of Termination; or
(iv)
directly or
indirectly divert or attempt to divert from a Janus Entity any
business in which a Janus Entity has been actively engaged during
the term hereof or interfere with any relationship between a Janus
Entity and any of its clients.
(d)
Definitions
(i)
“ Competitive Business ” means any business that
provides investment advisory or investment management
services.
(ii)
“ Affiliate ” means any corporation,
partnership, limited liability company, trust, or other entity
which controls, is controlled by or is under common control with
the Company.
(e)
If any court of competent jurisdiction shall determine that the
duration, geographic limitations, subject or scope of any
restriction contained in this Agreement is unenforceable, it is the
intention of the parties that this Agreement shall not thereby be
terminated but shall be deemed amended to the extent required to
make it valid and enforceable.
(f)
Executive acknowledges that these restrictive covenants are
reasonable and that irreparable injury will result to the Company
and to its business and properties in the event of any breach by
Executive of any of those covenants, and that Executive’s
continued employment is predicated on the commitments undertaken by
Executive pursuant to this Agreement. In the event any of the
covenants are breached, the Company shall be entitled, in addition
to any other remedies and damages available, to injunctive relief
to restrain the violation of such covenants by Executive or by any
person or persons acting for or with Executive in any capacity
whatsoever.
11.
Successors .
(a)
This Agreement is personal to Executive and without the prior
written consent of the Company shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by
Executive’s legal representatives.
(b)
This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c)
The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly, and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, “ Company ” shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
16
12.
Indemnification and Directors and Officers’ Insurance
.
(a)
The Company shall indemnify Executive to the fullest extent
permitted under law from and against any expenses (including but
not limited to reasonable attorneys’ fees, expenses of
investigation and preparation and fees and disbursements of
Executive’s accountants or other experts), judgments, fines,
penalties and amounts paid in settlement actually and reasonably
incurred by Executive in connection with any proceeding in which
Executive was or is made party or was or is involved (for example,
as a witness) by reason of the fact Executive was or is employed by
the Company, including advancement of payments of such expenses as
provided for by law.
(b)
Executive’s right to indemnification under this Section 12 is
subject to:
(i)
the Company promptly receiving written notice that a claim or
liability has been asserted or threatened (“ Notice of
Claim ”);
(ii)
the Executive providing reasonable cooperation and assistance in
the defense or settlement of a claim; and
(iii)
the Company being afforded the opportunity to have the sole control
over the defense or settlement of such claim or liability, subject
to Executive consent and approval of settlement if such settlement
directly impacts Executive, including requiring him to personally
pay claims that cannot be reimbursed by the Company, or negatively
impacting Executive’s professional licenses or
certifications.
(c)
Unless within ten days after receiving the Notice of Claim, the
Company notifies in writing the Executive of its intent to defend
against such claim or liability, the Executive may defend, settle
and/or compromise any such claim or liability, and be indemnified
for all losses resulting from such defense, settlement and/or
compromise. Executive also may participate in such defense at his
own cost and expense.
(d)
Such indemnification shall continue as to Executive during the Term
and for ten years from the Date of Termination with respect to acts
or omissions which occurred prior to Executive’s cessation of
employment with the Company and shall inure to the benefit of
Executive’s heirs, executors and administrators. The Company
shall advance to Executive all costs and expenses incurred by
Executive in connection with any proceeding covered by this
provision within 20 calendar days after receipt by the Company of a
written request for such advance. Such request shall include an
undertaking by Executive to repay the amount of such advance if it
shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(e)
The Company agrees to continue and maintain directors’ and
officers’ liability insurance policies covering Executive to
the extent that the Company provides such coverage for the Peer
Executives. Such insurance coverage shall continue as to Executive
even if he has ceased to be a director, member, employee or agent
of the Company with respect to acts or omissions which occurred
prior to Executive’s cessation of employment with the
Company. Notwithstanding the foregoing, however, if the
