More annual reports from Janus Henderson Group:
2023 ReportPeers and competitors of Janus Henderson Group:
Unitill
r
r
s
s
c
a
p
o
o
u
e
p
n
n
e
n
u
d
L
1
7
0
2
T
E
P
G
R
A
A
R
U
N
N
H
O
7J
T
1
R
0
O
2
P
E
R
L
A
U
N
N
A
About
Janus
Henderson
Janus Henderson is a leading global active
asset manager dedicated to helping
investors achieve long-term financial goals
through a broad range of investment
solutions, including equities, fixed income,
quantitative equities, multi-asset and
alternative asset class strategies.
Janus Henderson Group plc Annual Report 2017
1
This report and additional information
about the Group can be found online at
janushenderson.com/ir
Business highlights
2017 was a landmark year in the history of our
company, with the completion of the merger of
equals to form Janus Henderson Group plc
(‘the Group’).
The Group’s investment performance improved
year-on-year and despite net outflows, we
continue to see strong levels of engagement
and support from clients globally. In 2017, we
delivered revenue and profitability growth, and
are pleased with the pace of progress towards
our targeted cost synergies.
Business review
2 Group at a glance
4 Chairman and Deputy Chairman’s statement
6 Co-Chief Executive Officers’ statement
9
10
14 Client relationships and brand
Launching Janus Henderson
Investment management overview
Governance
18 Board of Directors
22 Governance overview
Form 10-K
26 Form 10-K
Other information
214 Shareholder information
216 Two year financial summary (unaudited)
Investment outperformance1 (%)
Net new money growth2 (%)
66%of AUM beating benchmark over three years
(3%)
2016
2017
56
-3
-3
66
Assets under management (AUM) (US$)
Adjusted operating margin (%)
370.8bn
39.6%
2016
2017
319.2
2016
370.8
2017
Adjusted diluted earnings per share (US$)
Dividend per share3 (US$)
Notes
Data for 2016 and 2017 periods present the results
of JHG as if the merger had occurred at the beginning
of the period shown. See pro forma adjusted financial
measures reconciliation on Form 10-K pages 43 and
44 for additional information.
In accordance with the Australian Securities and
Investment Commission Corporations Instrument
2016/91, amounts in this Annual Report have
been rounded to the nearest US$0.1m, unless
otherwise stated.
1. Investment performance data represents
percentage of AUM outperforming the relevant
benchmark. Full performance disclosures detailed
on page 216.
2. Calculated as total flows divided by beginning
of period AUM.
3. 2017 includes a hypothetical per share dividend
for Janus Henderson Group plc for 1Q17. The
amount is derived by taking the sum of the cash
dividends each legacy firm paid to its respective
shareholders (for legacy Janus that was
US$20.3m and for legacy Henderson that was
US$26.9m), divided by the number of shares
outstanding as at 30 May 2017 (approximately
200.4m). USD/GBP 1.3017.
2016
2017
33.9
39.6
2.48
2016
2017
1.20
1.94
2016
N/A
2.48
2017
1.20
Janus Henderson Group plc Annual Report 2017
2
BUSINESS REVIEW
Group at
a glance
Janus Henderson is an independent global asset
manager, specialising in active management.
We offer a broad range of investment solutions
across major asset classes to a client base
around the world.
Our purpose:
At Janus Henderson:
We exist to help our clients achieve their
long-term financial goals
We put our clients first
We succeed as a team
We act like an owner
We aim to:
Be a partner our clients can trust working
to deliver excellence in both investment
returns and service
Partner with each other on our responsibilities
to our clients and create an environment where
all our colleagues can thrive and successfully
achieve their personal and professional goals
Be a responsible steward for our owners,
pursuing efficiency and taking pride
in delivering stable and consistent
financial returns
Total assets under management (AUM)
(US$)
Investment performance by capability
Percentage of AUM outperforming benchmark
370.8bn
2016: 319.2bn
Equities
(US$)
189.7bn
2016: 153.3bn
Diverse business encompassing
a wide range of geographic and
investment styles.
Fixed Income
(US$)
80.1bn
2016: 73.7bn
Coverage across the asset class,
with an increasingly global offering.
Quantitative Equities
(US$)
Multi-Asset
(US$)
49.9bn
2016: 46.5bn
Our quantitative equity manager,
Intech, applies advanced
mathematical and systematic
portfolio rebalancing intended
to harness the volatility of stock
price movements.
31.6bn
2016: 28.0bn
Retail and institutional offering
through a diversity of strategies
including global asset allocation,
traditional multi-manager and
alternative asset class specialists.
Alternatives
(US$)
19.5bn
2016: 17.7bn
Expertise in liquid alternatives and
absolute return alongside traditional
hedge funds.
Janus Henderson Group plc Annual Report 2017
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
AUM
(US$bn) 1 year
3 years 5 years
189.7
64%
60%
67%
80.1
49.9
31.6
19.5
93%
95%
98%
90%
27%
87%
86%
87%
89%
93%
76%
100%
Total Group
370.8
76%
66%
79%
Note: Investment performance data represents percentage of AUM outperforming
the relevant benchmark. Full performance disclosures detailed on page 216.
For more information go to page 10
Strong client relationships
Our clients are financial professionals as well as private and
institutional investors. We focus on excellent client service and
on establishing long-term client relationships based on trust.
For more information go to page 14
An award-winning brand proposition
We believe in the sharing of expert insight for better investment
and business decisions. We call this ethos Knowledge. Shared.
This award-winning brand proposition provides investment insight,
thought leadership and transparency to our clients in a timely
and cost-efficient way.
For more information go to page 14
Note: All data as at 31 December 2017, unless stated otherwise.
3
Assets under management
AUM by client type (%)
AUM by capability (%)
AUM by client location (%)
Our clients are financial professionals as
well as private and institutional investors.
We manage assets diversified across five
core investment capabilities: Equities, Fixed
Income, Quantitative Equities, Multi-Asset
and Alternatives.
We manage assets for clients based across
the world.
39
17
44
13
22
5
9
16
51
52
32
Self-directed
Intermediary
Institutional
US$62.0bn
US$164.1bn
US$144.7bn
US$189.7bn
Equities
US$80.1bn
Fixed Income
Quantitative Equities US$49.9bn
US$31.6bn
Multi-Asset
US$19.5bn
Alternatives
Americas
EMEA
Asia Pacific
US$192.8bn
US$120.2bn
US$57.8bn
Global geographic distribution
We have strong distribution platforms and deep client relationships in the US, UK, Continental
Europe, Japan and Australia, and an evolving business in Latin America and the Middle East.
For more information go to page 16
Americas
Total AUM
Europe, Middle East and Africa (EMEA)
Asia Pacific
US$192.8bn
Total AUM
US$120.2bn
Total AUM
US$57.8bn
Investment professionals
Distribution professionals
281
280
Investment professionals
Distribution professionals
202
231
Investment professionals
Distribution professionals
43
91
Established North American distribution
network serving a diverse set of clients
across financial intermediaries, institutions
and self-directed channels. The organic build
out of our Latin America business is
gathering momentum.
Strong retail and institutional client base in
the UK with an award-winning Investment
Trust business. Strong relationships with
global distributors in Continental Europe
and growing institutional opportunities.
Strategic partnership with Dai-ichi Life and
its partners supports the growth of our
Japanese business. Australian distribution
offers a suite of global and domestic
capabilities. The wider Asian business
continues to evolve, with growing
brand presence.
Investment case
Janus Henderson has:
Depth, breadth and
connectivity of investment
teams focused on delivering
better risk-adjusted
outcomes for clients.
Distribution strength in
largest five markets
globally, to leverage the
opportunity to deepen
client relationships.
Note: All data as at 31 December 2017, unless stated otherwise.
Compelling products and
solutions to address a broad
range of client needs.
Scale and capacity to
innovate amid continuing
regulatory change.
A robust balance sheet
providing stability for the
company to weather
changes in market
conditions.
Janus Henderson Group plc Annual Report 2017
4
BUSINESS REVIEW
Chairman and
Deputy Chairman’s
statement
This has been a significant year for
Janus Henderson. We look forward
to developing the opportunities
before us for clients, shareholders
and employees.
Richard
Gillingwater
Chairman
Glenn
Schafer
Deputy
Chairman
2017 total dividend per share (US$)
1.20
2016: n/a
Launching Janus Henderson
It is with great pleasure that we introduce the
inaugural Janus Henderson Group annual report.
2017 was a momentous year for the firm, with
the completion of the merger of Janus Capital
Group and Henderson Group. It marked a step
change in the shape and footprint of our
respective businesses.
We operate in a challenging landscape, with
pressures from competitors, clients, regulators
and technology, and we must evolve and innovate
in order to remain relevant. Both Janus and
Henderson were successful companies in their
own right and it was with the most careful
consideration by the respective Boards and
Management teams that the transformational
merger was recommended to shareholders.
As a merged group with US$371 billion assets
managed for clients globally, Janus Henderson
has distribution strength in the largest five markets
in the world – the US, UK, Continental Europe,
Japan and Australia. Together with our highly
diversified product range and the scale to invest
and innovate, we believe we have the foundations
to be a leading, global, active asset manager.
The Group’s activities over the past year can be
separated into two halves: merger completion
and integration. The transatlantic merger was
one of the largest executed in our industry.
Multiple workstreams focused on the
preparations ahead of the merger’s completion
on 30 May 2017, involving hundreds of employees
and multiple advisors. Our focus on delivering
value to our clients, however, remained
unwavering. It was critical that our investment
teams were undisrupted through the merger. The
achievement of this is evidenced in our improved
long-term investment performance, with two
thirds or more of AUM outperforming
benchmarks over one, three and five-year
periods as at 31 December 2017. We would
particularly highlight the positive response from
clients, derived from the complementary nature
of the merger and transparent communication.
Equally, we are pleased by the subsequent
excellent progress made with integrating the
firms, without adversely affecting outcomes for
our clients. The timeline to complete integration
will continue into 2018 and beyond, and we are
encouraged by how well the business has come
together in the last seven months.
Janus Henderson Group plc Annual Report 2017
5
Launching a new company with over 2,000
employees and with offices in 27 cities
world-wide has required an extraordinary effort
by our teams and partners in a very short time.
We express our thanks to all Janus Henderson
employees and our partners for their efforts and
commitment to achieving our collective goal.
Leadership and governance
Establishing a common culture for Janus
Henderson is one of the over-arching aims
of the Board and Management. This has even
greater relevance in a merger of equals, where
it is imperative to bring the two cultures together
in a truly collaborative way. The process has been
helped by the strong focus the two firms had
on pure-play, active asset management and
client service.
The decision to appoint co-Chief Executive
Officers (co-CEOs) has been important in
enabling the merger and critical to the successful
integration. We are pleased with the highly
qualified team which the co-CEOs, Andrew
Formica and Dick Weil, have now built around
them to lead Janus Henderson forward.
Andrew and Dick, together with their Executive
Committee, have a strong sense of responsibility
to our shareholders, recognise the importance
of collaboration between employees, and have
passionate belief in the value active management
delivers for clients. It is this cultural fit and their
leadership that has laid the best possible
foundation for the new Group. In getting to this
position, we acknowledge the contribution of
a number of colleagues from the individual
firms’ leaderships who have now left but
who were critical to achieving the merger.
The new Board of Janus Henderson Group met
formally throughout the second half of 2017.
As a dual-listed company on the New York
Stock Exchange (NYSE) and the Australian
Securities Exchange (ASX) incorporated in
Jersey, Janus Henderson has a unique corporate
structure and regulatory obligations. The Group
adopted a corporate governance policy in a form
customary for NYSE-listed companies, adapted
as necessary to reflect Janus Henderson’s
dual-listed status in the US and Australia. We
are pleased to say that the new Board has
come together very well since the completion
of the merger.
Later in this report we have included an overview
of the governance structure and topics
addressed by the Board in its first meetings.
Financial strength and
capital management
This year’s financial results reflect the benefit
of the Group’s increased scale, with total adjusted
operating income of US$732 million and adjusted
diluted earnings per share of US$2.48, compared
to US$1.94 in 2016 on a pro forma basis1.
The Board takes an active, disciplined approach
to the management of Janus Henderson’s cash
and capital resources. It believes in balancing the
capital needs and the investment opportunities
of the business with shareholder interests, without
emphasising the use of leverage. This approach
has been demonstrated by the funding of a
quarterly dividend which we expect will broadly
grow in line with adjusted earnings growth.
As integration efforts bed down and short-term
needs for cash abate, and when capital
generation outweighs opportunities to organically
invest in the business, we will look to return
excess capital to shareholders.
Dai-ichi Life Holdings Inc. and Janus
Henderson: A strategic partnership
We would like to take the opportunity to express
our thanks to our strategic partners at Dai-ichi
Life. We thank them not only for their support in
completing the merger but also for reaffirming
their commitment as shareholders, their additional
investment in Janus Henderson products, and
their continued support to grow our Japanese
business. We are grateful for their partnership
and look forward to continuing to develop the
relationship in the years to come.
In concluding, we would like to thank our fellow
Board members for their care and commitment,
and to all our colleagues at Janus Henderson
for a successful year. We express our thanks
also to our clients and shareholders for their
continuing support.
2017 will be remembered as a significant year
for Janus Henderson. Through the merger we
have created a firm with a greater global footprint,
product capabilities and scale with which to
invest. We are just at the start of our path as
a new firm but look forward with anticipation
to developing together the opportunities ahead.
Richard Gillingwater
Chairman
Glenn Schafer
Deputy Chairman
1. Data for the 2016 and 2017 periods present the results of JHG as if the merger had occurred at the beginning of the period shown. See pro forma adjusted financial
measures reconciliation on Form 10-K pages 43 and 44 for additional information.
Janus Henderson Group plc Annual Report 2017
6
BUSINESS REVIEW
Co-Chief Executive
Officers’ statement
Janus Henderson is a business of
great opportunity and potential.
2017 was a year of integration and
setting the foundations for growth.
Andrew
Formica
Co-Chief
Executive
Officer
Dick
Weil
Co-Chief
Executive
Officer
2017 adjusted diluted earnings per share
(US$)1
2.48
2016: 1.94 (Pro forma)
2017 was a landmark year in the history of our
company. Janus Henderson starts life with a
rich opportunity set in front of us. We have a
business underpinned with a broad array of
clients who support and rely on us, great talent
and a strong balance sheet enabling us to
make the investments required to adapt
efficiently to the ever-changing environment.
It was against this backdrop that Janus
Henderson saw continued improvement in the
Group’s combined investment performance.
Over one, three and five-year periods, 76%,
66% and 79% of assets outperformed their
benchmarks respectively3, which compared
favourably over the same time periods a
year ago.
We are truly blessed with a broad and deep
array of investment talent but a risk of any
transformational transaction in our industry
is that it disrupts the investment process.
Pleasingly, the strength of our performance is
evidence that Janus Henderson saw no such
disruption, and is testament to the teams
quickly embracing the value of the merger and
their professionalism in appreciating that
change can help build better outcomes for
clients through the sharing of ideas.
At the core of Janus Henderson is the belief
in the role active management has to play in
helping our clients achieve their long-term
financial goals, and we are very pleased with
investment performance achieved in 2017.
A year in review
Looking to the dynamics of the financial markets
in which we operate, 2017 was a year in which
markets experienced broad-based growth
despite meaningful change in the macro
environment. We began the year with concerns
for the potential impact of global disruption:
the effect of geopolitical change on policies,
questions about how long the bull market –
and central banks’ support – could continue,
and whether the growth prospects for global
economies would underperform. What followed
was a year of impressive, synchronised global
growth, with all 35 of the OECD countries2
recording positive growth. Market commentators
were surprised that macro momentum did not
drive inflation or have significant impacts on
interest rates globally. This was good news
for equities and fixed income asset prices
generally. There were however big variations
within markets, with growth stocks continuing
to outperform in 2017.
Janus Henderson Group plc Annual Report 2017
7
At our core is the belief in the
role that active management
has to play in helping our
clients achieve their long-term
financial goals.”
Andrew Formica
Co-Chief Executive Officer
Building a leading global active
asset manager
Janus Henderson is a client-centric organisation,
where investment excellence and client
experience are paramount. We have an enviable
market position in the largest markets in the
world and aspire to be trusted by our clients
and a destination employer. To achieve this,
our culture needs to support and encourage
our objectives.
In the months leading up to the merger, there
was an extraordinary amount of work carried
out to launch the brand of Janus Henderson
effectively across a huge range of
communications and provide clients with
a seamless ‘Janus Henderson’ experience
from Day One. Seven months in, integration
efforts across the business have been
successful and are progressing ahead of
schedule. The business continues to come
together and through the integration period
employees around the world are embodying our
brand proposition of Knowledge. Shared.
In November we announced an expansion of
our long-standing strategic partnership with
BNP Paribas whereby they will take over
responsibility for the majority of our US back and
middle office fund administration, fund
accounting and custody functions. The
enhanced partnership with BNP, coupled with
the pace of integration across the firm, enabled
us to increase our target for cost synergies that
we expect to realise as a result of the merger
within three years from completion. We remain
well on track for our target of at least US$125
million in run rate net cost synergies and
believe we will achieve US$90 million by the
end of year one.
Janus Henderson starts life
with a rich opportunity set
in front of us.”
Dick Weil
Co-Chief Executive Officer
At the end of 2017, Janus Henderson managed
US$371 billion for clients, an increase of 16%,
with growth during the year1 driven by positive
markets and currency movements. The
Group saw net outflows for the year, totalling
US$10.2 billion. US$7.6 billion of the net
outflows were derived from our Quantitative
Equities business, primarily in the first quarter,
as a result of poor performance in the second
half of 2016. Despite these headwinds, we
have been encouraged by feedback from
our clients.
Our Equities capability saw net outflows of
US$1.3 billion for the year, with flows into
our Intermediary and Institutional channels
impacted by headwinds in the Self-directed
business. Geographically, Intermediary flows in
our European business were weak but notably
in the US Intermediary channel, we gained
share in the equity market during 2017, with
our Equity mutual fund business outpacing
the industry’s organic growth rate by 180 basis
points. Fixed Income net flows were flat for the
year. Outflows from the Janus Henderson
European Corporate Bond Fund were offset
by strong inflows into our Absolute Return fund
run out of Australia by our fully owned subsidiary,
Kapstream, and encouraging interest in the
Janus Henderson Global Unconstrained Bond
Fund. Our Multi-Asset business experienced an
improvement in net outflows during the year
and we were pleased by the improvement in
investment performance in Janus Henderson
Balanced, this capability’s single largest strategy.
Absolute Return products continued to attract
strong inflows in our Alternatives capability
throughout 2017. These were offset by a
combination of Institutional mandate losses and
modest outflows attributed to the UK Property
PAIF, albeit reduced from levels seen in 2016.
Our Institutional offering saw good traction
globally across a diverse breadth of strategies.
The ten largest Institutional net inflows for the
year were sourced from nine different strategies.
With improved investment performance and
consultants beginning to take Janus Henderson
off post-merger ‘watch’ lists, we are excited by
the opportunities for new business.
Later in this report, Janus Henderson’s Chief
Investment Officer, Enrique Chang, and our
Global Head of Distribution, Phil Wagstaff,
provide further detail into our diverse
investment capabilities and increased
distribution strength.
Our business results translated into strong
financial results, providing evidence of the
improved operating leverage in the business
following the merger.
• Adjusted revenue of US$1,848 million
(2016: US$1,669 million)1
• Adjusted operating income of
US$732 million (2016: US$565 million)1
• Adjusted diluted earnings per share
increased to US$2.48 (2016: US$1.94)1
As reflected in the results above, the combined
business has greater financial scale which
provides enhanced flexibility to invest in our
business as well as the ability to adapt more
efficiently to regulatory change and evolving
governance expectations. In recent years, we
have seen a wealth of regulatory change globally.
2017 saw no let-up in that pace, as rules were
implemented to protect clients and help them
better understand the products in which their
money is invested. As a firm, we continue to ready
the business. Whatever the outcome of global
regulatory or political change, we are confident
Janus Henderson will be able to continue to
deliver services in the interests of clients.
One of the significant regulatory changes that
we prepared for through 2017 was MiFID II and
in the second half of 2017 we saw a rapid
development in the process by which investment
managers were planning to pay for third-party
research in compliance with this new EU
regulation. Driven by client demand and changing
industry dynamics, there was a marked shift in
the way costs for this research would be passed
on to clients. Janus Henderson confirmed it will
pay directly for third-party investment research
for its European fund products and segregated
clients of its European business. Excellence in
research is fundamental to Janus Henderson’s
investment processes. Our decision reflects our
commitment to working on behalf of our clients
to provide the best solution to meet their needs.
1. Data for the 2016 and 2017 periods present the results of JHG as if the merger had occurred at the beginning of the period shown. See pro forma adjusted financial
measures reconciliation on Form 10-K pages 43 and 44 for additional information.
2. The Organisation for Economic Co-operation and Development.
3. Investment performance data represents percentage of AUM outperforming the relevant benchmark. Full performance disclosures detailed on page 216.
Janus Henderson Group plc Annual Report 2017
8
BUSINESS REVIEW
Co-Chief Executive
Officers’ statement
continued
Revenue growth opportunities
Stage 1
Stage 2
Stage 3
Dai-ichi strategic partnership
• US$500 million funding into Global Growth,
European Corporate Bond and European
Secured Loan funds
• Potential for distribution of additional products
through Asset Management One
• Broader global product offering for the
Japanese market
Cross-sell opportunities
• Increasing penetration of existing products
e.g. Global Equity Income and Emerging
Markets in the US, and Unconstrained Bond
and Intech in Europe
• Launching existing products in alternative
vehicles to broaden distribution
New product development
• Leveraging existing regional capabilities
to create global products e.g. Global Small Cap
• Enhancing Intech’s capabilities to create
new products
• Expanding Multi-Asset and Alternatives capabilities
• Partnering with our clients to develop
innovative solutions
Looking forward
During the year, we have spoken often about
the revenue synergies we believe we can deliver
through our new combination. We think of these
opportunities in three stages. Firstly, our strategic
partner Dai-ichi completed the US$500 million
investment into former-Henderson products it
committed to at the time we announced the
merger. Dai-ichi continues to be a great partner
to Janus Henderson and we are excited about
the future prospects with them and their affiliate,
Asset Management One. Stage two leverages
opportunities to cross-sell products to clients
globally. Enhanced distribution strength was at
the heart of the merger and with more than
600 distribution employees worldwide, we can
advance opportunities which did not exist to
us as individual companies. New product
development completes the set of revenue
synergies. We would expect the third stage
to take the most amount of time to realise
its potential as it involves the expansion of
capabilities or partnering with our clients
to develop innovative solutions. All of these
opportunities are expected to materialise over
multiple years however we are very pleased
with the exceptional client response since
we closed the merger and are encouraged
with the progress we have seen to date.
Priorities and outlook
What has been achieved in 2017 is remarkable
and we are more convinced than ever of the
merit of the merger. Janus Henderson is a
business of great opportunity and potential.
We have a broad, global footprint, with greater
depth in each market and enhanced diversity
of product. 2017 was a year of integration, in
which a major part of our activity was largely
internal as we set the foundations for growth.
With the groundwork in place, we can turn
our effort more external – focusing on
achieving positive organic growth by being
a trusted partner to our clients, delivering
market-leading investment returns, insights
and client experiences.
We finish by paying tribute to all of our colleagues
at Janus Henderson for their hard work over
the past year. None of what we accomplished
this year would have been possible without your
dedication and collaboration. It is a privilege to
lead Janus Henderson and we very much look
forward to seeing its potential realised.
Andrew Formica and Dick Weil
Co-Chief Executive Officers
Janus Henderson Group plc Annual Report 2017
Launching
Janus
Henderson
In the months leading up to the merger, an
extraordinary amount of work was carried out to
launch the Janus Henderson brand and provide
clients with a seamless experience from Day One.
9
Rebranded
10,000
items of literature
70
websites
27
offices in a
single weekend
4,000
fund factsheets
330+
institutional client reports
The path
to launch
Accounting platforms merged
Shareholders
2
45,000
transitioned in a single weekend
Fund holdings
Offices consolidated
US Mutual funds
100,000 7
merged into a single system
and 3 closed
78
merged or approved
new advisory agreements
Market capitalisation (US$)
Dual-listed
7.7bn NYSE & ASX
Employees worldwide
Offices
worldwide
Fund manager average
years’ financial
industry experience
Employee
ownership
+2,000 27 20
in 14 countries
7%
2017 adjusted revenue
(US$)1
2017 adjusted operating
income (US$)1
2017 adjusted diluted
EPS (US$)1
1,848m 732m 2.48
Note: All data as at 31 December 2017.
1. Data for the 2017 period presents the results of JHG as if the merger had occurred at the beginning of the period shown. See pro forma adjusted financial measures
reconciliation on Form 10-K pages 43 and 44 for additional information.
Janus Henderson Group plc Annual Report 2017
10
BUSINESS REVIEW
Investment
management
overview
We firmly believe in the role of active
management and amongst the
activity of the merger, our focus has
remained on adding value for clients.
Throughout 2017 we
fostered an environment
where research was
exchanged and investment
ideas debated globally.”
Enrique Chang
Global Chief Investment Officer
Our primary goal is to help clients meet their
investment objectives. In order to accomplish
this, it is important that we have the correct
products, management structure, investment
experts and supporting teams. 2017 was a
busy year in which the merger was accomplished
with a view to minimising any disruption to clients.
It is testament to the hard work of our operational,
technology and client service teams that our
investment experts were able to focus their
energies on managing client portfolios.
In aggregate, we were able to deliver solid
investment performance for clients as
demonstrated on page 11.
Building a global investment
management team
While minimal, the merger engendered some
reshaping of senior investment management as
we sought to reflect the realities of the enlarged
global business. As Global Chief Investment
Officer of the combined group, I am pleased
with the strength of the senior team around me
and I believe we are in a strong position to drive
the business forward. Fixed Income was further
strengthened with the recruitment of Jim
Cielinski as Global Head of Fixed Income. The
Global Head of Equities role was made a joint
role given the demands of multiple strategies;
the depth of experience meant we were able
to promote from within the organisation, with
George Maris, based in Denver, covering North
America and Alex Crooke, based in London,
covering the rest of the world.
Janus Henderson Group plc Annual Report 2017
A great strength of our business is that we
are able to accommodate teams with distinct
investment processes and did not stifle creativity
as a result of the merger. Janus Henderson
firmly believes in active management, so it was
important to sustain this pursuit of adding value
for clients within a risk-controlled environment.
We continued, therefore, to encourage teams
to follow existing successful models but also
invested further in our risk management and
compliance functions.
Throughout 2017 we fostered an environment
where research was exchanged and ideas
debated globally and this took on increased
prominence with the merger. We seamlessly
melded our corporate credit research teams
in Denver and London, with a transatlantic
analyst exchange programme deepening
the interaction. The network of investment
professionals in different locations directly
feeding into individual mandates continued
to expand, and encompasses strategies as
diverse as absolute return fixed income,
Asian equities and sustainable investment.
With regards to our investment responsibilities
to the environment, we signed a new initiative
– Climate Action 100. Participants aim to engage
with the top 100+ companies that contribute
the most to global emissions, seeking action
to reduce emissions and calling for enhanced
corporate disclosure.
The merger did not prevent us from launching
new funds to address client demand. This
included an AlphaGen hedge fund, which
targets mispricings in derivative contracts,
driven by a supply-demand imbalance originating
in the market for structured products, and a Euro
Secured Loans fund, which is primarily tailored
to institutional investors seeking an attractive
return in a low risk environment. In Japan, we
launched the Janus Henderson Mid-Cap
Growth fund in October for retail investors,
which attracted more than US$400 million
in a few short months.
Investment performance through
active management
Evidence of synchronised global growth, US tax
reform, and the resurgence in commodity prices
spurred many equity markets to new highs.
Within our Equities capability, both our
technology franchises performed well and
attracted net flows as investors sought access
to a sector that is transforming the global
economy through disruptive innovation. Other
distinct specialist propositions, including life
sciences, saw similar success and natural
resources also performed well. Our emerging
market equity franchise continues to gain
clients across geographies, attracted to the
team’s disciplined investment process.
11
In terms of style, growth outperformed value
in most markets. Small and mid-cap strategies
were typically strong performers, with our
mid-cap growth fund Janus Henderson
Enterprise bringing in net inflows of more than
US$1.8 billion and Janus Henderson Triton also
seeing net inflows. Despite the strength in
growth stocks, a majority of our Perkins value
strategies performed well and battled against
the investor style rotation. There were mixed
results from European equities, however, with
disappointing performance in some of the
growth strategies leading to outflows. Income
remained a requirement for many investors,
helping to maintain strong flows into the global
equity income strategy.
Buoyed by ongoing central bank purchases,
relatively restrained inflation, and an ongoing
search for yield, fixed income markets generally
experienced further yield and spread compression,
which lifted bond prices. Towards the end of the
year, however, there was firmer evidence of
central banks looking to wind back loose
monetary policy and yields began to climb.
There was clear investor appetite for strategies
that were unconstrained and are intended to
offer more in the way of protection against the
prospect of rising interest rates, with some
investors rotating out of more core strategies.
Australia remained a key source of growth
for our fixed income capability with good
performance and flows across both our
domestic and global capabilities, with the
Kapstream subsidiary being named KangaNews
Australian Credit Fund Manager of the Year 2017.
Intech, our Quantitative Equity manager,
performed well in 2017, with relative risk
strategies performing particularly strongly
and absolute risk, low volatility strategies in
line with expectations. However, flows reflected
ongoing industry trends towards passive
management in US equities, as well as investor
response to underperformance in 2016,
and total net outflows from Intech were
US$7.6 billion. This was primarily reflected
in the US-focused strategies, as Intech’s global
capabilities attracted more than US$1 billion
in net inflows. In 2017 Intech marked the 30th
anniversary of its founding with a major refresh
of its brand and the launch of a new website.
Other key developments included enhanced
capability in creating customised portfolios for
clients, allowing for greater client reach, and
the launch of a new absolute return capability.
Investment performance by capability
Percentage of AUM outperforming benchmark
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total Group
AUM
(US$bn)
1 year
3 years
5 years
189.7
64%
60%
67%
80.1
49.9
31.6
19.5
93%
95%
98%
90%
27%
87%
86%
87%
89%
93%
76%
100%
370.8
76%
66%
79%
Note: Investment performance data represents percentage of AUM outperforming the relevant benchmark.
Full performance disclosures detailed on page 216.
Multi-Asset in the US is dominated by our
Balanced strategy. Net flows for the year were
down despite strong performance and broadly
reflected retail investors seeking more
aggressive strategies given the momentum in
equity markets. Within Europe, there was a
recovery in performance of the retail funds and
the diversified growth strategy and efforts were
focused on strengthening distribution partners.
Investors looking for sources of uncorrelated
return spurred interest in many of our alternative
strategies, including diversified risk premia
and UK absolute return, with the latter bringing
in an additional US$1.7 billion of net flows.
The UK commercial property fund performed
well in 2017 after the Brexit-related challenges
of 2016 and flows, albeit negative for the year
as a whole, recovered as the year progressed,
with investors regaining their trust in ‘bricks
and mortar’ as a source of income.
Taken together, the strong aggregate
performance is encouraging since we are
ultimately judged on our capacity to meet
client’s return objectives. With the key merger
milestones successfully passed, 2018 offers
a year in which our depth of investment talent
and breadth of strategies create a firm platform
from which to retain and attract investors.
Janus Henderson Group plc Annual Report 2017
12
BUSINESS REVIEW
Investment management
overview continued
We offer expertise
across major asset
classes, with investment
teams situated around
the world.
Equities
We offer clients a wide range of equity strategies
encompassing different geographic focuses and
investment styles. The equity teams include
those with a global perspective, those with a
regional focus – US, Europe, Asia and Australia
– and those invested in specialist sectors.
Fixed Income
Our Fixed Income teams provide coverage
across the asset class applying a wide range
of innovative and differentiated techniques.
These teams include those adopting global
unconstrained approaches through to teams
with more focused mandates – based in the
US, Europe, Asia and Australia. The capabilities
of these teams can be accessed through
individual strategies and are combined where
appropriate to form multi-strategy offerings.
Equities AUM (US$bn)
Fixed Income AUM (US$bn)
189.7bn
80.1bn
Investment outperformance
Investment outperformance
1 year 3 years 5 years
1 year 3 years 5 years
Equities
64% 60% 67%
Fixed Income
93% 95% 98%
Largest pooled funds
Largest pooled funds
Funds
JnsHnd Enterprise
JnsHnd Research
JnsHnd Forty
JnsHnd Triton
JnsHnd Global Equity Income
AUM
31 Dec 2017
(US$bn)
Funds
16.1
13.5
11.6
9.6
5.6
JnsHnd Flexible Bond
JnsHnd Absolute Return
JnsHnd Strategic Bond
JnsHnd Hzn European
Corporate Bond
JnsHnd Global
Unconstrained Bond
AUM
31 Dec 2017
(US$bn)
8.6
4.9
2.7
2.2
2.2
Note: Investment performance data represents percentage of AUM outperforming the relevant benchmark. Full performance disclosures detailed on page 216.
Janus Henderson Group plc Annual Report 2017
13
Quantitative Equities
Our Quantitative Equities business, known under
the brand ‘Intech’, applies advanced mathematics
and systematic portfolio rebalancing intended
to harness the volatility of movements in stock
prices – a reliable source of excess returns and
risk control. With more than 30 years of volatility
expertise, the Intech team employs a distinctive
quantitative approach based on observations
of actual price movements, not on subjective
forecasts of companies’ future performance.
Multi-Asset
Janus Henderson Multi-Asset includes teams
in the US and UK. In the US, the team manages
Global Asset Allocation strategies. In the UK,
we have traditional multi-manager investors,
asset allocation specialists and those focused
on alternative asset classes.
Alternatives
The Janus Henderson Alternatives grouping
includes teams with different areas of focus
and approach. Diversified Alternatives brings
together a cross-asset class combination
of alpha generation, risk management and
efficient beta replication strategies. These
include Multi-Strategy, Liquid Alternatives,
Absolute Return, Agriculture and Global
Commodities/Managed Futures. Finally, the
investment management of our direct UK
commercial property offering is sub-advised
to TH Real Estate.
Quantitative Equities AUM (US$bn)
Multi-Asset AUM (US$bn)
Alternatives AUM (US$bn)
49.9bn
31.6bn
19.5bn
Investment outperformance
Investment outperformance
Investment outperformance
1 year 3 years 5 years
1 year 3 years 5 years
1 year 3 years 5 years
Quantitative Equities
90% 27% 87%
Multi-Asset
86% 87% 89%
Alternatives
93% 76% 100%
Five investment platforms
Largest pooled funds
Largest pooled funds
All strategies subscribe to an investment idea
used across five investment platforms: equity
price volatility is enduring and a reliable source
of both excess return and a key to risk control.
Funds
JnsHnd Balanced
Enhanced Equity
Active Core Equity
Low Tracking
Error Relative
Return
Objective
JnsHnd Cautious Managed
JnsHnd Multi-Manager
Managed
AUM
31 Dec 2017
(US$bn)
14.0
3.0
0.6
Adaptive Volatility Equity
Low Volatility Equity
Absolute Return
Low Standard
Deviation
Absolute
Return
Objective
Funds
JnsHnd UK Absolute
Return (SICAV)
JnsHnd UK Property
PAIF/PAIF Feeder
JnsHnd UK Absolute
Return (OEIC)
JnsHnd Horizon Pan
European Alpha
JnsHnd Multi-Asset
Absolute Return
AUM
31 Dec 2017
(US$bn)
6.0
4.1
3.5
1.2
0.2
Janus Henderson Group plc Annual Report 2017
14
BUSINESS REVIEW
Client relationships
and brand
In a year that saw developments in
the political, economic, and our own
corporate landscape, we focused on
putting clients first and aligning
around common goals.
Change is the essence
of what we do. It is the
reason clients turn to us
for long-term solutions,
and the object of
portfolio positioning.”
Phil Wagstaff
Global Head of Distribution
One of the best pieces of advice I was given
and now share with new starters in the industry
is to embrace change. I think this applies to many
aspects of life but is especially true within the
asset management industry. Resistance to
change is, in my view, energy wasted; the world
is continuously changing and it is far better to
respond with openness and flexibility.
Change is the essence of what we do – it is the
reason clients turn to us for long-term solutions,
the subject of our investment teams’ analysis
and the object of their portfolio positioning. It is,
therefore, our ability as a business to recognise
the drivers with the most meaningful potential
to create change and our ability to adapt on behalf
of our clients that will determine our success.
2017 was a year of significant change.
At a macro level, it combined new, uncharted
political developments with the impact of moves
by central banks away from many years of
emergency economic stimulus. It saw regulators
impose new requirements on the industry and
saw the merits of active and passive investment
again in the spotlight. And, of course, for us
at a corporate level, it saw the creation of
Janus Henderson.
Janus Henderson merger
As one of the largest cross-border mergers ever
seen in the industry, there was high potential
for disruption to those people that matter the
most to us: our clients. It was therefore imperative
to me that the integration be managed smoothly
and at no point come at a cost to our day-to-day
relationships with clients. There were notable
changes to communicate, a global rebrand to
implement and product ranges to bring together,
but the aim was to keep disruption to clients
to a minimum.
Looking back, I am pleased with what we
achieved. There were bumps along the road,
but feedback from clients and peers has been
overwhelmingly positive. Our investment
capabilities have been broadened, our distribution
teams were strengthened, and enhancements
were made to the back office systems that
allow us to best service our clients. Our
distribution footprint is now truly global and this
opens up the potential to build new and
stronger relationships with global distributors
and key institutional clients, something that has
already proved beneficial since the merger
completed. With experienced and talented
distribution teams covering all major markets
worldwide, we are able to understand the
variety of challenges facing our clients and
seek to deliver solutions accordingly.
Clients are already benefiting from the wider
product range we offer, with notable examples
of US investors exploring opportunities with our
UK-based Global Equity Income, Strategic
Fixed Income and Global Emerging Markets
teams, while European and Asia Pacific clients
have access to highly experienced US-based
fixed income teams and our equities franchise.
Knowledge. Shared
A key aspect of our approach is sharing expert
insight for better investment and business
decisions. We call this ethos Knowledge. Shared.
It is reflected both in how our investment teams
interact and in our commitment to empowering
clients in their decision-making.
Central to this approach is making the intellectual
capital of our investment teams and subject
matter experts readily available. 2017 provided
many opportunities, with market-moving events
leading clients to naturally seek the views of
experts. For some of our US clients, Knowledge.
Shared would have been a new concept, so it
was pleasing to see strong interaction with
our US blog and websites. This was alongside
the excellent Janus Henderson Labs, a series of
high-value consultancy and training programmes
that have been popular with US professional
clients for a number of years, and which we are
now in the process of adapting for use globally
where appropriate.
Janus Henderson Group plc Annual Report 2017
Where next?
From a distribution perspective, this year has
been about bringing together the various teams
from our legacy businesses, improving systems
and processes to enhance client experiences
and exploring the opportunities presented by
our wider investment management capabilities.
The foundations for all of these are now in place
and we look forward to our clients benefiting
from the new structure in the years ahead.
With our own integration progressing well,
it is important to maintain our focus on the
wider industry. As explained in further detail on
the right, currently we see four powerful
themes likely to impact the landscape from a
distribution standpoint.
With our enhanced global presence, we believe
Janus Henderson is well placed for each theme
and hope to be among the best at adapting
and delivering client solutions. By combining
a sharp focus on client needs, generating
investment excellence and utilising our distribution
strength we will continue to embrace rather
than resist change as we seek to benefit our
investors globally.
We also continued to publish our quarterly study
of the dividends paid by leading global companies
and our well-regarded Market GPS outlook.
This mix of forward-looking insight led to strong
pick-up in the media globally and onward
distribution of articles and videos by third
parties and clients.
In addition, we also offered clients the chance
to hear from our managers first-hand at a series
of Knowledge Exchange events. These included
panel discussions with experts, both from within
Janus Henderson and externally, and interactive
sessions at which clients were able to set the
agenda. These events ran across the US, Europe,
Asia and Australia, and were complemented in
the US by the extensive programme of Labs
development and training sessions.
Feedback from clients on Knowledge. Shared
has been extremely positive and it has also been
pleasing to receive external validation with a
number of high-profile industry awards. These
included: a Content Marketing Strategy award
from the Gramercy Institute; the Advisor
Services and Advisor Special Communications
large asset level awards at the Mutual Fund
Education Alliance STAR Awards; Most
Accessible Fund Managers at Citywire
Selector’s Pan-European Awards; the Judges
Award for Knowledge. Shared at Investment
Week’s Investment Marketing and Innovation
Awards; and winner of the ‘Best Digital
Marketing’ and ‘Best International’ categories
at the 2017 Financial Services Forum’s Awards
for Marketing Effectiveness.
15
Four key themes impacting
the Distribution landscape
A buyers’ market
Financial markets are becoming increasingly
transparent, which we welcome, and
regulators are applying additional
requirements. Having the scale and
experience to respond to these will be
critical. Millennials are also likely to seek
new ways to engage with traditional wealth
management and it is important that we
adapt to their shifting appetites.
Digital technologies
Technology giants are likely to enter our
sector as gatekeepers and it will be important
to work with them as a new breed of
distributors. Digital also means client
engagement has the potential to be taken to
new levels through interaction and the use of
big data.
Funding the future
Asset and wealth managers are likely to
fill the funding gaps that have arisen since
banks took a step back as capital providers
following the 2008 financial crisis.
Governments have also taken a step
back and it is to companies such as
Janus Henderson that individuals
are turning.
Outcomes matter
Clients increasingly tell us that outcome-
oriented solutions matter. In helping achieve
these outcomes, be it by combining different
asset classes, for example within fixed
income or via multi-asset approaches,
it is important to be able to harness a
wide variety of capabilities. We also see
increased interest in strategies that deliver
certain outcomes by investing within an
Environmental, Social and Governance
(ESG) framework.
‘Best Digital Marketing Award’ and
‘Best International Award’ 2017
for Knowledge. Shared
Janus Henderson Group plc Annual Report 2017
16
BUSINESS REVIEW
Client relationships
and brand continued
Janus Henderson’s combined global distribution strength1
Americas growth opportunities
+66%
Janus
Henderson
Janus
Henderson
+101%
Global distribution footprint
(as at 31 December 2017)2
• Targeted marketing to capitalise on cross-selling
opportunities across broader North American
distribution channels, building on early success seen
in the second half of 2017
• Expand Institutional business through depth and
breadth of investment strategy offering
• Capitalise on opportunities within Latin America
• Build brand presence, with Knowledge. Shared ethos
Americas distribution
professionals
280
Americas
Total AUM
US$193bn
Global distribution professionals
602
Total Group AUM (US$)
371bn
1. Global Distribution team headcount.
2. Location of client assets of US$50m or more.
What is Knowledge. Shared?
Timely and relevant
expert insight
Shared internally and
externally, for better
investment and
business decisions.
An ongoing dialogue
We listen to client needs,
and make our expertise
and solutions available
to help achieve success.
Openness and
transparency
When explaining how
we think, invest and
translate our insight into
portfolio positioning.
Janus Henderson Group plc Annual Report 2017
17
EMEA growth opportunities
Asia Pacific growth opportunities
• Leverage increased distribution footprint, driving
• Maximise strategic partnership with Dai-ichi Life and
cross-selling opportunities
its partners
• Maintain UK market share and capitalise on Retail
• Leverage enhanced product suite, building on strong
opportunities in Europe
brand presence
• Institutional opportunities in Europe and Middle East
• Develop relationships with global financial institutions
• Develop position to be a Top 10 Australian asset manager
• Continue to build on positive cross-selling momentum
in broader Asia Pacific region
Asia Pacific
distribution
professionals
91
Asia Pacific
Total AUM
US$58bn
EMEA distribution
professionals
231
EMEA
Total AUM
US$120bn
K
R
O
W
M
A
E
T
D
N
A
E
G
D
E
L
W
O
N
K
L
A
C
O
L
A world of investment opportunity
Key timeline
1930s
1960s
1980s
1990s
2000s
2010s
1934
Founded in the UK to
administer the estate of
Alexander Henderson,
the first Lord Faringdon
1983
Became a public company
1986
Opened investment office
in Japan
1992
Acquired Touche Remnant,
establishing Henderson as the UK’s
leading investment trust manager
1995
Opened office in Singapore
1998
Acquired by AMP (Australia)
1999
Set up hedge fund business
2000
Opened office in Hong Kong
2001
Started US mutual fund business
2003
Demerged from AMP
2005
Re-named as Henderson Group plc
2009
Acquired New Star Asset
Management Group in UK
2011
Acquired Gartmore Group in UK
2013
Opened office in Australia
Acquired stake in natural resources specialist, 90 West Asset Management
Acquired H3 Global Advisors in Australia
2014
Acquired US small/mid cap specialist, Geneva Capital Management
2015
Acquired Perennial Fixed Interest and Perennial Growth Management in Australia
Acquired remaining stake in 90 West Asset Management
2016
Announced merger of equals with Janus Capital Group
2017
1998
Established London office
1987
Began managing fixed
income assets
1969
Founded as a fundamental,
bottom-up growth equity
investment manager
8
Henderson Global Investors Janus Capital Group
2007
Opened Singapore office
2003
Janus Capital Group begins trading on
the New York Stock Exchange
Acquired INTECH Investment Management
and Perkins Investment Management
as investment subsidiaries
2000
Opened Hong Kong office
2016
Announced merger of equals with Henderson Global Investors
2015
Acquired Australia-based, global macro fixed income specialist Kapstream Capital
2014
Established global macro fixed income platform with launch of strategy managed
by Bill Gross
Nobel Prize Laureate Myron Scholes joined the firm as Chief Investment Strategist,
supporting the build out of the global asset allocation platform
Acquired VS Holdings Inc., parent company of ETF specialist, VelocityShares LLC
2012
Announced Strategic Alliance with Dai-ichi Life Holdings, Inc.
Opened Taiwan office
Launched alternatives business
9
Local knowledge and teamwork to deliver to our clients world wide
JH LK FRK (P7)
For promotional purposes
Janus Henderson Group plc Annual Report 2017
Introducing Janus Henderson Investors To find out more visit janushenderson.comBROADER EXPERTISEBRIGHTER INVESTMENT IDEAS
18
GOVERNANCE
Board of
Directors
The Board comprises a Non-Executive
Chairman, two Executive Directors and
nine other Non-Executive Directors.
Glenn
Schafer
Deputy Chairman
Glenn Schafer has been a Non-Executive
Director and Deputy Chairman of Janus
Henderson since May 2017. He was a Director
of Janus Capital Group from December 2007
to May 2017, taking the position of Chairman in
April 2012. He is a member of the Compensation
Committee and the Nominating and
Governance Committee.
Mr Schafer serves as a Director of GeoOptics
LLC, a weather satellite manufacturer. Mr
Schafer served as a Director of the Michigan
State University Foundation from 2004 to 2014.
He was Vice Chairman of Pacific Life Insurance
Company (Pacific Life) from April 2005 until his
retirement in December 2005; a member of
Pacific Life’s Board of Directors and President
of Pacific Life from 1995 to 2005; and Executive
Vice President and Chief Financial Officer of
Pacific Life from 1991 to 1995. From 2006 to
2007, he served on the Board of Directors for
Scottish Re Group. Between 2006 and 2017
Mr Schafer was a Director of Genesis Healthcare,
Inc., the successor company resulting from the
merger with Skilled Healthcare Group, Inc. of
which Mr Schafer was a director. Mr Schafer
also served as a Director of Mercury General
Corporation, an insurance holding company,
between 2015 up until his resignation in February
2018. Mr Schafer has a BS from Michigan State
University and an MBA from the University
of Detroit.
Andrew
Formica
Co-Chief Executive Officer
and Executive Director
Andrew Formica is Co-Chief Executive Officer
of Janus Henderson and has been an Executive
Director since May 2017. Mr Formica was
Chief Executive and an Executive Director
of Henderson Group from November 2008
to May 2017.
Mr Formica has been with Henderson since 1998
and in the fund management industry since 1993.
He has held various senior roles with Henderson
and he has been a member of the executive
committee since 2004. Prior to being appointed
Chief Executive, he served as Joint Managing
Director of the Listed Assets business (from
September 2006) and as Head of Equities (from
September 2004). In the early part of his career,
he was an equity manager and analyst for
Henderson. Mr Formica was a director of TIAA
Henderson Real Estate Limited from April
2014 to July 2015. Mr Formica is the senior
independent director of the board of The
Investment Association and has served as a
non-executive director of Hammerson plc since
November 2015. Mr Formica received a B Econ
and MA in Economics from Macquarie University
and a MBA from London Business School.
He is a Fellow of the Institute of Actuaries in
both the UK and Australia.
Richard
Gillingwater
Chairman; Nominating &
Corporate Governance
Committee Chair
Richard Gillingwater has been a Non-Executive
Director and Chairman of Janus Henderson since
May 2017. He was a Non-Executive Director of
the Henderson Group Board from February 2013
to May 2017, taking the position of Chairman
in May 2013. He is currently the Chair of the
Nominating and Governance Committee and
a member of the Compensation Committee.
Mr Gillingwater started his career in investment
banking in 1980 at Kleinwort Benson, where
he spent ten years. After this he moved to BZW
and, in due course, became joint Head of
Corporate Finance. BZW was taken over by
Credit Suisse First Boston and he ultimately
became Chairman of European Investment
Banking at Credit Suisse First Boston. In 2003,
he was asked by the UK Government to found
and become the Chief Executive and later,
Chairman of the Shareholder Executive. In 2007,
he became Dean of Cass Business School which
role he held until 2012. In his Non-Executive
career, Mr Gillingwater has been Chairman
of CDC Group plc and has also been a
Non-Executive Director of P&O, Debenhams,
Tomkins, Qinetiq Group, Kidde, Hiscox Ltd and
Wm Morrison Supermarkets plc. Mr Gillingwater
is Chairman of SSE plc and Non-Executive
Director of Helical plc. Mr Gillingwater holds an
MA in Law, St Edmund Hall, Oxford University
and a MBA from the International Institute for
Management Development (IMD) in Lausanne.
Mr Gillingwater is a qualified solicitor.
Janus Henderson Group plc Annual Report 2017
19
Dick
Weil
Co-Chief Executive Officer
and Executive Director
Dick Weil is Co-Chief Executive Officer of
Janus Henderson and has been an Executive
Director since May 2017. Mr Weil was Chief
Executive Officer of Janus Capital Group from
February 2010 to May 2017.
Mr Weil has 24 years of financial industry
experience. Prior to joining Janus as Chief
Executive Officer in 2010, Mr Weil spent
15 years with PIMCO where most recently he
served as the global head of PIMCO Advisory,
a member of PIMCO’s executive committee,
and a member of the board of trustees of the
PIMCO Funds. Previous to his appointment as
global head of PIMCO Advisory, he served as
chief operating officer of PIMCO, a position he
held for ten years, in which time he successfully
led the development of PIMCO’s global business
and founded their German operations. Mr Weil
also previously served as PIMCO Advisors LP’s
general counsel. Prior to joining PIMCO in 1996,
Mr Weil was with Bankers Trust Global Asset
Management and Simpson Thacher & Bartlett
LLP in New York. Mr Weil earned his bachelor
of arts degree in economics from Duke University
and his juris doctorate from the University of
Chicago Law School.
Sarah
Arkle
Independent Non-Executive
Director; Risk Committee Chair
Sarah Arkle has been a Non-Executive Director
of Janus Henderson since May 2017. Ms Arkle
was a Non-Executive Director of Henderson
Group from September 2012 to May 2017 and
is currently the Chair of the Risk Committee and
member of the Audit Committee and Nominating
and Governance Committee.
Kalpana
Desai
Independent
Non-Executive Director
Kalpana Desai has been a Non-Executive
Director of Janus Henderson since May 2017.
Ms Desai was a Non-Executive Director of
Henderson Group from October 2015 to
May 2017 and is currently a member of the
Audit Committee and Nominating and
Governance Committee.
Ms Arkle has been in the financial industry
for over 34 years. She joined Allied Dunbar
Asset Management in 1983 which became
Threadneedle in 1994. She was Vice Chairman
of Threadneedle until the end of July 2012 and
was Chief Investment Officer until December
2010, a role she held for ten years. Previously,
Ms Arkle worked at the Far Eastern stockbroker
WI Carr (Overseas) Limited and was an advisor
to the South Yorkshire Pension Fund. Ms Arkle
is currently a Non-Executive Director of Foreign
& Colonial Investment Trust plc and Chair of J.P.
Morgan Emerging Markets Investment Trust plc.
Ms Arkle has also been a member of the Royal
Commission of the Great Exhibition of 1851
Finance Committee since January 2017.
Ms Arkle holds an MA in Management Studies
from Cambridge University and is an associate
of the Institute of Chartered Secretaries
and Administrators.
Ms Desai has over 30 years of international
advisory and investment banking experience,
primarily gained in the Asia-Pacific region.
Until 2013, Ms Desai was Head of Macquarie
Capital Asia, the investment banking division
of Macquarie Group Limited, headquartered
in Australia. Prior to this, she was Head of the
Asia-Pacific Mergers & Acquisitions Group and
a Managing Director from 2001 in the investment
banking division of Bank of America Merrill
Lynch based in Hong Kong. Earlier, Ms Desai
worked in the corporate finance divisions of
Barclays de Zoete Wedd in London and Hong
Kong and at J. Henry Schroder Wagg in London,
having started her career in the financial services
division of Coopers & Lybrand Consulting in
London. She was a member of the Takeovers
and Mergers Panel of the Securities and Futures
Commission in Hong Kong from 2007 to 2014.
She is currently a Non-Executive Director of
Canaccord Genuity Group Inc., headquartered
in Canada. Ms Desai has a BSc in Economics
from the London School of Economics and
Political Science and qualified as a Chartered
Accountant with PricewaterhouseCoopers in
London in 1991.
Janus Henderson Group plc Annual Report 2017
20
GOVERNANCE
Board of Directors
continued
Jeffrey
Diermeier
Independent Non-Executive
Director; Audit Committee Chair
Jeffrey Diermeier has been a Non-Executive
Director of Janus Henderson since May 2017.
Mr Diermeier was an Independent Director
of Janus Capital Group from March 2008
to May 2017 and is currently the Chair of the
Board Audit Committee and member of the
Nominating and Governance Committee and
the Risk Committee.
Mr Diermeier is a Director of the University of
Wisconsin Foundation, a non-profit fundraising
and endowment management organisation, and
former Chairman of its Investment Committee.
In January 2011, Mr Diermeier became a
Director of Adams Street Partners, a private
equity firm located in Chicago. Between 2010
and 2017 he was a co-owner and Chairman of
L.B. White Company, a heating equipment
manufacturer. He is also a minority owner of
Stairway Partners, LLC, a registered investment
adviser located in Chicago, and was an advisory
board member from 2005 to December 2012.
He was a Trustee of the Board of the Financial
Accounting Foundation, which oversees the
Financial Accounting Standards Board and the
Government Accounting Standards Board, from
January 2009 to December 2015 and Chairman
of the Trustees from November 2012 to
December 2015. From 2005 until January 2009,
he served as President and Chief Executive
Officer of the CFA Institute, a non-profit
educational organization for investment
professionals in Charlottesville, Virginia, and
previously in a number of capacities in the
global asset management division of UBS and
predecessor organisations, primarily Brinson
Partners, Inc., beginning as an Equity Analyst
and culminating as its Global Chief Investment
Officer from 2000 to 2004. Mr Diermeier holds
the Chartered Financial Analyst designation.
Janus Henderson Group plc Annual Report 2017
Kevin
Dolan
Independent
Non-Executive Director
Kevin Dolan has been a Non-Executive Director
of Janus Henderson since May 2017. Mr Dolan
was a Non-Executive Director of Henderson
Group from September 2011 to May 2017 and
is currently a member of the Nominating and
Governance Committee and Risk Committee.
Mr Dolan has been in the financial services
industry for 36 years, many of them as head
of significant investment management
organisations and has extensive experience in
M&A transactions, both in Europe and the US.
He spent ten years with the AXA Group where
he was Chief Executive Officer of AXA
Investment Managers Paris, and Global Deputy
Chief Executive Officer of AXA Investment
Managers. Mr Dolan has held other executive
positions, including as Chief Executive of the
Asset Management Division of Bank of Ireland
Group, Chief Executive of Edmond de Rothschild
Asset Management and Chief Executive of
their Private Equity arm, Edmond de Rothschild
Capital Partners. He was Chief Executive of La
Fayette Investment Management in London from
2006 to 2009 and was a Director of Meeschaert
Gestion Privée in Paris until 2015. He is the
founding partner of Anafin LLC, and a senior
advisor to London based Private Equity firm One
Peak Partners. Mr Dolan has a BS in Business
Administration from Georgetown University.
Eugene
Flood Jr.
Independent
Non-Executive Director
Eugene Flood Jr. has been a Non-Executive
Director of Janus Henderson since May 2017.
Mr Flood was a Non-Executive Director of
Janus Capital Group from January 2014 to
May 2017 and is currently a member of the
Audit Committee, Nominating and Governance
Committee and Risk Committee.
Currently, Mr Flood also serves as Chairman
of the advisory board for the Institute for
Global Health and Infectious Diseases at the
University of North Carolina Chapel Hill; is a
member of the Steering Board of the Eshelman
Institute at the University of North Carolina
Eshelman School of Pharmacy; is a Trustee
of the Financial Accounting Foundation; and,
has been a Director of the Research Corporation
for Science Advancement since 2015. Previously,
Mr Flood served as a Director of The Foundation
for the Carolinas from 2012 to 2015. He was
Executive Vice President of TIAA-CREF from
2011 until his retirement in 2012, serving on the
CREF Board of Trustees and the TIAA-CREF
Mutual Fund Board of Trustees for seven years,
and chairing the Investment Committee. Prior
to joining TIAA-CREF as an executive in 2011,
Mr Flood spent 12 years with Smith Breeden
Associates, a North Carolina-based fixed income
asset manager, as President and Chief Executive
Officer. Mr Flood also served with Morgan Stanley
in a range of trading and investment positions
from 1987 to 1999 and was an Assistant
Professor of Finance at Stanford Business
School from 1982 to 1987. Mr Flood earned
a Bachelor of Arts degree in economics from
Harvard University and a PhD in economics from
the Massachusetts Institute of Technology.
21
Angela
Seymour-Jackson
Independent
Non-Executive Director
Angela Seymour-Jackson has been a
Non-Executive Director of Janus Henderson
since May 2017. Ms Seymour-Jackson was a
Non-Executive Director of Henderson Group
from January 2014 to May 2017 and is
currently a member of the Compensation
Committee and the Nominating and Governance
Committee. She also chairs Henderson Global
Holdings Asset Management Limited (a holding
company of the legacy-Henderson Group).
Ms Seymour-Jackson has over 20 years’
experience in retail financial services. She has
held various senior marketing and distribution
roles in Norwich Union Insurance, General
Accident Insurance, CGU plc and Aviva. She
was Chief Executive Officer of RAC Motoring
Services Limited from 2010 until 2012.
She joined Aegon UK in May 2012 and was
appointed Managing Director of the Workplace
Solutions Division in December 2012. Ms
Seymour-Jackson was a Senior Advisor to
Lloyds Banking Group (insurance) until October
2017. She is a Non-Executive Director of Rentokil
Initial plc, Page Group plc and esure Group plc
and is also Deputy Chair and Senior Independent
Director at Gocompare.com Group plc. Ms
Seymour-Jackson has a BA (Hons) in French
and European Studies from the University of
East Anglia, a diploma from the Chartered
Institute of Marketing and an MSc in Marketing.
Tatsusaburo
Yamamoto
Independent
Non-Executive Director
Tatsusaburo Yamamoto has been a
Non-Executive Director of Janus Henderson
since May 2017. Mr Yamamoto was an
Independent Director of Janus Capital
Group from July 2015 to May 2017 and is
currently a member of the Nominating and
Governance Committee.
Mr Yamamoto is currently Managing Executive
Officer, Corporate Planning Unit, of The Dai-ichi
Life Holdings, Inc. (Dai-ichi Life) and has worked
in many different capacities for Dai-ichi Life
over his 29-year career with the firm. Prior
to his current role, Mr Yamamoto served as
Executive Officer at Asset Management
Business Unit of Dai-ichi Life and Investment
Planning Department of Dai-ichi Life Insurance
Company, Limited. Mr Yamamoto was appointed
to the Janus Capital Group Board after being
designated by Dai-ichi Life as its representative
for appointment to the Board. This right was
granted to Dai-ichi Life as a result of the
Investment and Strategic Co-operation
Agreement (the “Agreement”) between Dai-ichi
Life and Janus Capital Group. In connection with
the Agreement, Mr Yamamoto works with Janus
Henderson’s senior management to further the
goals of the strategic alliance between the
two firms and to enhance product distribution
opportunities. Mr Yamamoto has a Bachelor of
Arts in Economics from WASEDA University.
Lawrence
Kochard
Independent Non-Executive
Director; Compensation
Committee Chair
Lawrence Kochard has been a Non-Executive
Director of Janus Henderson since May 2017.
Mr Kochard was an Independent Director of
Janus Capital Group from March 2008 to
May 2017 and is currently the Chair of the
Compensation Committee and a member of
the Nominating and Governance Committee.
Mr Kochard is Chief Investment Officer at
Makena Capital Management. Until January
2018, he was the Chief Executive Officer and
Chief Investment Officer of the University of
Virginia Investment Management Company.
Mr Kochard has served as a Director of the
Virginia Commonwealth University Investment
Management Company since 2015, as a Director
and the Chair of the Investment Committee for
the Virginia Environmental Endowment since
2013 and a Member of the Investment Advisory
Committee of the Virginia Retirement System
since March 2011, serving as Chair since 2017.
He previously served as the Chairman of the
College of William & Mary Investment Committee
from 2005 to October 2011. From 2004 to 2010,
he was the Chief Investment Officer for
Georgetown University, and from 2001 to 2004
was Managing Director of Equity and Hedge
Fund Investments for the Virginia Retirement
System. Mr Kochard worked as an Assistant
Professor of Finance at the McIntire School of
Commerce at the University of Virginia from
1999 to 2001. He started his career in financial
analysis and planning, corporate finance and
capital markets for E.I. DuPont de Nemours and
Company, Fannie Mae and The Goldman Sachs
Group, Inc. Mr Kochard holds the Chartered
Financial Analyst designation and a Ph.D. in
economics from the University of Virginia.
Janus Henderson Group plc Annual Report 2017
22
Governance
overview
An overview of governance structure,
Board business and skills.
Janus Henderson views good corporate
governance as essential to achieving the goals
of the organisation. The Janus Henderson
Group Board comprises a Non-Executive
Chairman, a Non-Executive Deputy Chairman,
two Executive Directors and eight other
Non-Executive Directors who meet in London
and Denver. The Board has delegated specific
responsibilities to four standing Committees of
the Board. A copy of the matters reserved to
the Board is available on our website at
janushenderson.com/ir.
Board business
The Board met throughout the course of the
second half of 2017 after its first formal meeting
in July. An overview of the topics addressed by
the Board since its formation is provided in the
summary overleaf.
A typical Board agenda is ordered so that the
strategic items and projects are considered
first. Depending on the importance of the items,
either regulatory or finance, capital and budget
items are considered next, followed by other
business matters. The items that do not require
detailed consideration or discussion are set out
at the end of the agenda. Where possible, items
are grouped together to ensure that the items
flow according to topic and that management’s
time is used effectively when presenting.
Sessions are usually provided which include
training or presentations from the business
during days on which Board meetings are held.
Compensation
The Compensation Committee is responsible
for determining the remuneration of the Co-CEOs,
certain other executive officers, and the Group’s
independent directors. The Committee is
chaired by Lawrence Kochard.
Committees
Janus Henderson has four standing committees
of the Group Board: Audit, Compensation,
Nominating and Corporate Governance, and Risk.
Audit
The Audit Committee is responsible for
monitoring the reliability and appropriateness
of the Group’s financial reporting, reviewing the
qualifications, performance and independence
of the independent auditors (as well as
being responsible for recommending their
appointment, reappointment and removal),
assessing the effectiveness of the Internal
Audit function, and reviewing the Group’s
compliance with legal and regulatory
requirements. Ultimate responsibility for
reviewing and approving the Group’s financial
reporting and other public reports, declarations
and statements remains with the Board. The
Committee is chaired by Jeffrey Diermeier.
Nominating and Corporate Governance
The Nominating and Corporate Governance
Committee has responsibility for considering
the size, composition, expertise and balance of
the Board as well as succession planning.
The Committee is also responsible for
recommending the applicable Corporate
Governance Guidelines to the Board and
oversees the Board’s annual evaluation. The
Committee is chaired by Richard Gillingwater.
Risk
The purpose of the Risk Committee is to
assist the Board in the oversight of risk. The
Committee also looks to identify any forward-
looking and emerging risks that relate to the
industry or Janus Henderson specifically, and
will refresh and monitor these risks and look
at mitigating actions on an ongoing basis.
The Committee is chaired by Sarah Arkle.
Governance structure
Janus
Henderson
Group plc
Board
Audit
Committee
Compensation
Committee
Nominating
and Corporate
Governance
Committee
Risk
Committee
Co-CEO:
Andrew Formica
Co-CEO:
Dick Weil
Executive
Committee
Ethics and
Conflicts
Committee
Other
operating
committees
Janus Henderson Group plc Annual Report 2017
GOVERNANCE 23
2017 Director attendance at Board and Committee meetings
Five meetings were held by the Janus Henderson Group plc Board during 2017, on: 25 July, 7 August, 24 October, 8 November, and 12 December.
Board and Committee meetings attended
Richard Gillingwater
Glenn Schafer
Andrew Formica
Dick Weil
Sarah Arkle
Kalpana Desai
Jeffrey Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence Kochard
Angela Seymour-Jackson
Tatsusaburo Yamamoto1
Date
appointed
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
30 May ’17
Board and Committee meetings attended
Board
Audit Compensation
Nominating
and
Governance
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
4/5
n/a
3/4
n/a
n/a
4/4
4/4
4/4
n/a
1/4
n/a
n/a
n/a
4/4
4/4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
4/4
4/4
n/a
2/2
2/2
n/a
n/a
2/2
2/2
2/2
2/2
2/2
2/2
2/2
1/2
Risk
n/a
n/a
n/a
n/a
2/2
n/a
2/2
2/2
2/2
n/a
n/a
n/a
Notes
• All Directors attended 100% of Board and Committee meetings of which they were members, with the exception of Tatsusaburo Yamamoto who was not present
at one Board and one Nomination and Corporate Governance Committee meeting.
• Glenn Shafer stepped down from the Audit Committee on 8 November 2017; Eugene Flood Jr. was appointed to the Audit Committee on 8 November 2017.
1. As Dai-ichi prepared to issue their 10b5-1 stock purchase programme authority of Janus Henderson shares, Mr Yamamoto did not attend one Board and one
Nomination and Corporate Governance Committee meeting in order to comply with regulatory procedures.
An overview of the topics addressed by the Board in 2017
July
• Janus Henderson’s strategy
August
• Second quarter results
October
• 3Q17 financial update
• Update on integration (including an
• Capital position and dividend for 2Q17
• Update on integration
update on BNP outsourcing)
• Capital management and dividend policy
• Update on regulatory matters
• Update on Brexit
November
• Third quarter results
December
• 2018 Budget
• Capital position and dividend for 3Q17
• Janus Henderson’s strategy
• US tax reform
• Janus Henderson’s strategy
• Modern Slavery policy
• BNP outsourcing
• Update on regulatory matters
• Update on Brexit
Janus Henderson Group plc Annual Report 2017
24
Governance overview
continued
Janus Henderson share register (%)
NYSE Listing
Dai-ichi Life Holdings, Inc.
UK Depositary Interests
ASX Listing
57
10
2
43
Training
To ensure that the Directors continually update
their skills and knowledge, all Directors receive
regular presentations on different aspects of the
Group’s business and on financial, legal and
regulatory matters affecting our sector. During
2017 all former-Janus and former-Henderson
Directors received training upon being appointed
to the Janus Henderson Group Board and they
independently met with senior people within
the business.
The Board also received presentations on:
US Regulation and Australian Stock Exchange
(ASX) disclosure and Corporate Governance;
Brexit; key regulatory risks and issues for Janus
Henderson; key compliance policies for Janus
Henderson; the Markets in Financial Instruments
Directive II (MiFID II); General Data Protection
Regulation; Senior Managers & Certification
Regime; and Executive compensation
disclosures required by the US Securities
and Exchange Commission (SEC).
Relations with shareholders
Janus Henderson conducts an active
Investor Relations programme, engaging with
shareholders across the Group’s two listings.
In 2017, Management and IR conducted over
230 individual meetings with existing and
potential shareholders in London, Sydney,
Melbourne, New York, Boston and Denver.
This included three roadshows to Australia
and two to the US to engage with shareholders
following results announcements and in advance
of, and following, the merger of Janus Capital
and Henderson Group. The Chairman also met
with shareholders in London.
The Board regularly receives feedback on
shareholder sentiment and sell-side analysts’
view of the Group and the wider industry. Board
members welcome the opportunity to learn
more about shareholders’ interests in Janus
Henderson. Equally, Management receive
weekly updates on shareholder engagement,
topics raised and key discussion points.
In the course of a year, Janus Henderson gives
four scheduled updates to the market in addition
to our Annual General Meeting. The Investor
Relations team and Management have frequent
contact with the 16 sell-side analysts who
follow Janus Henderson.
Asset
Management
International
Finance
Risk
Client Focus
Acquisitions
Board skills
Richard Gillingwater
Glenn Schafer
Andrew Formica
Dick Weil
Sarah Arkle
Kalpana Desai
Jeffrey Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence Kochard
Angela Seymour-Jackson
Tatsusaburo Yamamoto
Janus Henderson Group plc Annual Report 2017
GOVERNANCE
Directors’ Report
Further disclosures, where applicable to the
Company, are contained in the sections of
this Annual Report and Accounts identified
below and form part of the Directors’ report
for the period:
• Pages 31 to 56, Item 7 on Form 10-K –
Management’s Discussion and Analysis
• Pages 125 to 135, Item 10 on Form 10-K
– Directors, Executive Officers and
Corporate Governance
• Pages 135 to 159, Item 11 on Form 10-K
– Executive Compensation
ASX Corporate Governance Principles
and Recommendations
Details of Janus Henderson’s compliance with
the ASX Corporate Governance Principles and
Recommendations during the reporting period
are available on the Company’s website at
janushenderson.com/ir.
Diversity
Janus Henderson fosters and maintains an
environment that values the unique talents and
contributions of every individual. We know that
having a diverse and inclusive workplace will
support our strategic vision.
We invite you to review our Commitment to
Diversity and recent initiatives on our website
at janushenderson.com/diversity.
Financial reporting
The Directors are required to prepare and
approve the financial statements for the Group
and Company in accordance with Jersey law
for each financial year which show a true and
fair view of the state of affairs of the Group
and the Company and of the profit or loss
of the Group for that period in accordance
with generally accepted accounting principles.
The Directors have elected to prepare the
Group and Company financial statements
in accordance with US generally accepted
accounting principles (US GAAP).
The Directors confirm that to the best of
their knowledge:
• the financial records of the Group and
Company have been properly maintained
• the financial statements of the Group and
Company comply with US GAAP and give a
true and fair view of the financial position
and performance of the Group and
Company, and
• this opinion has been formed on the basis
of a sound system of risk management and
internal control which is operating effectively.
Supplementary note to Item 11 on
SEC Form 10-K
The “Total compensation table” on page 137
of the Company’s Annual Report on SEC Form
10-K is revised as follows:
• by replacing the figure of $484,910 shown in
the “Other” column for Richard M. Weil with
$610,952, and
• by replacing footnote (7) to the table with the
following text:
“Amounts shown in ‘Other’ include dividends on
ESOP and unvested shares. Mr. Weil’s amount
includes $172,240 in such dividends, $312,670
in relocation benefits and $126,042 in housing
benefits per Company policy as a result of his
2017 move to the UK from the US.”
25
Signed in accordance with a resolution
of the Directors:
Andrew Formica
Co-Chief Executive Officer
27 February 2018
Richard Weil
Co-Chief Executive Officer
27 February 2018
Roger Thompson
Chief Financial Officer
27 February 2018
Janus Henderson Group plc Annual Report 2017
26
FORM 10-K
Form 10-K
Janus Henderson Group plc Annual Report 2017
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 001-38103
23FEB201804182498
Janus Henderson Group plc
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
(State or other jurisdiction of
incorporation or organization)
201 Bishopsgate EC2M 3AE
United Kingdom
(Address of principal executive offices)
98-1376360
(I.R.S. Employer Identification No.)
N/A
(Zip Code)
+44 (0) 20 7818 1818
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $1.50 Per Share Par Value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes � No �
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes � No �
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to the filing requirements for the past 90 days. Yes � No �
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes � No �
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. � (Not applicable. See Item 1
Business.)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller
reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller
reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer � Accelerated filer �
Non-accelerated filer � Smaller reporting company �
Emerging growth company �
(Do not check if a smaller
reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. �
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes � No �
As of June 30, 2017, the aggregate market value of common equity held by non-affiliates was $6,635,447,229.18. As of
February 22, 2018, there were 200,406,138 shares of the Company’s common stock, $1.50 par value per share, issued and
outstanding.
None
DOCUMENTS INCORPORATED BY REFERENCE
Page
2
11
26
26
26
26
27
29
31
56
59
125
125
125
125
135
150
155
159
160
167
168
JANUS HENDERSON GROUP PLC
2017 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6.
Item 7.
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations of Janus Henderson Group plc
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9.
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
PART IV
1
FORWARD-LOOKING STATEMENTS
PART I
Certain statements in this Annual Report on Form 10-K contain ‘‘forward-looking statements’’ within
the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of
1995, as amended, Section 21E of the Securities Exchange Act of 1934 (‘‘Exchange Act’’), as
amended, and Section 27A of the Securities Act of 1933, as amended (‘‘Securities Act’’). Such
forward-looking statements involve known and unknown risks, uncertainties, assumptions and other
factors which may cause the actual results, performance or achievements of Janus Henderson
Group plc (the ‘‘Company’’) and its consolidated subsidiaries (collectively, the ‘‘Group’’ or ‘‘JHG’’) to
be materially different from any future results, performance or achievements expressed or implied by
such forward-looking statements and future results could differ materially from historical performance.
Statements preceded by, followed by or that otherwise include the words ‘‘believes’’, ‘‘expects’’,
‘‘anticipates’’, ‘‘intends’’, ‘‘projects’’, ‘‘estimates’’, ‘‘plans’’, ‘‘may increase’’, ‘‘may fluctuate’’, ‘‘forecast’’,
‘‘seeks’’, ‘‘targets’’, ‘‘outlook’’ and similar words and expressions and future or conditional verbs such
as ‘‘will’’, ‘‘should’’, ‘‘would’’, ‘‘may’’, ‘‘could’’ and variations or negatives of these words, are generally
forward-looking in nature and not historical facts. Any statements that refer to expectations or other
characterizations of future events, circumstances or results are forward-looking statements. These
statements are based on the beliefs and assumptions of Company management based on
information currently available to management.
Various risks, uncertainties, assumptions and factors that could cause future results to differ
materially from those expressed by the forward-looking statements included in this Annual Report on
Form 10-K include, but are not limited to, risks, uncertainties, assumptions and factors specified in
the Company’s prospectus dated March 21, 2017, as filed with the Securities and Exchange
Commission (‘‘SEC’’) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (File
No. 333-216824) (the ‘‘Prospectus’’) and this Annual Report on Form 10-K included under headings
such as ‘‘Risk Factors’’, ‘‘Management’s Discussion and Analysis of Financial Condition and Results
of Operations of Janus Henderson Group plc’’, and ‘‘Quantitative and Qualitative Disclosures about
Market Risk’’, and in other filings and furnishings made by the Company with the SEC from time to
time. In light of these risks, uncertainties, assumptions and factors, the forward-looking events
discussed in this Annual Report on Form 10-K may not occur. In particular, any discussion of
potential merger synergies is forward looking and uncertain. Forward-looking statements by their
nature address matters that are, to different degrees, subject to numerous assumptions and known
and unknown risks and uncertainties, which change over time and are beyond the control of the
Company and its management. You are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date stated, or if no date is stated, as of the date of
this Annual Report on Form 10-K. The Company does not assume any duty and does not undertake
to update forward-looking statements, to report events or to report the occurrence of unanticipated
events, whether as a result of new information, future developments or otherwise, should
circumstances change, nor does the Company intend to do so, except as otherwise required by
securities and other applicable laws and regulations.
ITEM 1. BUSINESS
Janus Henderson Group plc (‘‘JHG’’ or ‘‘the Group’’), a company incorporated and registered in
Jersey, Channel Islands, is an independent global asset manager, specializing in active investment
across all major asset classes.
On May 30, 2017 (the ‘‘Closing Date’’), JHG (previously Henderson Group plc (‘‘Henderson’’))
completed a merger of equals with Janus Capital Group Inc. (‘‘JCG’’) (the ‘‘Merger’’). As a result of
the Merger, JCG and its consolidated subsidiaries became subsidiaries of JHG.
2
JHG is a client-focused global business with over 2,300 employees worldwide, and assets under
management (‘‘AUM’’) of $370.8 billion as of December 31, 2017. JHG has operations in North
America, the United Kingdom (‘‘UK’’), Continental Europe, Latin America, Asia and Australia. JHG
focuses on active fund management by investment managers with unique individual perspectives,
who are free to implement their own investment views, within a strong risk management framework.
JHG manages a broad range of actively managed investment products for institutional and retail
investors across five capabilities: Equities, Quantitative Equities, Fixed Income, Multi-Asset and
Alternatives.
Clients entrust money to JHG — either their own or money they manage for their clients — and
expect the Group to deliver the benefits specified in their mandate or by the prospectus for the fund
in which they invest. JHG measures the amount of these funds as AUM. Growth in AUM is a key
objective of the Group. AUM increases or decreases primarily depending on its ability to attract and
retain client investments, and on investment performance, market and currency movements. To the
extent that the Group invests in new asset management teams or businesses or divests from
existing ones, this is also reflected in AUM.
Clients pay a management fee, which is usually calculated by reference to a percentage of AUM.
Certain investment products are also subject to performance fees, which vary based on a product’s
relative performance as compared to a benchmark index and the level of assets subject to such
fees. As of December 31, 2017, performance fees were generated from a diverse group of funds
and accounts. Management and performance fees are the primary drivers of the Group’s revenue.
JHG believes that the more diverse the range of investment strategies from which management and
performance fees are derived, the more successful its business model will be.
Investment Offerings
Equities
The Group offers a wide range of equity strategies encompassing different geographic focuses and
investment styles. The equity teams include those with a global perspective, those with a regional
focus — U.S., Europe, Asia and Australia — and those invested in specialist sectors. These teams
generally apply processes based on fundamental research and bottom-up stock picking.
Quantitative Equities
The Intech Investment Management LLC (‘‘Intech’’) business applies advanced mathematics and
systematic portfolio rebalancing intended to harness the volatility of movements in stock prices — a
reliable source of excess returns and risk control. With more than 30 years of volatility expertise, the
Intech team employs a distinctive quantitative approach based on observations of actual price
movements, not on subjective forecasts of companies’ future performance.
Fixed Income
JHG’s Fixed Income teams provide coverage across the asset class, applying a wide range of
innovative and differentiated techniques. These teams include those adopting global unconstrained
approaches through to those with more focused mandates — based in the United States (‘‘U.S.’’),
Europe, Asia and Australia. The capabilities of these teams can be accessed through individual
strategies and are combined where appropriate to form multi-strategy offerings.
3
Multi-Asset
JHG Multi-Asset includes teams in the U.S. and UK. In the U.S., the team manages Global Asset
Allocation strategies. In the UK, JHG has asset allocation specialists, traditional multi-manager
investors and those focused on alternative asset classes.
Alternatives
JHG Alternatives includes teams with different areas of focus and approach. Diversified Alternatives
brings together a cross-asset class combination of alpha generation, risk management and efficient
beta replication strategies. These include Multi-Strategy, Liquid Alternatives, Agriculture and Global
Commodities/Managed Futures, while other strategies focus on Absolute Return, Volatility and Tail
Risk. Additionally, the management of the Group’s direct UK commercial property offering is sub
advised to TH Real Estate.
Distribution
Distribution Channels
JHG distributes its products through three channels: intermediary, institutional and self-directed.
Each channel is discussed below.
Intermediary Channel
The intermediary channel distributes mutual funds and exchange-traded funds (‘‘ETFs’’) through
financial intermediaries including banks, broker-dealers, financial advisors, UK Open Ended
Investment Companies (‘‘OEICs’’), Soci ´et ´e d’Investissement `A Capital Variable (‘‘SICAV’’), fund
platforms and discretionary wealth managers. Significant investments have been made to grow the
Company’s presence in the financial advisor subchannel, including increasing the number of external
and internal wholesalers, enhancing the Company’s technology platform and recruiting highly
seasoned client relationship managers. At December 31, 2017, assets in the intermediary channel
totaled $164.1 billion, or 44% of total Group assets.
Institutional Channel
The institutional channel serves corporations, endowments, pension funds, foundations, Taft-Hartley
funds, public fund clients and sovereign entities, with distribution direct to the plan sponsor and
through consultants. At December 31, 2017, assets in the institutional channel totaled $144.7 billion,
or 39% of total Group assets.
Self-Directed Channel
The self-directed channel serves existing individual investors who invest in JHG products through a
mutual fund supermarket or directly with JHG. Exchange-traded notes (‘‘ETNs’’) associated with
VelocityShares are also part of the self-directed channel. At December 31, 2017, assets in the
self-directed channel totaled $62.0 billion, or 17% of total Group assets.
While JHG seeks to leverage its global model where possible, it also recognizes the importance of
tailoring its services to the needs of clients in different regions. For this reason, JHG maintains a
local presence in most of the markets in which it operates and provides investment material that
takes into account local customs, preferences and language needs. JHG has a global distribution
team of over 600 client-facing staff.
4
JHG’s brand centers on the proposition of Knowledge. Shared, which leverages the Group’s deep
pool of intellectual capital to deliver investment thought leadership and transparency to clients,
thereby building and strengthening trusted relationships.
Products and Services
The Group’s global product team maintains oversight of a broad range of products, including locally
domiciled pooled funds in the U.S., the UK, Luxembourg, Japan, Singapore and Australia, hedge
funds, segregated mandates and closed-ended vehicles. The team provides governance for all funds
and strategies, and gauges the suitability of new offerings as well as ensuring that existing products
remain suited to the clients to which they are marketed.
Intellectual Property
JHG has used, registered, and/or applied to register certain trademarks, service marks and trade
names to distinguish the Group’s sponsored investment products and services from those of its
competitors in the jurisdictions in which it operates, including the U.S., the UK, the European Union
(‘‘EU’’), Australia, China, Japan and Singapore. These trademarks, service marks and trade names
are important to JHG and, accordingly, the company enforces its trademark, service mark and trade
name rights. The Group’s brand has been, and continues to be, extremely well received both in the
asset management industry and with clients.
Seasonality
JHG’s revenue streams are not seasonal in nature, with management fees and other income
generally accruing evenly through the year. Performance fees are recognized when the prescribed
performance hurdles have been achieved and it is probable that the fee will be earned as a result.
The hurdles coincide with the underlying fund year ends. Given the uncertain nature of performance
fees, they tend to fluctuate from period to period. Finance income includes interest received and
investment income. While interest received accrues over the year, investment income, which
includes movements in seed capital investments, can fluctuate period to period. This fluctuation
depends upon how that particular investment performs each month.
Competition
The investment management industry is relatively mature and saturated with competitors that
provide services similar to JHG. As such, JHG encounters significant competition in all areas of its
business. JHG competes with other investment managers, mutual fund advisers, brokerage and
investment banking firms, insurance companies, hedge funds, venture capitalists, banks and other
financial institutions, many of which are larger, have proprietary access to certain distribution
channels, have a broader range of product choices and investment capabilities, and have greater
capital resources. Additionally, the marketplace for investment products is rapidly changing, investors
are becoming more sophisticated, the demand for and access to investment advice and information
is becoming more widespread, passive investment strategies are becoming more prevalent, and
more investors are demanding investment vehicles that are customized to their individual
requirements.
JHG believes its ability to successfully compete in the investment management industry significantly
depends upon its ability to achieve consistently strong investment performance, provide exceptional
client service and strategic partnerships, and develop and innovate products that will best serve its
clients.
5
Regulation
The investment management industry is subject to extensive federal, state and international laws
and regulations intended to benefit and protect the shareholders of investment products such as
those managed by JHG and advisory clients of JHG. The costs of complying with such laws and
regulations have significantly increased and may continue to contribute significantly to the costs of
doing business as a global investment adviser. These laws and regulations generally grant
supervisory agencies broad administrative powers, including the power to limit or restrict the conduct
of businesses and to impose sanctions for failure to comply with laws and regulations. Possible
consequences for failure to comply include, but are not limited to, voiding of investment advisory and
subadvisory agreements, the suspension of individual employees (particularly investment
management and sales personnel), limitations on engaging in certain lines of business for specified
periods of time, revocation of registrations, disgorgement of profits, and imposition of censures and
fines. Further, failure to comply with such laws and regulations may provide the basis for civil
litigation that may also result in significant costs and reputational harm to JHG.
U.S. Regulation
Certain of JHG’s U.S. subsidiaries are subject to laws and regulations from a number of government
agencies and regulatory bodies, including, but not limited to, the SEC, the U.S. Department of Labor
(‘‘DOL’’), the Financial Industry Regulatory Authority (‘‘FINRA’’) and the U.S. Commodity Futures
Trading Commission (‘‘CFTC’’).
Investment Advisers Act of 1940
Certain subsidiaries of JHG are registered investment advisers under the Investment Advisers Act of
1940, as amended (the ‘‘Investment Advisers Act’’) and, as such, are regulated by the SEC. The
Investment Advisers Act requires registered investment advisers to comply with numerous and
pervasive obligations, including, among others, recordkeeping requirements, operational procedures,
registration and reporting requirements, and disclosure obligations. Certain subsidiaries of JHG are
also registered with regulatory authorities in various countries and states, and thus are subject to the
oversight and regulation by such countries’ and states’ regulatory agencies.
Investment Company Act of 1940
Certain of JHG’s subsidiaries act as the adviser or subadviser to mutual funds and ETFs, which are
registered with the SEC pursuant to the Investment Company Act of 1940, as amended (the ‘‘1940
Act’’). Certain of JHG’s subsidiaries also serve as adviser or subadviser to investment products that
are not required to be registered under the 1940 Act. As an adviser or subadviser to a registered
investment company, these subsidiaries must comply with the requirements of the 1940 Act and
related regulations, including, among others, requirements relating to operations, fees charged,
sales, accounting, recordkeeping, disclosure and governance. In addition, the adviser or subadviser
to a registered investment company generally has obligations with respect to the qualification of the
registered investment company under the Internal Revenue Code of 1986, as amended (the
‘‘Code’’).
Broker-Dealer Regulations
JHG’s limited purpose broker-dealer subsidiary, Janus Distributors LLC (‘‘JD’’), is registered with the
SEC under the Exchange Act and is a member of FINRA, the securities industry’s domestic
self-regulatory organization. JD is the general distributor and agent for the sale and distribution of
shares of domestic mutual funds that are directly advised or serviced by certain of JHG’s
subsidiaries, as well as the distribution of certain commingled funds and exchange-traded products
6
(‘‘ETPs’’). The SEC imposes various requirements on JD’s operations, including disclosure,
recordkeeping and accounting. FINRA has established conduct rules for all securities transactions
among broker-dealers and private investors, trading rules for the over-the-counter markets and
operational rules for its member firms. The SEC and FINRA also impose net capital requirements on
registered broker-dealers.
JD is subject to regulation under state law. The federal securities laws prohibit states from imposing
substantive requirements on broker-dealers that exceed those under federal law. This does not
preclude the states from imposing registration requirements on broker-dealers that operate within
their jurisdiction or from sanctioning broker-dealers and their employees for engaging in misconduct.
ERISA
Certain JHG subsidiaries are also subject to the Employee Retirement Income Security Act of 1974,
as amended (‘‘ERISA’’), and related regulations to the extent they are considered ‘‘fiduciaries’’ under
ERISA with respect to some of their clients. ERISA-related provisions of the Code and regulations
issued by the DOL impose duties on persons who are fiduciaries under ERISA and prohibit some
transactions involving the assets of each ERISA plan that is a client of a JHG subsidiary as well as
some transactions by the fiduciaries (and several other related parties) to such plans.
CFTC
The CFTC has regulations that require certain JHG subsidiaries to register as a commodity pool
operator (‘‘CPO’’) and commodity trading adviser (‘‘CTA’’) and become a member of the National
Futures Association (‘‘NFA’’) in connection with the operation of certain of the Company’s products.
The regulations generally impose certain registration, reporting and disclosure requirements on
CPOs, CTAs and products that utilize futures, swaps and other derivatives that are subject to CFTC
regulation. The CFTC or NFA may institute proceedings to enforce applicable rules and regulations,
and violations may result in fines, censure or the termination of CPO and/or CTA registration and
NFA membership.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act’’) was
signed into law in July 2010. The Dodd-Frank Act established enhanced regulatory requirements for
non-bank financial institutions designated as ‘‘systemically important’’ by the Financial Stability
Oversight Council (‘‘FSOC’’). Subsequently, in April 2012, the FSOC issued a final rule and
interpretive guidance related to the process by which it will designate non-bank financial companies
as systemically important financial institutions (‘‘SIFI’’). Certain non-bank financial companies have
since been designated as SIFIs, and additional non-bank financial companies, including large asset
management companies, may be designated as SIFIs in the future. If JHG were designated a SIFI,
it would be subject to enhanced prudential measures, which could include capital and liquidity
requirements, leverage limits, enhanced public disclosures and risk management requirements,
annual stress testing by the Federal Reserve, credit exposure and concentration limits, and
supervisory and other requirements. These heightened regulatory requirements could adversely
affect the Company’s business and operations. JHG is not a designated SIFI.
International Regulation
UK
The Financial Conduct Authority (‘‘FCA’’) regulates JHG and certain of its subsidiaries and products
and services it offers in the UK. FCA authorization is required to conduct any investment
management related business in the UK under the Financial Services and Markets Act 2000 (the
7
‘‘FSMA’’). The FCA’s rules and guidance under that act govern a firm’s capital resources
requirements, senior management arrangements, systems and controls, conduct of business, and
interaction with clients and the markets. The FCA also regulates the design and manufacture of
investment funds intended for public distribution and, on a more limited basis, those that are for
investment by professional investors.
Europe
In addition to the above, certain of the Group’s UK-regulated entities must comply with a range of
EU regulatory measures. Some of these apply directly to UK firms while others have been
implemented through member states’ law. They include the EU Markets in Financial Instruments
Directive (‘‘MiFID’’). MiFID regulates the provision of investment services and conduct of investment
activities throughout the European Economic Area. MiFID establishes detailed requirements for the
governance, organization and conduct of business of investment firms and regulated markets. It also
includes pre- and post-trade transparency requirements for equity markets and extensive transaction
reporting requirements. These requirements were substantially revised and extended to non-equities
from January 3, 2018, as a result of the implementation of the revised MiFID. The Markets in
Financial Instruments Directive II (‘‘MiFID II’’) will have a substantial impact on the EU financial
services sector, including asset managers. The UK has adopted the MiFID rules into national
legislation, principally via the FSMA and the FCA rules. The other EU member states in which JHG
has a presence have also implemented MiFID in their local legal and regulatory regimes.
The EU’s Alternative Investment Fund Managers Directive (‘‘AIFMD’’), was required to be transposed
into EU member state law by July 2013 with a transitional period until July 2014. AIFMD regulates
managers of, and service providers to, alternative investment funds (‘‘AIFs’’) that are domiciled and
offered in the EU and that are not authorized as retail funds under the Undertakings for Collective
Investment in Transferable Securities Directive. JHG has two subsidiaries regulated as Alternative
Investment Fund Managers. The AIFMD also regulates the marketing within the EU of all AIFs,
including those domiciled outside the EU. In general, AIFMD has a staged implementation up to
2018. Compliance with the AIFMD’s requirements may restrict AIF marketing and imposes
compliance obligations in the form of remuneration policies, capital requirements, reporting
requirements, leverage oversight, valuation, stakes in EU companies, the domicile, duties and
liability of custodians and liquidity management.
UCITS are investment funds regulated at the EU level under the UCITS Directive V (‘‘UCITS V’’).
UCITS are capable of being freely marketed throughout the EU on the basis of a single authorization
in a member state — so-called passporting. UCITS V covers a range of matters relating to UCITS
including the fund structure and domicile of UCITS, service providers to UCITS and marketing
arrangements.
Luxembourg
A JHG subsidiary, Henderson Management S.A. (‘‘HMSA’’), is authorized and regulated in
Luxembourg by the Commission de Surveillance du Secteur Financier as a UCITS Management
Company. Two umbrella funds, Henderson Horizon Fund and Henderson Gartmore Fund, have
appointed HMSA as their management company. Henderson Horizon Fund and Henderson
Gartmore Fund are OEICs incorporated under the laws of Luxembourg in the form of an SICAV
authorized as a UCITS.
Singapore
In Singapore, the Group’s subsidiary is subject to, among others, the Securities and Futures Act, the
Financial Advisers Act and the subsidiary legislation promulgated pursuant to these acts, which are
8
administered by the Monetary Authority of Singapore. JHG’s asset management subsidiary and its
employees conducting regulated activities specified in the Securities and Futures Act and/or the
Financial Advisers Act are required to be licensed with the Monetary Authority of Singapore.
Australia
In Australia, JHG’s subsidiaries are subject to various Australian federal and state laws and are
regulated by the Australian Securities and Investments Commission (‘‘ASIC’’). ASIC regulates
companies, financial markets and financial services in Australia. ASIC imposes certain conditions on
licensed financial services organizations that apply to the Group’s subsidiaries, including
requirements relating to capital resources, operational capability and controls. As JHG’s chess
depository interests (‘‘CDIs’’) are quoted and traded on the financial market operated by the
Australian Securities Exchange (‘‘ASX’’), Henderson is also required to comply with the ASX listing
rules and the ASX Principles.
Hong Kong
In Hong Kong, JHG’s subsidiary is subject to the Securities and Futures Ordinance (‘‘SFO’’), and its
subsidiary legislation, which governs the securities and futures markets and regulates, among other
things, offers of investments to the public and provides for the licensing of dealing in securities and
asset management activities and intermediaries. This legislation is administered by the Securities
and Futures Commission (‘‘SFC’’). The SFC is also empowered under the SFO to establish
standards for compliance as well as codes and guidelines. JHG’s subsidiaries and its employees
conducting any of the regulated activities specified in the SFO are required to be licensed with the
SFC, and are subject to the rules, codes and guidelines issued by the SFC from time to time.
Japan
In Japan, the Group’s subsidiary is subject to the Financial Instruments and Exchange Act and the
Act on Investment Trusts and Investment Corporations. These laws are administered and enforced
by the Japanese Financial Services Agency, which establishes standards for compliance, including
capital adequacy and financial soundness requirements, customer protection requirements and
conduct of business rules.
These regulatory agencies have broad supervisory and disciplinary powers, including, among others,
the power to temporarily or permanently revoke the authorization to conduct regulated business,
suspend registered employees, and censure and fine both regulated businesses and their registered
employees.
Many of the non-U.S. securities exchanges and regulatory authorities have imposed rules (and
others may impose rules) relating to capital requirements applicable to JHG’s foreign subsidiaries.
These rules, which specify minimum capital requirements, are designed to measure general financial
integrity and liquidity, and require that a minimum amount of assets be kept in relatively liquid form.
Other
The Group’s operations in Taiwan and Ireland are regulated by the Financial Supervisory
Commission of Taiwan and the Central Bank of Ireland, respectively.
Employees
As of December 31, 2017, JHG had 2,356 full-time equivalent employees. None of JHG’s employees
are represented by a labor union.
9
Available Information
Copies of JHG’s filings with the SEC can be obtained from the SEC’s Public Reference Room at
100 F Street, N.E., Washington, DC 20549. Information can be obtained about the operation of the
Public Reference Room by calling the SEC at (800) SEC-0330. The SEC also maintains an Internet
site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at http://www.sec.gov.
JHG makes available free of charge its annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K and amendments thereto as soon as reasonably
practical after such filing has been made with the SEC. Reports may be obtained through the
Investor Relations section of JHG’s website (http://en-us.janushenderson.com). The contents of
JHG’s website are not incorporated herein for any purpose.
JHG’s Officer Code of Ethics for Chief Executive Officers and Senior Financial Officers (including its
Chief Executive Officers, Chief Financial Officer and Chief Accounting Officer) (the ‘‘Officer Code’’);
Corporate Code of Business Conduct for all employees; corporate governance guidelines; and the
charters of key committees of the Board of Directors (including the Audit, Compensation, and
Nominating and Corporate Governance committees) are available on the Investor Relations section
of JHG’s website (http://www.snl.com/irw/corporateprofile/4147331). Any future amendments to or
waivers of the Officer Code will be posted to the Investor Relations section of JHG’s website.
Corporate Information
JHG is a public limited company incorporated in Jersey, Channel Islands and tax resident in the UK
Its principal business address is 201 Bishopsgate, London, EC2M 3AE, United Kingdom and its
telephone number is +44 (0)20 7818 1818.
JHG is a ‘‘foreign private issuer’’ as defined in Rule 3b-4 promulgated by the SEC under the
Exchange Act and in Rule 405 under the Securities Act. As a result, it is eligible to file its annual
reports pursuant to Section 13 of the Exchange Act on Form 20-F (in lieu of Form 10-K) and to file
its interim reports on Form 6-K (in lieu of Forms 10-Q and 8-K). However, JHG has elected to file its
annual and interim reports on Forms 10-K, 10-Q and 8-K, including any instructions therein that
relate specifically to foreign private issuers.
Pursuant to Rule 3a12-3 under the Exchange Act regarding foreign private issuers, the proxy
solicitations of JHG are not subject to the disclosure and procedural requirements of Regulation 14A
under the Exchange Act, and transactions in the JHG’s equity securities by its officers, directors and
significant shareholders are exempt from the reporting and liability provisions of Section 16 of the
Exchange Act.
Additional Financial Information
See additional financial information about geographical areas in Part II, Item 8, Financial Statements
and Supplementary Data, Note 20 — Geographic Information.
10
ITEM 1A. RISK FACTORS
JHG faces numerous risks, uncertainties and other factors that are substantial and inherent to its
business, including market and investment performance risks, business and strategic risks,
operational and technology risks, legal and regulatory risks, risks related to taxes and Jersey
company risks. The following are significant factors that could affect JHG’s business.
Market and Investment Performance Risks
JHG’s results of operations and financial condition are primarily dependent on the value,
composition and relative investment performance of its investment products.
Any decrease in the value, relative investment performance or amount of AUM will cause a decline
in revenue and negatively impact operating results and the financial condition of JHG. AUM may
decline for various reasons, many of which are not under the control of JHG.
Factors that could cause AUM and revenue to decline include the following:
• Declines in equity markets. JHG’s AUM are concentrated in the U.S. and European equity
markets. Equity securities may decline in value as a result of many factors, including an issuer’s
actual or perceived financial condition and growth prospects, investor perception of an industry or
sector, changes in currency exchange rates, changes in regulations and geopolitical and economic
risks. Declines in the equity markets as a whole, or in the market segments in which JHG
investment products are concentrated, may cause AUM to decrease.
• Declines in fixed income markets. Fixed income investment products may decline in value as a
result of many factors, principally increases in interest rates, changes in currency exchange rates,
changes in relative yield among instruments with different maturities, geopolitical and general
economic risks, available liquidity in the markets in which a security trades, an issuer’s actual or
perceived creditworthiness, or an issuer’s ability to meet its obligations.
• Relative investment performance. JHG’s investment products are often judged on their
performance as compared to benchmark indices or peer groups, as well as being judged on an
absolute return basis. Any period of underperformance of investment products relative to peers
may result in the loss of existing assets and affect the ability of JHG to attract new assets. In
addition, as of December 31, 2017 approximately 17% of JHG’s AUM were subject to performance
fees. Performance fees are based either on each product’s investment performance as compared
to an established benchmark index or on its positive absolute return over a specified period of
time. If JHG investment products subject to performance fees underperform their respective
benchmark index or produce a negative absolute return for a defined period, the revenue and thus
results of operations and financial condition of JHG may be adversely affected. In addition,
performance fees subject JHG’s revenue to increased volatility. Further, certain JHG U.S. mutual
fund contracts, representing approximately 12% of JHG’s AUM at December 31, 2017, are subject
to fulcrum performance fees and as a result, performance fees earned can be negative as well as
positive.
JHG’s revenue and profitability would be adversely affected by any reduction in assets under
management as a result of redemptions and other withdrawals from the funds and accounts
managed.
Redemptions or withdrawals may be caused by investors (in response to adverse market conditions
or pursuit of other investment opportunities or as a consequence of damage to JHG’s reputation,
among other factors) reducing their investments in funds and accounts in general or in the market
segments on which JHG focuses; investors taking profits from their investments; poor investment
performance of the funds and accounts managed by JHG; and portfolio risk characteristics, which
could cause investors to move assets to other investment managers. Poor performance relative to
11
competing products provided by other investment management firms tends to result in decreased
sales, increased redemptions of fund shares and the loss of or reduction in AUM in private
institutional accounts, with corresponding decreases in revenue. Failure of the JHG funds and
accounts to perform well could, therefore, have a material adverse effect on the results of operations
and financial condition of the Group.
Changes in the value of seeded investment products could affect JHG’s non-operating
income or earnings and could increase the volatility of its earnings.
JHG has a significant seed portfolio and periodically adds new investment strategies to its
investment product offerings, and provides the initial cash investment or ‘‘seeding’’ to facilitate the
launch of the product. JHG may also provide substantial supplemental capital to an existing
investment product in order to accelerate the growth of a strategy and attract outside investment in
the product. A decline in the valuation of these seeded investments could negatively impact JHG’s
earnings and financial condition.
Disruption to the operations of third parties whose functions are integral to the Group’s ETNs
and ETFs platforms, collectively referred to as ETPs, may adversely affect the prices at which
ETPs trade, particularly during periods of market volatility.
The trading price of an ETPs shares fluctuates continuously throughout trading hours. While an
ETPs creation/redemption feature and the arbitrage mechanism are designed to make it more likely
that the ETP’s shares normally will trade at prices close to the ETFs net asset value (‘‘NAV’’),
exchange prices may deviate significantly from the ETPs NAV. ETP market prices are subject to
numerous potential risks, including trading halts invoked by a stock exchange, inability or
unwillingness of market markers, authorized participants, settlement systems or other market
participants to perform functions necessary for an ETPs arbitrage mechanism to function effectively,
or significant market volatility. If market events lead to instances where ETPs trade at prices that
deviate significantly from an ETPs NAV, or trading halts are invoked by the relevant stock exchange
or market, investors may lose confidence in ETP products and redeem their holdings, which may
cause AUM, revenue and earnings to decline.
Illiquidity in certain securities in which JHG invests may negatively impact the financial
condition of the Group’s investment products, and may impede the ability of JHG funds to
effect redemptions.
JHG is exposed to the risk that some of its funds or mandates invest in certain securities or other
assets in which the secondary trading market is illiquid or in which there is no secondary trading
market at all. Illiquidity may occur with respect to the securities of a specific issuer, of issuers within
a specific industry or sector, of issuers within a specific geographic region or regions, with respect to
an asset class or an investment type, or with respect to the market as a whole. An illiquid trading
market may increase market volatility and may make it impossible for funds or mandates to sell
investments promptly without suffering a loss. This may have an adverse impact on the investment
performance of such funds and mandates and on the AUM, revenues and results of operations of
JHG.
Investors in certain funds managed by JHG have contractual terms that provide for a shorter notice
period than the time period during which these funds may be able to sell underlying investments
within the fund. This liquidity mismatch may be exacerbated during periods of market illiquidity and,
in circumstances in which there are high levels of investor redemptions, it may be necessary for
JHG to impose restrictions on redeeming investors or suspend redemptions. Such actions may
increase the risk of legal claims by investors, regulatory investigation and/or fines and adversely
affect the reputation of JHG.
12
JHG could be adversely impacted by changes in assumptions used in calculating pension
assets and liabilities.
JHG provides retirement benefits for its current and former employees in the UK through the Janus
Henderson Group Pension Scheme (the ‘‘UK Pension Scheme’’). The UK Pension Scheme operates
a number of defined benefit sections, which closed to new entrants on November 15, 1999, and a
money purchase section. As of December 31, 2014, the UK Pension Scheme had a funding deficit
of £39.2 million on a technical provisions basis. The Group has agreed with the trustees of the UK
Pension Scheme to make contributions of $11.4 million (£8.4 million) per year for four years
beginning in 2017 to recover the deficit. JHG may be required to increase its contributions in the
future to cover any increased funding shortfall and/or expenses in the UK Pension Scheme, which
could adversely impact JHG’s results and financial condition.
The following issues could adversely affect the funding of the defined benefits under the UK Pension
Scheme and materially affect JHG’s funding obligations: (i) poorer than anticipated investment
performance of pension fund investments; (ii) the trustees of the UK Pension Scheme switching
investment strategy to one with a lower weighting of return-seeking assets; (iii) changes in the
corporate bond yields which are used in the measurement of the UK Pension Scheme’s liabilities;
(iv) longer life expectancy (which will make pensions payable for longer and therefore more
expensive to provide, whether paid directly from the UK Pension Scheme or secured by the
purchase of annuities); (v) adverse annuity rates (which tend, in particular, to depend on prevailing
interest rates and life expectancy), as these will make it more expensive to secure pensions with an
insurance company; (vi) a change in the actuarial assumptions by reference to which JHG’s
contributions are assessed, for example changes to assumptions for long term price inflation;
(vii) any increase in the risk-based levy assessed by and payable to the Pension Protection Fund by
the UK Pension Scheme; (viii) other events occurring which make past service benefits more
expensive than predicted in the actuarial assumptions by reference to which JHG’s past
contributions were assessed; (ix) changes to the regulatory regime for funding defined benefit
pension schemes in the UK; and (x) the UK Pensions Regulator exercising its power to trigger a
winding up of the UK Pension Scheme thereby triggering a buy-out debt on the employers or the UK
Pensions Regulator using its powers under the Pensions Act 2004 to make other members of the
JHG group liable for any deficit in the UK Pension Scheme’s funding (although, in practice, it is
assumed that the Pensions Regulator would be unlikely to exercise these powers while JHG
continues to fund the UK Pension Scheme appropriately).
The global scope of JHG’s business subjects the Group to currency exchange rate risk that
may adversely impact revenue and income.
JHG generates a substantial portion of its revenue in pounds sterling, euro and Australian dollars. As
a result, JHG is subject to foreign currency exchange risk relative to the USD, JHG’s financial
reporting currency, through its non-U.S. operations. Fluctuations in the exchange rates to the
U.S. dollar may affect JHG’s financial results from one period to the next. In addition, the Group has
risk associated with the foreign exchange revaluation of balances held by certain subsidiaries for
which the local currency is different from the Group’s functional currency.
JHG could be impacted by counterparty or client defaults.
In periods of significant market volatility, the deteriorating financial condition of one financial
institution may materially and adversely impact the performance of others. JHG, and the funds and
accounts it manages, have exposure to many different counterparties, and routinely execute
transactions with counterparties across the financial industry. JHG, and the funds and accounts it
manages, may be exposed to credit, operational or other risk in the event of a default by a
counterparty or client, or in the event of other unrelated systemic market failures.
13
Business and Strategic Risks
JHG may fail to successfully implement a strategy for the combined business, which could
negatively impact the Group’s assets under management, results of operations and financial
condition.
Through the combination of JCG and Henderson, the Group intends to establish an independent,
active asset manager with a globally relevant brand, footprint, investment proposition and client
service. No assurance can be given that the Group will successfully achieve this objective or that
this objective will lead to increased revenue and net income, or to the creation of shareholder value.
The failure to successfully implement a strategy for JHG could adversely affect the Group’s AUM,
results of operations and financial condition.
JHG operates in a highly competitive environment and revenue from fees may be reduced.
The investment management business is highly competitive. In addition, established firms as well as
new entrants to the asset management industry have, in recent years, expanded their application of
technology, including through the use of robo-advisers, in providing services to clients. JHG’s
traditional fee structures may be subject to downward pressure due to these factors. Moreover, in
recent years there has been a trend toward lower fees in the investment management industry, as
evidenced by the movement toward passively managed mutual funds and the growth of lower cost
funds such as exchange traded, smart beta and quant funds. Fees for actively managed investment
products may come under increased pressure if such products fail to outperform returns for
comparable passively managed products or as a consequence of regulatory intervention. Fee
reductions on existing or future new business as well as changes in regulations pertaining to fees
could adversely affect the Group’s results of operations and financial condition. Additionally, JHG will
compete with investment management companies on the basis of investment performance, fees,
diversity of products, distribution capability, reputation and the ability to develop new investment
products to meet the changing needs of investors. Failure to adequately compete could adversely
affect the Group’s assets under management, results of operations and financial condition.
The Group’s results are dependent on its ability to attract and retain key personnel.
The investment management business is highly dependent on the ability to attract, retain and
motivate highly skilled and often highly specialized technical, executive, sales and investment
management personnel. The market for qualified investment and sales professionals is extremely
competitive and is characterized by the frequent movement of portfolio managers, analysts and
salespeople among different firms. Any changes to management structure, shifts in corporate
culture, changes to corporate governance authority, or adjustments or reductions to compensation
could affect the Group’s ability to retain key personnel and could result in legal claims. If JHG is
unable to retain key personnel, particularly those personnel responsible for managing client funds
that account for a high proportion of JHG’s revenue, it could adversely affect the Group’s AUM,
results of operations and financial condition.
The Group is dependent upon third-party distribution channels to access clients and potential
clients.
JHG’s ability to market and distribute its investment products is significantly dependent on access to
the client base of insurance companies, defined contribution plan administrators, securities firms,
broker-dealers, financial advisors, multi-managers, banks and other distribution channels. These
companies generally offer their clients various investment products in addition to, and competitive
with, products offered by JHG. In addition, JHG’s existing relationships with third-party distributors
and access to new distributors could be adversely affected by recent consolidation within the
financial services industry. Consolidation may result in increased distribution costs, a reduction in the
14
number of third parties distributing JHG’s investment products or increased competition to access
third-party distribution channels. The inability to access clients through third-party distribution
channels could adversely affect the Group’s business prospects, AUM, results of operations and
financial condition.
The global scope of JHG’s business subjects the Group to market-specific political, economic
and other risks that may adversely impact the Group’s revenue and income generated
overseas.
The Group’s global portfolios and revenue derived from managing these portfolios are subject to
significant risks of loss as a result of political, economic, and diplomatic developments, currency
fluctuations, social instability, changes in governmental policies, expropriation, nationalization, asset
confiscation and changes in legislation related to non-U.S. ownership. Political events in any country
or region could result in significant declines in equity and/or fixed income securities exposed to such
a country or region and, to the extent that JHG has a concentration of AUM in such a country or
region could result in a material adverse effect on the AUM, results of operations and financial
condition of the combined company. In addition, international trading markets, particularly in some
emerging market countries, are often smaller, less liquid, less regulated and significantly more
volatile than those in the U.S. As the Group’s business grows in non-U.S. markets, any ongoing and
future business, political, economic or social unrest affecting these markets may have a negative
impact on the long-term investment climate in these and other areas and, as a result, on JHG’s
AUM and the corresponding revenue and income generated from these markets may be negatively
affected.
Harm to JHG’s reputation or poor investment performance of JHG’s products could reduce
the level of assets under management or affect sales, potentially negatively impacting the
Group’s revenue and net income. JHG’s reputation is critical to the success of the Group.
JHG believes that its brand name is well received both in the asset management industry and with
its clients, reflecting the fact that the brand, like the business, is based in part on trust and
confidence. If the reputation of JHG is harmed, existing clients may reduce amounts held in, or
withdraw entirely from, funds advised by JHG, or funds may terminate or reduce AUM under their
management agreements with JHG, which could reduce the amount of AUM of the Group and cause
the Group to suffer a corresponding loss in revenue and income. The investment performance of
JHG, along with achieving and maintaining superior distribution and client services, is also critical to
the success of the business. Strong investment performance has historically stimulated sales of JHG
investment products. Poor investment performance as compared to third-party benchmarks or
competitive products has in the past, and could in the future, lead to a decrease in sales of
investment products managed by JHG and stimulate redemptions from existing products, generally
lowering the overall level of AUM and reducing management fees. No assurance can be given that
past or present investment performance in the investment products JHG manages will be indicative
of future performance. Any poor investment performance may negatively impact the revenue and net
income of JHG. The reputation of JHG could also be damaged by factors such as litigation,
regulatory action, loss of key personnel, misconduct, operational failures (including any failures
during the integration process), mismanagement, loss of client data, fraud (by employees or third
parties), failure to manage conflicts of interest or satisfy fiduciary responsibilities, and negative
publicity or press speculation (whether or not any such allegations or claims are valid or ultimately
disproved, dismissed or withdrawn). Reputational harm or poor investment performance may cause
JHG to lose current clients and it may be unable to continue to attract new clients or develop new
business. If JHG fails to address, or appears to fail to address, successfully and promptly the
underlying causes of any reputational harm or poor investment performance, it may be unsuccessful
15
in repairing any existing harm to its reputation or performance and the Group’s future business
prospects would likely be affected.
JHG has significant goodwill and intangible assets that are subject to impairment.
At December 31, 2017, JHG’s goodwill and intangible assets totaled $4.7 billion. The value of these
assets may not be realized for a variety of reasons, including, but not limited to, significant
redemptions, loss of clients, damage to brand name and unfavorable economic conditions. JHG has
recorded goodwill and intangible asset impairments in the past and could incur similar charges in the
future. Under accounting pronouncements generally accepted in the United States of America
(‘‘GAAP’’), goodwill and intangible assets with indefinite lives are not amortized but are tested for
impairment annually or more often if an event or circumstance indicates that an impairment loss may
have been incurred. Other intangible assets with finite lives are amortized on a straight-line basis
over their estimated useful lives and reviewed for impairment whenever there is an indication of
impairment. Should such reviews indicate impairment, a reduction of the carrying value of the
intangible asset could occur, resulting in a charge that may, in turn, adversely affect JHG’s AUM,
results of operations and financial condition.
JHG’s businesses are dependent on investment management agreements that are subject to
termination, non-renewal or reductions in fees.
JHG derives revenue from investment management agreements with investment funds, institutional
and other investors. With respect to investment management agreements with U.S. mutual funds,
these agreements may be terminated by either party with notice, or in the event of an ‘‘assignment’’
(as defined in the Investment Company Act), and must be approved and renewed annually by the
independent members of each fund’s board of directors or trustees or its shareowners, as required
by law. In addition, the board of directors or trustees of certain investment funds and institutional and
other investors generally may terminate their investment management agreements upon written
notice for any reason and without penalty. Such U.S. mutual funds, investments funds or other
investors may choose to exercise such termination rights as a result of the uncertainty caused by
the Merger or if the employees with whom they have a relationship leave the business during or
following the integration process. The termination of or failure to renew one or more of these
agreements or the reduction of the fee rates applicable to such agreements could have a material
adverse effect on the Group’s AUM, results of operations and financial condition.
Integration efforts related to the Merger are ongoing and JHG may face significant challenges
in implementing such integration.
Certain integration processes are complex, time-consuming and ongoing and the Group may face
significant challenges implementing such integration in a timely manner.
Failure to properly address conflicts of interest could harm JHG’s reputation, business and
results of operations.
JHG’s business will require continuously managing actual and potential conflicts of interest, including
situations where the Group’s services to a particular client conflict, or are perceived to conflict, with
the interests of another client or those of JHG. The risk of actual or potential conflicts of interest
occurring may be increased as a result of the Merger and it is possible that conflicts between
aspects of Janus’s and Henderson’s existing businesses will be identified during the integration
process. The willingness of clients to enter into transactions in which such a conflict might arise may
be affected if the Group fails, or appears to fail, to deal appropriately with conflicts of interest. In
addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement
actions.
16
Operational and Technology Risks
JHG could be subject to losses and reputational harm if the Group, or its agents, fail to
properly safeguard sensitive and confidential information or as a result of cyberattacks.
JHG will be dependent on the continued effectiveness of its information and cyber security policies,
procedures and capabilities to protect its computer and telecommunications systems and the data
that resides in or is transmitted through such systems.
As part of JHG’s normal operations, the Group maintains and transmits confidential information
about its clients and employees as well as proprietary information relating to its business operations.
JHG maintains a system of internal controls designed to provide reasonable assurance that
fraudulent activity, including misappropriation of assets, fraudulent financial reporting and
unauthorized access to sensitive or confidential data, is either prevented or detected on a timely
basis. Nevertheless, all technology systems remain vulnerable to unauthorized access and may be
corrupted by cyberattacks, computer viruses or other malicious software code, the nature of which
threats are constantly evolving and becoming increasingly sophisticated. In addition, authorized
persons could inadvertently or intentionally release confidential or proprietary information. Although
JHG takes precautions to password protect and encrypt its mobile electronic hardware, if such
hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other
unauthorized use, creating a possible security risk and resulting in potentially costly actions by JHG.
Breach or other failure of JHG’s technology systems, including those of third parties with which the
Group does business, or failure to timely and effectively identify and respond to any such breach or
failure, could result in the loss of valuable information, liability for stolen assets or information,
remediation costs to repair damage caused by the incident, additional security costs to mitigate
against future incidents and litigation costs resulting from the incident. Moreover, loss of confidential
customer identification information could harm JHG’s reputation, result in the termination of contracts
by the Group’s existing customers and subject the Group to liability under laws that protect
confidential personal data, resulting in increased costs or loss of revenue. The increasing prevalence
and sophistication of cyberattacks generally and the heightened profile of JHG as a result of its
increased scale and breadth of global activities may result in an increase in the volume and
sophistication of cyberattacks on JHG specifically. This may increase the amount of investment that
the Group will need to make to minimize the risk of harm to its business and potentially increase the
risk that, despite such investment, the Group will be a victim of a successful cyberattack. Recent
well-publicized security breaches at other companies have exposed failings by companies to keep
pace with the threats posed by cyberattackers and have led to enhanced government and regulatory
scrutiny of the measures taken by companies to protect against cyberattacks, and may in the future
result in heightened cyber security requirements, including additional regulatory expectations for
oversight of vendors and service providers which could lead to increased costs or fines or public
censure which could lead to a damaged reputation and loss of customers (and a decrease in AUM,
lower revenue and reduced net income) as a result.
Intech’s investment process is highly dependent on key employees and proprietary software.
Intech’s investment process (which relates to approximately 13% of JHG’s AUM as of December 31,
2017) is based on complex and proprietary mathematical models that seek to outperform various
indices by capitalizing on the volatility in stock price movements while controlling trading costs and
overall risk relative to the index. The maintenance of such models for current products and the
development of new products is highly dependent on certain key Intech employees. If Intech is
unable to retain key personnel or properly transition key personnel responsibilities to others, if the
mathematical investment strategies developed by Intech fail to produce the intended results, or if
errors occur in the development or implementation of Intech’s mathematical models, Intech may not
be able to maintain its historical level of investment performance, which could adversely affect JHG’s
17
AUM, results of operations and financial condition and could also result in legal claims against JHG
or regulatory investigations in respect of its operations.
Failure to establish adequate controls and risk management policies, the circumvention of
controls and policies, or fraud as well as failure to maintain adequate infrastructure or
failures in operational or risk management processes and systems could have an adverse
effect on the Group’s assets under management, results of operation and financial condition.
JHG has a comprehensive risk management process and will continue to enhance various controls,
procedures, policies and systems to monitor and manage risks to its business; however, there can
be no assurances that such controls, procedures, policies and systems will successfully identify and
manage internal and external risks to the business. JHG is subject to the risk that its employees,
contractors or other third parties may deliberately seek to circumvent established controls to commit
fraud or act in ways that are inconsistent with the Group’s controls, policies and procedures
(including insider trading). Any operational errors or negligence by the employees of, or others acting
on behalf of, JHG or weaknesses in the internal controls over those processes could result in losses
for JHG, a requirement for JHG to compensate clients for losses suffered and/or regulatory fines.
Persistent or repeated attempts involving conflicts of interests, circumvention of policies and controls,
fraud or insider trading could have a materially adverse impact on JHG’s reputation and could lead
to costly regulatory inquiries.
The JHG business is also highly dependent on the integrity, security and reliability of its information
technology systems and infrastructure. If any of the critical systems or infrastructure do not operate
properly or are disabled, the ability of JHG to perform effective investment management on behalf of
its clients could be impaired. In addition, the failure to maintain an infrastructure commensurate with
the size and scope of JHG’s business, including any expansion, could impede the Group’s
productivity and growth, which could negatively impact AUM, results of operations and financial
condition.
JHG’s infrastructure, including its technological capacity, data centers and office space, will be vital
to the operations and competitiveness of its business. The failure to maintain an infrastructure
commensurate with the increased size and scope of JHG’s business, including any expansion, could
impede the Group’s productivity and growth, which could negatively impact assets under
management, results of operations and financial condition, and increase operational risk.
Insurance may not be available on a cost-effective basis to help protect JHG from potential
liabilities.
JHG faces the inherent risk of liability related to litigation from clients, third-party vendors or others.
To help protect against these potential liabilities, JHG has purchased insurance in amounts, and
against risks, that JHG considers appropriate, where such insurance is available at prices it deems
acceptable. There can be no assurance, however, that a claim or claims will be covered by
insurance or, if covered, will not exceed the limits of available insurance coverage, that any insurer
will remain solvent and will meet its obligations to provide JHG with coverage or that insurance
coverage will continue to be available with sufficient limits at a reasonable cost. Insurance costs are
impacted by market conditions and the risk profile of the insured, and may increase significantly over
relatively short periods. In addition, certain insurance coverage may not be available or may only be
available at prohibitive costs. Renewals of insurance policies may expose JHG to additional costs
through higher premiums or the assumption of higher deductibles or co-insurance liability.
18
JHG’s business may be vulnerable to failures of support systems and client service functions
provided by third-party vendors.
JHG’s client service capabilities as well as its ability to obtain prompt and accurate securities pricing
information and to process client transactions and reports will be significantly dependent on
communication and information systems and services provided by third-party vendors. The ability to
consistently and reliably obtain securities pricing information, process client transactions and provide
reports and other client services to the shareholders of funds and other investment products
managed by JHG are essential to the Group’s operations. Any delays, errors or inaccuracies in
obtaining pricing information, processing client transactions or providing reports, and any other
inadequacies in other client service functions could impact client relationships, result in financial loss
and potentially give rise to regulatory action and claims against JHG. A failure of third-party systems
or services could adversely affect JHG’s AUM, results of operations and financial condition.
JHG depends on third-party service providers and other key vendors for various fund administration,
accounting, custody, risk analytics, market data, market indices and transfer agent roles, and other
distribution and operational needs. If JHG’s third-party service providers or other key vendors fail to
fulfill their obligations, experience service interruptions or otherwise provide inadequate service, it
could lead to operational and regulatory problems, including with respect to certain of the Group’s
products, which could result in losses, enforcement actions, or reputational harm and which could
negatively impact the Group’s, AUM, results of operations and financial condition.
Failure to maintain adequate business continuity plans could have a material adverse impact
on JHG and its products.
Significant portions of JHG’s business operations and those of its critical third-party service providers
will be concentrated in a few geographic areas, including the UK, U.S., Luxembourg and Australia.
Should JHG, or any of its critical service providers, experience a significant local or regional disaster
or other business continuity problem, the Group’s continued success will depend in part on the
safety and availability of its personnel, its office facilities, and the proper functioning of its computer,
telecommunication and other related systems and operations. The failure by JHG, or any of its
critical service providers, to maintain updated adequate business continuity plans, including backup
facilities, could impede the Group’s ability to operate in the event of a disruption. This could
negatively impact the Group’s AUM, results of operations and financial condition. JHG has
developed various backup systems and contingency plans but no assurance can be given that they
will be adequate in all circumstances that could arise or that material interruptions and disruptions
will not occur. In addition, JHG will rely to varying degrees on outside vendors for disaster
contingency support, and, notwithstanding any due diligence or oversight carried out by JHG, no
assurance can be given that these vendors will be able to perform in an adequate and timely
manner. If JHG, or any of its critical service providers, is unable to respond adequately to such an
event in a timely manner, the Group may be unable to continue its business operations, which could
lead to a damaged reputation and loss of customers, resulting in a decrease in AUM, lower revenue
and reduced net income.
JHG’s indebtedness could adversely affect its financial condition and results of operations.
JHG’s indebtedness could limit its ability to obtain additional financing for working capital, capital
expenditures, acquisitions, debt servicing requirements or other purposes. Debt servicing
requirements will increase JHG’s vulnerability to adverse economic, market and industry conditions;
limit JHG’s flexibility in planning for or reacting to changes in business operations or to the asset
management industry overall; and place JHG at a disadvantage in relation to competitors that have
lower debt levels. Any or all of the above events and factors could adversely affect JHG’s AUM,
results of operations and financial condition.
19
Legal and Regulatory Risks
JHG is periodically involved in various legal proceedings and regulatory matters and may be
involved in such proceedings in the future.
JHG and its employees are periodically involved in various legal proceedings and regulatory
investigations. Among other things, such matters may result in fines, censure, suspension of
personnel and revocation of licenses. Any of these outcomes could adversely affect JHG’s AUM,
results of operations and financial condition. Additionally, JHG and its employees have received and
may receive in the future requests for information in connection with certain investigations or
proceedings from various governmental and regulatory authorities. These investigations or
proceedings may result in increased costs or reputational harm to the Group, which may lower sales
and increase redemptions.
JHG operates in an industry that is highly regulated in most countries, and any enforcement
action or adverse changes in the laws or regulations governing its business could adversely
affect its results of operations or financial condition.
Like all investment management firms, JHG’s activities are highly regulated in almost all countries in
which it conducts business. The Group is subject to regulation in the U.S., the UK, Europe, Australia
and in other international markets, including regulation by the SEC, FINRA, the CFTC, the NFA, the
Australian Securities and Investments Commission in Australia, and the FCA in the UK, Subsidiaries
operating in the EU are subject to various EU Directives, which are implemented by member state
national legislation. JHG’s operations elsewhere in the world are regulated by similar regulatory
organizations.
Laws and regulations applied at the international, national, state or provincial and local level
generally grant governmental agencies and industry self-regulatory authorities broad administrative
discretion over JHG’s activities, including the power to limit or restrict its business activities, conduct
examinations, risk assessments, investigations and capital adequacy reviews, and impose remedial
programs to address perceived deficiencies. As a result of regulatory oversight, JHG could face
requirements which negatively impact the way in which it conducts business, increase compliance
costs, impose additional capital requirements and/or involve enforcement actions which could lead to
sanctions up to and including the revocation of licenses to operate certain businesses, the
suspension or expulsion from a particular jurisdiction or market of any of its business organizations
or key personnel, or the imposition of fines and censures on it or its employees. Judgments or
findings of wrongdoing by regulatory or governmental authorities, or in private litigation against JHG,
could affect its reputation, increase its costs of doing business and/or negatively impact revenues,
any of which could have an adverse impact on JHG’s results of operations or financial condition.
JHG may also be adversely affected as a result of new or revised legislation or regulations, or by
changes in the interpretation or enforcement of existing laws and regulations. The costs and burdens
of compliance with these and other current and future reporting and operational requirements and
regulations have increased significantly and may continue to increase the cost of offering mutual
funds and other investment products and services, which could adversely affect JHG’s AUM, results
of operations and financial condition.
The regulatory environment in which JHG operates frequently changes and has seen a significant
increase in regulation in recent years. Various changes in laws and regulations have been enacted
or otherwise developed in multiple jurisdictions globally and various other proposals remain under
consideration by legislators, regulators, and other government officials and other public policy
commentators. Certain enacted provisions and certain other proposals are potentially far reaching
and, depending upon their implementation, could have a material impact on JHG’s business. JHG
20
may be adversely affected as a result of the new or revised legislation or regulations or by changes
in the interpretation or enforcement of existing laws and regulations.
Proposed Changes in the U.S. Regulatory Framework
In the U.S., the government and other institutions have taken action, and may continue to take
further action, in response to the volatility in the global financial markets. For example, the
Dodd-Frank Act was signed into law in July 2010. Certain provisions have required JHG, and other
provisions will or may require JHG, to change and or impose new limitations on the manner in which
it conducts business and has increased regulatory burdens and related compliance costs.
Rulemaking is still ongoing for the Dodd-Frank Act and any further actions could include new rules
and requirements that may be applicable to JHG, the effect of which could have additional adverse
consequences to JHG’s business and results of operations.
Regulators also continue to examine the different aspects of the asset management industry. For
example, in December 2014, the Chairperson of the SEC announced a comprehensive agenda for
regulatory change governing the U.S. asset management industry and directed SEC staff to develop
a five-part series of new regulations addressing the topics of enhanced portfolio reporting, liquidity
risk management, leverage and use of derivatives, adviser wind up and stress testing for funds and
advisers. This resulted in new regulations regarding enhanced portfolio reporting (the Investment
Company Reporting Modernization Act) and liquidity risk management (Liquidity Risk Management
Rule). These new industry rules can be expected to add additional reporting, operational and
compliance costs and may affect the development of new products. JHG believes these proposals
could increase operational and compliance costs. It is unclear whether any of the former SEC
Chairperson’s other initiatives will result in any new rulemaking.
The DOL has adopted regulations, effective June 9, 2017 (with the delay of some provisions until
July 1, 2019), that will treat as fiduciaries any person who provides investment advice or
recommendations to employee benefit plans (plan fiduciaries, plan participants and plan
beneficiaries) and, Individual Retirement Accounts (‘‘IRAs’’) owners. The new regulations, when fully
implemented, will have wide-ranging consequences for JHG and its U.S. distribution partners and
product lines. Under the new rules, firms and individuals who recommend financial products to
retirement investors would be required to act in the best interest of the investor and, to receive
variable compensation, would be required to enter into a contract with clients and produce complex
disclosure documents intended to highlight financial conflicts of interest that may arise from the
compensation the financial adviser receives from firms like JHG.
With the commencement of President Trump’s new administration, the regulatory moratorium
imposed by President Trump on January 20, 2017, the possibility for the repeal of aspects of the
Dodd-Frank Act, delay of portions of the DOL’s fiduciary rule and other deregulation, and other
political uncertainty in the U.S. following the 2016 Presidential and Congressional elections, the
regulatory environment in the U.S. may experience increased volatility. At this time, it is not possible
to determine the impact such reforms would have on JHG’s business.
Proposed Changes in the European Union Regulatory Framework
The EU has promulgated or is considering various new or revised directives pertaining to financial
services, including investment managers. Such directives are progressing at various stages, and
have been, are being, or will or would be implemented by national legislation in member states.
MiFID II is an example of such regulation, which seeks to promote a single market for wholesale and
retail transactions in financial instruments. MiFID II, which came into effect on January 3, 2018,
addresses the conduct of business rules for intermediaries providing investment services and the
effective, efficient and safe operation of financial markets. Key elements of MiFID II in relation to
21
investor protection measures include changes to the extent to which retrocessions may be paid and
the use of trading commissions to fund research. Such regulatory changes will have a direct impact
on the revenue of JHG’s asset management business as they reduce JHG’s ability to utilize
commissions to pay for research services which will result in operational changes and increased
costs allocated to research services.
Various regulators promulgated or are considering other new disclosure or suitability requirements
pertaining to the distribution of investment funds and other investment products or services, including
enhanced standards and requirements pertaining to disclosures made to retail investors at the point
of sale. As with the Dodd-Frank Act, the Group does not believe implementation of these directives
will fundamentally change the asset management industry or cause JHG to reconsider its
fundamental strategy, but certain provisions may require JHG to change or impose new limitations
on the manner in which it conducts business and may result in increased fee and margin pressure
from clients. They also have increased regulatory burdens and compliance costs, and will or may
continue to do so. Certain provisions, such as MiFID II, may have unintended adverse
consequences on the liquidity or structure of the financial markets. Similar developments are being
implemented or considered in other jurisdictions where JHG does business; such developments
could have similar effects.
The full impact of potential legal and regulatory changes or possible enforcement proceedings on the
JHG business cannot be predicted. Such changes have imposed, and may continue to impose, new
compliance costs and/or capital requirements, including costs related to information technology
systems, or may impact JHG in other ways that could have an adverse impact on JHG’s results of
operations or financial condition. Similarly, regulatory enforcement actions which impose significant
penalties or compliance obligations or which result in significant reputational harm could have similar
adverse effects on JHG. Moreover, certain legal or regulatory changes could require JHG to modify
its strategies, businesses or operations, and it may incur other new constraints or costs, including
the investment of significant management time and resources in order to satisfy new regulatory
requirements or to compete in a changed business environment. In recent years, certain regulatory
developments have also added pressures regarding fee levels. In addition, the 2016 presidential
election in the U.S., and recent elections in Europe, have created additional uncertainty as to the
future regulatory environment and how it may impact JHG.
To the extent that existing or future regulations affecting the sale of JHG products and services or
investment strategies cause or contribute to reduced sales or increased redemptions of its products,
impair the investment performance of its products or impact its product mix, JHG’s aggregate assets
under management, results of operations or financial condition might be adversely affected.
JHG may have increased regulatory capital requirements imposed on it by regulators, which
could negatively impact the Group’s ability to return capital or pay dividends to shareholders
or its results of operations and financial condition.
JHG’s regulators typically have broad discretion to impose increased regulatory capital requirements
on the regulated entities in their respective groups. It is possible that the regulatory capital
requirements that JHG’s business is subject to currently may be subject to change and could
increase. The imposition of increased regulatory capital requirements could negatively impact the
Group’s ability to return capital or pay dividends to shareholders, restrict its ability to make future
acquisitions or, should the Company be required to raise additional capital, negatively impact its
results of operations and financial condition.
22
Failure to comply with client contractual requirements and/or investment guidelines could
negatively impact JHG’s assets under management, results of operations and financial
condition.
Many of the investment management agreements under which JHG manages assets or provides
services will specify investment guidelines or requirements that the Group will be required to observe
in the provision of its services. Laws and regulations will also impose similar requirements for certain
accounts. A failure to follow these guidelines or requirements could result in damage to the Group’s
reputation or in clients seeking to recover losses, withdrawing their assets or terminating their
contracts, any one of which could cause revenues and profitability to decline. In addition breach of
these investment guidelines or requirements could result in regulatory investigation, censure and/or
fine. The risk of breach of such investment guidelines or requirements may be increased during the
integration process as the businesses of Janus and Henderson are combined.
The UK electorate voted in favor of a UK exit from the EU in a referendum, which could
adversely impact JHG’s business, results of operations and financial condition.
The UK Government held an ‘‘in-or-out’’ referendum in June 2016 on the UK’s membership in the
EU. The UK electorate voted in favor of a UK exit from the EU (‘‘Brexit’’). The UK is still negotiating
with EU governing bodies to determine the terms of the UK’s exit from the EU. At present, it is not
possible to predict the outcome of those negotiations or the future relationship the UK will have with
the EU. However, JHG remains headquartered in the UK and conducts business in Europe through
subsidiaries and branches in the EU as well as conducting cross-border business into the EU from
the UK. Depending on the terms of Brexit, JHG could face additional costs, including possibly
additional taxation, and other challenges, including new impediments to conducting EU business and
costs of restructuring and other changes to facilitate continuing European business activities.
UK asset management firms could lose their current level of access to the single EU market and, as
a result of Brexit, JHG may incur additional costs due to having to locate more activities within the
EU. A decline in trade between the UK and EU could affect the attractiveness of the UK as a global
investment center and could have a detrimental impact on UK economic growth. Although JHG has
a diverse international customer base, its results could be adversely affected by the market impacts
of reduced UK economic growth and greater volatility in the pound sterling. There could also be
changes to UK and EU immigration policies as a result of Brexit, which could lead to restrictions on
the free movement of investment and support staff between the UK and the EU.
Any of the foregoing factors could have a material adverse effect on JHG’s business, results of
operations or financial condition.
JHG may be subject to claims of lack of suitability.
If clients of JHG suffer losses on funds or investment mandates managed by the Group, they may
seek compensation from JHG on the basis of allegations that the funds and/or investment mandates
were not suitable for such clients or that the fund prospectuses or other marketing materials
contained material errors or were misleading. Despite the controls relating to disclosure in fund
prospectuses and marketing materials, it is possible that such action may be successful, which in
turn could adversely affect the business, financial condition and results of operations of the Group.
Any claim for lack of suitability may also result in regulatory investigation, censure and/or fine and
may damage the reputation of JHG.
23
As a foreign private issuer, JHG is not subject to certain U.S. securities law disclosure
requirements that apply to a domestic U.S. issuer, which may limit the information publicly
available to our shareholders.
As a foreign private issuer, JHG is not required to comply with all of the periodic disclosure and
current reporting requirements of the Exchange Act and therefore there may be less publicly
available information about the company than if it were a U.S. domestic issuer. For example, JHG is
not subject to the proxy rules in the U.S. and disclosure with respect to its annual meetings will be
governed by Jersey law and ASX requirements. In addition, JHG’s officers, directors and significant
shareholders are exempt from the reporting and ‘‘short-swing’’ profit recovery provisions of
Section 16 of the Exchange Act and the rules thereunder. Therefore, JHG’s shareholders may not
know on a timely basis when the company’s officers, directors and significant shareholders purchase
or sell shares.
Risks Related to Taxes
Additional tax liabilities could have a material impact on the Group’s financial condition,
results of operations and/or liquidity.
JHG operates in a number of territories, and will accordingly be subject to tax in several jurisdictions.
The tax rules to which JHG are subject to tax are complex, and the Group as a whole, must make
judgments (including certain judgments based on external advice) as to the interpretation and
application of these rules. The tax affairs of the Group will in the ordinary course be reviewed by tax
authorities, which may disagree with certain positions that JHG has taken, or that members of the
Group have taken or will take in the future, and assess additional taxes. JHG regularly assesses the
likely outcomes of such tax inquiries, investigations or audits in order to determine the
appropriateness of their respective tax provisions. However, there can be no assurance that JHG will
accurately predict the outcomes of these inquiries, investigations or audits, and the actual outcomes
of these inquiries, investigations or audits could have a material impact on the Group’s financial
results.
Changes to tax laws could adversely affect JHG.
Any change in tax law, interpretation or practice, or in the terms of tax treaties, in a jurisdiction
where the Group is subject to tax could increase the amount of tax payable by the Group. On
December 22, 2017, the Tax Cuts and Jobs Act, (the ‘‘Act’’), was signed into law. The Act enacts
broad changes to the existing U.S. federal income tax code, including reducing the federal corporate
income tax rate from 35% to 21%, amongst many other complex provisions. The ultimate impact of
such tax reforms may differ from our current estimates due to changes in interpretations and
assumptions made by us as well as the issuance of any further regulations or guidance that may
alter the operation of the U.S. federal income tax code. Various uncertainties also exist in terms of
how U.S. states and any foreign countries within which the Group operate will react to these U.S.
federal income tax reforms. The overall impact of the Act on the Group’s future financial results is
subject to uncertainties and the Group’s financial results could be adversely impacted by certain
other aspects of the Act.
The IRS may assert that JHG is to be treated as a domestic corporation or otherwise subject
to certain adverse consequences for U.S. federal income tax purposes.
Although JHG is a public limited company incorporated in Jersey, Channel Islands and tax resident
in the UK, the U.S. Internal Revenue Services (the ‘‘IRS’’) may assert that JHG, as a result of the
Merger, should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal
24
income tax purposes pursuant to section 7874 of the U.S. Internal Revenue Code of 1986, as
amended (‘‘Section 7874’’).
Section 7874 provides that if, following an acquisition of a U.S. corporation by a non-U.S.
corporation, at least 80% of the acquiring non-U.S. corporation’s stock (by vote or value) is
considered to be held by former shareholders of the U.S. corporation by reason of holding stock of
such U.S. corporation (such percentage referred to as the ‘‘ownership percentage’’ and such test
referred to as the ‘‘80% ownership test’’), and the ‘‘expanded affiliated group’’ which includes the
acquiring non-U.S. corporation does not have substantial business activities in the country in which
the acquiring non-U.S. corporation is created or organized, then the non-U.S. corporation would be
treated as a U.S. corporation for U.S. federal income tax purposes even though it is a corporation
created and organized outside the U.S.
JHG does not believe that the 80% ownership test was satisfied as a result of the Merger. If the
80% ownership test were satisfied and, as a result, JHG were treated as a U.S. corporation for U.S.
federal income tax purposes, JHG could be liable for substantial additional U.S. federal income tax
on its operations and income. Additionally, if JHG were treated as a U.S. corporation for U.S. federal
income tax purposes, non-U.S. JHG shareholders would generally be subject to U.S. withholding tax
on the gross amount of any dividends paid by JHG to such shareholders.
Section 7874 also provides that if, following an acquisition of a U.S. corporation by a non-U.S.
corporation, the ownership percentage is equal to or greater than 60% but less than 80% (such test
the ‘‘60% ownership test’’), then the U.S. corporation and its affiliates could be prohibited from using
their foreign tax credits or other U.S. federal tax attributes to offset the income or gain recognized by
reason of the transfer of property to a non-U.S. related person or any income received or accrued by
reason of a license of any property by such U.S. entity to a non-U.S. related person. Further, certain
JCG stock compensation held directly or indirectly by management prior to the Merger would be
subject to an excise tax at a rate equal to 15%. In addition, under U.S. Treasury temporary
regulations, JHG’s ability to integrate certain non-U.S. operations or to access cash earned by
non-U.S. subsidiaries may be limited. JHG does not believe that the 60% ownership test was
satisfied as a result of the Merger.
Because there is only limited guidance on the manner in which the ownership percentage is to be
determined, there can be no assurance that the IRS will agree with the position that JHG is to be
treated as a non-U.S. corporation or that JHG is not to be subject to the other adverse U.S. federal
income tax consequences associated with satisfying the 60% ownership test.
Jersey Company Risks
JHG’s ordinary shares are governed by the laws of Jersey, Channel Islands, which may not
provide the level of legal certainty and transparency afforded by incorporation in a U.S. state.
JHG is organized under the laws of Jersey, Channel Islands, a British crown dependency that is an
island located off the coast of Normandy, France. Jersey is not a member of the EU. Jersey,
Channel Islands legislation regarding companies is largely based on English corporate law
principles. However, there can be no assurance that the laws of Jersey, Channel Islands, will not
change in the future or that it will serve to protect investors in a similar fashion afforded under
corporate law principles in the U.S., which could adversely affect the rights of investors.
U.S. shareholders may not be able to enforce civil liabilities against JHG.
Certain of JHG’s directors and executive officers are not residents of the U.S. A substantial portion
of the assets of such persons are located outside the U.S. As a result, it may not be possible for
investors to effect service of process within the U.S. upon such persons.
25
Judgments of U.S. courts may not be directly enforceable outside of the U.S. and the enforcement
of judgments of U.S. courts outside of the U.S. may be subject to limitations. Investors may also
have difficulties pursuing an original action brought in a court in a jurisdiction outside the U.S. for
liabilities under the securities laws of the U.S.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
JHG has 31 offices across the UK, Europe, North America, Asia and Australia. JHG’s corporate
headquarters is located in London, where it occupies approximately 107,000 square feet on a
long-term lease which expires in 2028. JHG also has significant operations in Denver, Colorado
occupying approximately 217,000 square feet of office space in two separate locations. The two
leases in Denver, Colorado expire in 2018 and 2025. The remaining 28 offices total approximately
125,000 square feet and are all leased. In the opinion of management, the space and equipment
leased by the Group are adequate for existing operating needs.
ITEM 3. LEGAL PROCEEDINGS
From time to time, JHG may become involved in various lawsuits and legal proceedings which arise
in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse
result in these or other matters may arise from time to time that may harm JHG’s business. JHG is
currently not aware of any such legal proceedings or claims that it believes will have, individually or
in the aggregate, a material adverse effect on its AUM, financial condition or operating results.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
26
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
JHG Common Stock
Post-Merger, JHG’s common stock is traded on the New York Stock Exchange (the ‘‘NYSE’’)
(symbol: JHG). Prior to the Merger, Henderson Group plc shares were listed on the London Stock
Exchange. The following table presents the high and low sale prices as reported on the appropriate
market for each completed quarter in 2017 and 2016.
Quarter
First
Second (pre-merger)
Second (post-merger)
Third
Fourth
Quarter
First
Second
Third
Fourth
2017
High
Low
2.45
£
2.44
£
$ 33.99
$ 35.77
$ 38.47
£ 2.12
£ 2.26
$ 30.60
$ 31.60
$ 34.52
2016
High
Low
£ 3.10
£ 2.69
£ 2.54
£ 2.71
£ 2.15
£ 1.95
£ 1.98
£ 2.19
On April 26, 2017, Henderson redenominated its ordinary shares from Great British pound (‘‘GBP’’)
to USD, resulting in a change in par value from £0.125 to $0.1547 per share. Also on April 26, 2017,
the shareholders approved a 10-to-1 share consolidation, which took effect on May 30, 2017. Refer
to the share redenomination and consolidation section within Note 2 — Summary of Significant
Accounting Policies for additional information.
The following graph illustrates the cumulative total shareholder return (rounded to the nearest whole
dollar) of JHG’s common stock over the five-year period ending December 29, 2017, the last trading
day of 2017, and compares it to the cumulative total return on the Standard and Poor’s (‘‘S&P’’) 500
Index and the S&P Diversified Financials Index. The comparison assumes a $100 investment on
December 31, 2012, in JHG’s common stock and in each of the foregoing indices and assumes
27
reinvestment of dividends, if any. This data is not intended to forecast future performance of JHG’s
common stock.
S
R
A
L
L
O
D
$350
$300
$250
$200
$150
$100
$50
Dec
12
Mar
13
Jun
13
Sep
13
Dec
13
Mar
14
Jun
14
Sep
14
Dec
14
Mar
15
Jun
15
Sep
15
Dec
15
Mar
16
Jun
16
Sep
16
Dec
16
Mar
17
Jun
17
Sep
17
Dec
17
Janus Henderson Group PLC (JHG)
100 120 114 149 180 207 194 165 175 229 218 220 262 218 184 205 208 206 236 251 278
S&P 500 / Diversified Financials
SUBIND (SP637.R)
S&P 500 Index (SP50.R)
100 112 121 126 141 143 147 154 165 160 161 145 150 145 144 155 181 185 192 206 226
100
23FEB201804255736
111 114 120 132 135 142 143 151 152 152 143 153 155 158 165 171 181 187 195 208
On December 31, 2017, there were approximately 47,324 holders of record of JHG’s common stock.
Dividends
The payment of cash dividends is within the discretion of JHG’s Board of Directors and depends on
many factors, including, but not limited to, JHG’s results of operations, financial condition, capital
requirements, restrictions imposed by financing arrangements, general business conditions and legal
requirements. Dividends are subject to quarterly declaration by JHG’s Board of Directors.
The following cash dividends were declared and paid during 2017:
Dividend
per share
Date
declared
Dividends paid
(in millions)
Date paid
£ 0.0730 February 9, 2017
£ 0.0185
$ 0.3200
$ 0.3200 November 8, 2017
April 19, 2017
August 7, 2017
$ 102.6
26.0
$
63.7
$
63.7
$
May 19, 2017
May 19, 2017
September 1, 2017
December 1, 2017
JHG declared dividends of £0.104 per share during 2016.
On February 5, 2018, JHG’s Board of Directors declared a fourth quarter 2017 cash dividend of
$0.32 per share. The dividend will be paid on March 2, 2018, to shareholders of record at the close
of business on February 16, 2018.
Common Stock Purchases
Some of the Group’s executives and employees receive rights over JHG ordinary shares as part of
their remuneration arrangements and employee entitlements. These entitlements may be satisfied
28
either by the transfer of existing ordinary shares acquired on-market or by the issue of ordinary
shares. The following table presents JHG ordinary shares purchased on-market by month during
2017 in satisfaction of employee awards and entitlements.
Average
price paid per
share
Total number of shares
purchased as part of
publicly announced
programs
Approximate dollar value of
shares that may yet
be purchased under the
programs (end of month)
Period
January
February
March
April
May
June
July
August
September
October
November
December
Total
Total
number of
shares
purchased
1,046,305
1,126,364
7,898,665
2,463,300
40,398
165,577
754
94,394
19,711
9,595
104,508
16,775
$
2.36
2.28
2.29
2.41
30.85
26.80
25.15
26.99
33.15
34.07
27.52
37.28
12,986,346
$
3.22
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
At the Annual General Meeting held on April 26, 2017, shareholders authorized JHG to make
on-market purchases of up to 10% of the issued share capital of the Group at completion of the
Merger. Shareholders will be asked to renew this authority at the 2018 Annual General Meeting. The
Group did not make any on-market or off-market share purchases during 2017 in connection with
any share buy-back program and as at the date of this report, there were no current on-market or
off-market buy-backs of the Group’s securities.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data below was derived from the Group’s consolidated financial statements
and should be read in conjunction with Part II, Item 7, Management’s Discussion and Analysis of
Financial Condition and Results of Operations of JHG, and Part II, Item 8, Financial Statements and
Supplementary Data. The selected financial data presents four years of data prepared in accordance
with GAAP. Selected financial data for 2013 is only available in International Financial Reporting
29
Standards (‘‘IFRS’’) and cannot be provided on a restated basis without unreasonable effort or
expense. The Group has limited ability to convert the data from IFRS to GAAP.
Consolidated income statement:
Operating revenues
Operating expenses
Operating income
Interest expense (2)
Investment gains (losses), net (3)
Other non-operating income (expenses), net
Income tax benefit (provision) (4)
Net income
Net loss (income) attributable to
noncontrolling interests (5)
Year ended December 31,
2017 (1)
2016
2015
2014
(dollars in millions, except per share data and
operating data)
$ 1,743.7
1,301.4
$
442.3
(11.9)
18.0
(1.0)
211.0
658.4
999.9
767.8
232.1
(6.6)
(11.7)
(1.9)
(34.6)
177.3
$ 1,155.1
837.8
$ 1,105.7
807.2
317.3
(20.1)
39.7
0.6
(6.1)
331.4
298.5
(19.3)
285.9
(1.5)
(52.6)
511.0
(2.9)
11.7
(1.6)
(7.7)
Net income attributable to JHG
$
655.5
$
189.0
$
329.8
$
503.3
Earnings per share attributable to JHG
common shareholders:
Diluted
Weighted-average diluted common
shares outstanding (in millions)
Dividends declared and paid per share:
GBP
USD
Consolidated balance sheet (as of
December 31):
Total assets
Long-term debt (including current portion)
Deferred income taxes, net
Other non-current liabilities
Redeemable noncontrolling interests (6)
Cash flow:
Cash flows provided by operating activities
Operating data (in billions):
Ending AUM
Average AUM
$
3.93
$
1.66
$
2.78
$
4.21
162.3
1,111.1
1,154.5
1,154.4
£ 0.0915
$ 0.6400
£ 0.1040
$
— $
£ 0.0950
£ 0.0845
—
— $
$ 7,272.7
$ 2,433.4
$ 2,835.2
$ 2,840.5
$
$
$
$
$
$
$
379.2
752.6
99.6
190.3
444.1
370.8
262.1
$
$
$
$
$
$
$
— $
$
$
70.7
39.0
158.0
235.1
124.7
129.4
$
$
$
$
220.9
86.3
49.4
82.9
388.9
135.6
127.7
$
$
$
$
$
$
$
233.0
87.5
52.6
4.4
226.8
126.5
121.2
(1) Data presented for the year ended December 31, 2017, includes the impact of the Merger
starting from the Closing Date and thus is not comparable to results presented in the prior
periods, which only relate to Henderson. Refer to Item 8 — Financial Statements and
Supplementary Data, Note 4 — Acquisitions for additional information on the Merger.
(2) The Group repaid its 7.25% Senior Notes due 2016 (the ‘‘2016 Senior Notes’’) in March 2016
thus interest expense decreased in 2016 compared to 2015 and 2014.
30
(3) The Group sold its property business for a gain of $245.3 million and a share in a joint venture
in 2014.The Group’s share in the joint venture was sold in 2015 and an $18.9 million gain was
recognized.
(4) The Group’s income tax provision in 2015 was extraordinarily low primarily due to one-off tax
benefits, which included a reduction in the UK tax rate, tax benefits arising from the exercise of
stock-based compensation awards and the settlement of tax positions with the UK tax
authorities. The Group’s income tax provision in 2017 includes a one-time tax benefit of
$340.7 million related to new U.S. tax legislation.
(5) The Group’s net loss (income) attributable to noncontrolling interests in 2015 and 2014 is
primarily due to its investment in private equity seed investments.
(6) The increase in redeemable noncontrolling interest in 2016 is primarily due to an increase in
third-party ownership in seed capital.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF JHG
Business Overview
JHG is an independent global asset manager, specializing in active investment across all major
asset classes. JHG actively manages a broad range of investment products for institutional and retail
investors across five capabilities: Equities, Quantitative Equities, Fixed Income, Multi-Asset and
Alternatives.
On the Closing Date, JCG and Henderson completed a merger of equals. As a result of the Merger,
JCG and its consolidated subsidiaries became subsidiaries of Henderson, which was renamed to
Janus Henderson Group plc. For purposes of this section, each reference to the ‘‘Group’’ or ‘‘JHG’’
refers to Janus Henderson Group plc and its consolidated subsidiaries.
Segment Considerations
JHG is a global asset manager and manages a range of investment products, operating across
various product lines, distribution channels and geographic regions. However, information is reported
to the chief operating decision-makers, the Co-Chief Executive Officers (‘‘Co-CEOs’’), on an
aggregated basis. Strategic and financial management decisions are determined centrally by the
Co-CEOs and, on this basis, the Group operates as a single segment investment management
business.
Revenue
Revenue primarily consists of management fees and performance fees. Management fees are
generally based upon a percentage of the market value of AUM and are calculated using either the
daily, month-end or quarter-end average asset balance in accordance with contractual agreements.
Accordingly, fluctuations in the financial markets have a direct effect on the Group’s operating
results. Additionally, AUM may outperform or underperform the financial markets and therefore may
fluctuate in varying degrees from that of the general market.
Performance fees are specified in certain fund and client contracts and are based on investment
performance either on an absolute basis or compared to an established index over a specified
period of time. This is often subject to a hurdle rate. Performance fees are recognized at the end of
the contractual period (typically monthly, quarterly or annually) if the stated performance criteria are
achieved. Certain fund and client contracts allow for negative performance fees where there is
underperformance against the relevant index.
31
2017 SUMMARY
2017 Highlights
• Completion of the Merger with JCG on May 30, 2017. Integration efforts are ahead of
expectations, setting the foundations for future growth.
• Improvements to investment performance and minimal disruption to clients and investment
teams.
• Increase of AUM to $370.8 billion, up 16% from December 31, 2016 on a pro forma basis.
• Strong revenue and profitability growth with significant improvement in operating margin. 2017
diluted earnings per share of $3.93, or $2.48 on a pro forma adjusted basis. Refer to the
Non-GAAP Financial Measures section for information on adjusted non-GAAP figures.
• Forecasted cost synergies of $110 million at time of merger have since been raised to
$125 million, with approximately $90 million in annualized run rate cost synergies realized as
of December 31, 2017.
• Announcement of expansion into the U.S. of our long-standing strategic partnership with BNP
Paribas Securities Services (‘‘BNP Paribas’’), supporting the Group’s global operating model.
Financial Summary
Results are reported on a GAAP basis. Adjusted non-GAAP figures are presented in the Non-GAAP
Financial Measures section.
Revenue for the year ended December 31, 2017 was $1,743.7 million, an increase of $743.8 million,
or 74%, from December 31, 2016. This increase was driven primarily by legacy JCG revenues of
$680.8 million in 2017. Average AUM (excluding JCG) increased by 6% and positively affected
management fees during 2017, compared to 2016. Performance fees improved in 2017 by
$55.4 million compared to 2016, which contributed to the increase in revenue. These increases are
partially offset by lower average management fee margins and adverse foreign currency translation.
Total operating expenses for the year ended December 31, 2017 were $1,301.4 million, an increase
of $533.6 million, or 69%, compared to operating expenses for the year ended December 31, 2016.
Legacy JCG operations contributed $405.0 million to operating expenses in 2017 and total deal and
integration costs in 2017 contributed $126.2 million.
Operating income for the year ended December 31, 2017, was $442.3 million, an increase of
$210.2 million, or 91%, compared to the year ended December 31, 2016. The Group’s operating
margin was 25.4% in 2017, compared to 23.2% in 2016. Legacy JCG operations contributed
$275.8 million to operating income in the year ended December 31, 2017. This was partially offset
by an increase of $110.5 million of deal and integration costs related to the Merger and a reduction
in expenditures year-over-year as the Group concentrated on integration.
Net income attributable to JHG in the year ended December 31, 2017 was $655.5 million, an
increase of $466.5 million, or 247%, compared to the year ended December 31, 2016. During the
year ended December 31, 2017, the Group recorded a one-time tax benefit of $340.7 million due to
changes in U.S. tax laws. Legacy JCG operations contributed $173.1 million to net income
attributable to JHG in 2017. Performance fees improved in 2017 and contributed $55.4 million to the
year-over-year change. These increases were partially offset by deal and integration costs related to
the Merger.
32
Investment Performance of Assets Under Management
The following table is a summary of investment performance as of December 31, 2017:
Percentage of assets under management outperforming benchmark (1)
1 year
3 years
5 years
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total Group
(1)
Includes JCG performance.
Assets Under Management
64%
93%
90%
86%
93%
76%
67%
60%
98%
95%
87%
27%
87%
89%
76% 100%
79%
66%
The Group’s AUM as of December 31, 2017, was $370.8 billion, an increase of $246.1 billion, or
197% from December 31, 2016, driven primarily by net acquisitions of $205.8 billion representing
JCG’s AUM of $206.5 billion, offset by disposals of $0.7 billion. Positive market movements in the
period contributed $31.7 billion and the weakening of the USD resulted in favorable foreign
exchange movements of $11.6 billion. This was partially offset by net outflows of $3.0 billion, which
includes flows from JCG from the Closing Date.
During 2017, the USD weakened against all major currencies. As of December 31, 2017,
approximately 36% of the Group’s AUM was non-USD denominated, resulting in a favorable
currency effect, particularly in products exposed to GBP.
JHG’s ETNs are not included within the AUM as JHG is not the named adviser or subadviser to
ETNs. ETN assets totaled $4.0 billion as of December 31, 2017.
Asset and flows by capability for the years ended December 31, 2017, 2016 and 2015 (includes
JCG activity from the Closing Date), are as follows (in billions):
Closing AUM
Dec. 31,
2016 (1)
Sales Redemptions (2)
Net sales
(redemptions) Markets FX (3)
Acquisitions &
disposals
Closing AUM
Dec. 31,
2017
By capability
Equities
Fixed Income
Quantitative
Equities
Multi-Asset
Alternatives
$ 63.6
34.7
$ 32.6
17.2
$ (32.6)
(15.7)
$ —
1.5
$ 21.2 $ 5.2
3.8
1.5
$ 99.7
38.6
$ 189.7
80.1
—
9.0
17.4
1.6
2.8
7.7
(5.2)
(3.8)
(7.6)
(3.6)
(1.0)
0.1
5.4
2.7
0.9
0.1
0.9
1.6
48.0
20.0
(0.5)
49.9
31.6
19.5
TOTAL
$ 124.7
$ 61.9
$ (64.9)
$ (3.0)
$ 31.7 $ 11.6
$ 205.8
$ 370.8
33
Closing AUM
Dec. 31,
2015 (1)
Sales Redemptions (2)
Net sales
(redemptions) Markets FX (3)
Acquisitions &
disposals
Closing AUM
Dec. 31,
2016 (1)
$ 68.6
36.5
10.4
20.1
$ 135.6
$ 16.2
10.6
0.6
7.7
$ 35.1
$ (19.9)
(10.5)
(1.4)
(8.5)
$ (40.3)
$ (3.7)
0.1
(0.8)
(0.8)
$ (5.2)
$ 3.0
2.7
1.1
—
$ (4.3)
(4.6)
(1.7)
(1.9)
$ 6.8
$ (12.5)
$ —
—
—
—
$ —
$ 63.6
34.7
9.0
17.4
$ 124.7
Closing AUM
Dec. 31,
2014 (1)
Sales Redemptions (2)
Net sales
(redemptions) Markets FX (3)
Acquisitions &
disposals
Closing AUM
Dec. 31,
2015 (1)
$ 60.7
29.9
11.3
24.6
$ 126.5
$ 22.8
13.8
1.0
10.5
$ 48.1
$ (16.1)
(11.4)
(1.5)
(6.2)
$ (35.2)
$ 6.7
2.4
(0.5)
4.3
$ 12.9
$ 3.9 $ (2.8)
(1.8)
(0.6)
(0.9)
(0.2)
0.2
0.4
$ 4.3 $ (6.1)
$ 0.1
6.2
—
(8.3)
$ (2.0)
$ 68.6
36.5
10.4
20.1
$ 135.6
By capability
Equities
Fixed Income
Multi-Asset
Alternatives
TOTAL
By capability
Equities
Fixed Income
Multi-Asset
Alternatives
TOTAL
(1) AUM as of December 31, 2016, 2015 and 2014 has been reclassified between capabilities following the completion of
the Merger.
(2) Redemptions include the impact of client transfers which could cause a positive balance on occasion.
(3)
FX reflects movements in AUM resulting from changes in foreign currency rates as non-USD denominated AUM is
translated into USD.
Closing Assets Under Management
The following table presents the closing AUM, split by client type and client location as of
December 31, 2017 (in billions):
By client type
Intermediary
Institutional
Self-directed
Total
By client location
Americas
EMEA
Asia-Pacific
Total
Closing AUM
December 31, 2017
$ 164.1
144.7
62.0
$ 370.8
Closing AUM
December 31, 2017
$ 192.8
120.2
57.8
$ 370.8
Valuation of Assets Under Management
The fair value of AUM is based on the value of the underlying cash and investment securities of the
funds, trusts and segregated mandates. A significant proportion of these securities are listed or
quoted on a recognized securities exchange or market and are regularly traded thereon; these
investments are valued based on unadjusted quoted market prices. Investments including, but not
limited to, over-the-counter derivative contracts, (which are dealt in or through a clearing firm),
exchange or financial institution will be valued by reference to the most recent official settlement
price quoted by the appointed market vendor and in the event no price is available from this source,
34
a broker quotation may be used. Physical property held is valued monthly by a specialist
independent appraiser.
When a readily ascertainable market value does not exist for an investment, the fair value is
calculated based on the expected cash flows of its underlying net asset base, taking into account
applicable discount rates and other factors. Judgment is used to ascertain if a formerly active market
has become inactive and in determining fair values when markets have become inactive. The Fair
Value Pricing Committee is responsible for determining or approving these unquoted prices, which
are reported to those charged with governance of the funds and trusts. For funds that invest in
markets that are closed at their valuation point, an assessment is made daily to determine whether a
fair value pricing adjustment is required to the fund’s valuation. This may be due to significant
market movements in other correlated open markets, scheduled market closures or unscheduled
market closures as a result of natural disaster or government intervention.
For legacy Henderson funds, third-party administrators hold a key role in the collection and validation
of prices used in the valuation of the securities. Daily price validation is completed using techniques
such as day-on-day tolerance movements, invariant prices, excessive movement checks and intra-
vendor tolerance checks. The JHG Data Management Team performs oversight of this process and
completes annual due diligence on the processes of third parties.
For legacy JCG funds, the Group performs a number of procedures to validate the pricing received
from third-party providers. For actively traded equity securities, prices are received daily from both a
primary and secondary vendor. For fixed income securities, prices are received daily from a primary
vendor and weekly from a secondary vendor. Prices from the primary and secondary vendors are
compared to identify any discrepancies. In the event of a discrepancy, a price challenge may be
issued to both vendors. Securities with significant day to day price changes require additional
research, which may include a review of all news pertaining to the issue and issuer and any
corporate actions. All fixed income prices are reviewed by JHG’s fixed income trading desk to
incorporate market activity information available to JHG’s traders. In the event the traders have
received price indications from market makers for a particular issue, this information is transmitted to
the pricing vendors.
JHG leverages the expertise of its fund management teams across the business to cross-invest
assets and create value for its clients. Where cross investment occurs, assets and flows are
identified and the duplication is removed.
Results of Operations
Operating Revenues
Revenue (in millions):
Management fees
Performance fees
Shareowner servicing fees
Other revenue
Year ended December 31,
2017
2016
2015
2017 vs.
2016
2016 vs.
2015
$ 1,465.1
103.9
71.5
103.2
$ 867.8
54.8
—
77.3
$
914.7
150.8
68.8%
(5.1)%
89.6% (63.7)%
— n/m*
n/m*
89.6
33.5% (13.7)%
Total revenue
$ 1,743.7
$ 999.9
$ 1,155.1
74.4% (13.4)%
*
n/m — Not meaningful
35
Management fees
Management fees increased by $597.3 million, or 68.8%, during the year ended December 31, 2017,
compared to the same period in 2016 with the inclusion of seven months of legacy JCG
management fees of $584.9 million as the largest driver. Average AUM (excluding JCG) increased
by 6% and positively affected management fees during the year ended December 31, 2017,
compared to the same period in 2016. Positive market movements contributed $80.2 million to the
increase in management fees over the year. These increases are partially offset by the effect of
adverse foreign currency translations ($11.0) million, net outflows causing a decrease in
management fees ($50.3) million, and lower average gross fee margins. Lower margins are primarily
from a change in product mix (i.e., switch in share classes as a result of the Retail Distribution
Review within Europe to a lower fee share class), and are partially offset by a decrease in
distribution expenses.
Management fees decreased by $46.9 million, or (5.1%), from 2015 to 2016, despite average AUM
increasing by 1.3% year-over-year. Although average institutional AUM increased by 6.1%, average
retail AUM decreased by 1.5% resulting in a mix shift from higher margin retail fees to lower margin
institutional fees. In addition, management fee margins decreased due to the share class change as
explained above. As a result, distribution costs also fell during the period.
The impact of foreign currency fluctuations, markets and 2016 outflows caused a net decrease in
management fees, which was partially offset by a net favorable full year impact of 2015 inflows and
the full year favorable impact of acquisitions.
Performance fees
Performance fees are derived across a number of product ranges. Pooled fund and segregated
mandate performance fees are recognized on a quarterly or annual basis, while mutual fund
performance fees are recognized on a monthly basis. Performance fees by product type consisted of
the following for the years ended December 31, 2017, 2016 and 2015 (in millions):
Year ended December 31,
2017
2016
2015
2017 vs.
2016
2016 vs.
2015
Performance fees (in millions):
SICAVs
UK OEICs & Unit Trusts
Offshore Absolute Return
Segregated Mandates
Private Accounts
Investment Trusts
Mutual Funds
Other
Total performance fees
*
n/m — Not meaningful
$
49.1
22.8
8.2
17.8
13.2
11.8
(19.5)
0.5
$ 18.1
8.6
13.6
8.2
—
4.6
—
1.7
$ 72.7
18.1
38.1
5.9
—
14.4
—
1.6
171.3% (75.1)%
165.1% (52.5)%
(39.7)% (64.3)%
117.1% 39.0%
n/m*
156.5% (68.1)%
n/m*
(70.6)% 6.3%
n/m*
n/m*
$ 103.9
$ 54.8
$ 150.8
89.6% (63.7)%
Performance fees increased by $49.1 million, or 89.6%, during the year ended December 31, 2017,
compared to the same period in 2016. The increase for the year ended December 31, 2017,
compared to the same period in 2016, was primarily due to an increase in SICAV performance fees.
Performance fees for UK OEICs and Unit Trusts also increased in the period. These increases are
partially offset by $6.3 million of net negative performance fees related to legacy JCG.
36
For the year ended December 31, 2016, performance fees decreased by $96.0 million compared to
2015, primarily due to lower SICAV fees which for long-only funds typically only pay out a
performance fee if relative and absolute performance is positive. Offshore Absolute Return fees
decreased by 64.3% in 2016 compared to 2015 primarily due to lower performance fees on pooled
hedge funds.
The following table outlines performance fees by product type and includes information on fees
earned, number of funds generating performance fees, AUM generating performance fees, number
of funds eligible to earn performance fees, AUM with an un-crystalized performance fee,
performance fee participation rate, performance fee frequency and performance fee methodology
(dollars in millions, except where noted):
Segregated
Mandates /
Managed
Offshore CDO / Private
Absolute
Return
Funds
Equity /
Property /
Other
UK OEICs &
Unit Trusts
SICAVs
Investment Australia U.S. Mutual
MIS
Trusts
Funds
Performance fees — Year ended December 31,
2017
$ 22.8
$ 49.2
$ 8.2
$ 31.4
$ 11.8
$ —
$ (19.5)
Performance fees — Year ended December 31,
2016
$ 8.6
$ 18.1
$ 13.6
$ 9.2
$ 4.6
$ 0.7
$ —
Performance fees — Year ended December 31,
2015
$ 18.1
$ 72.7
$ 38.1
$ 7.5
$ 14.4
$ —
$ —
Number of funds generating performance fees
in FY17 (1)
Number of funds generating performance fees
in FY16 (1)
Number of funds generating performance fees
in FY15 (1)
AUM December 31, 2017 generating FY17
performance fees (in billions)
AUM December 31, 2016 generating FY16
performance fees (in billions)
AUM December 31, 2015 generating FY15
performance fees (in billions)
Number of funds eligible to earn performance
fees at December 31, 2017
Number of funds eligible to earn performance
fees at December 31, 2016
Number of funds eligible to earn performance
fees at December 31, 2015
AUM December 31, 2017 with an un-crystallized
performance fee at December 31, 2017,
vesting in 2018 (in billions) (2)
AUM December 31, 2016 with an un-crystallized
performance fee at December 31, 2016,
vesting in 2017 (in billions) (2)
AUM December 31, 2015 with an un-crystallized
performance fee at December 31, 2015,
vesting in 2016 (in billions) (2)
Performance fee participation rate percentage (3)
Performance fee frequency
Performance fee methodology (4)
3
3
5
18
14
13
24
16
22
72
14
30
5
3
8
—
2
—
13
—
—
$ 3.1
$ 11.7
$ 1.9
$ 36.3
$ 2.8
$ —
$ 43.0
$ 2.4
$ 5.2
$ 1.4
$ 4.7
$ 1.1
$ 0.1
$ —
$ 1.9
$ 12.4
$ 2.3
$ 5.7
$ 3.1
$ —
$ —
4
4
5
25
26
26
21
22
29
76
45
54
8
8
8
2
2
2
19
—
—
$ 3.5
$ 11.9
$ 0.3
$ n/a
$ 1.8
$ —
$ n/a
$ 2.3
$ 3.1
$ 1.3
$ n/a
$ 0.6
$ n/a
$ n/a
$ 1.4
$ 7.6
15%-20% 10%-20% 10%-20%
$ 1.9
$ n/a
5%-28%
$ 1.6
$ —
15%
15%
$ n/a
+/(cid:31)15%
Annually
and
Quarterly
Quarterly
Relative /
Absolute
Absolute
Relative
plus HWM plus HWM plus HWM
Annually
Quarterly,
Semi-
Annually and
Annually
Bespoke
Annually
Semi-
Annually
Monthly
Relative
Relative
plus HWM plus HWM plus HWM
Relative
(1)
(2)
(3)
(4)
For Offshore Absolute Return Funds this excludes funds earning a performance fee on redemption and only includes those with a period
end crystallization date.
Reflects the total AUM of all funds with a Performance Fee opportunity at any point in the relevant year.
Participation rate reflects JHG’s share of outperformance.
Relative performance is measured versus applicable benchmarks, and is subject to a High Water Mark (HWM) for relevant funds.
37
Shareowner servicing fees
Shareowner servicing fees are primarily composed of mutual fund servicing fees, such as transfer
agent fees. The activity in the year ended December 31, 2017 relates to legacy JCG.
Adoption of updated revenue recognition guidance, particularly relating to principal-agent
considerations, will significantly increase shareowner servicing fees in 2018 and onward. The Group
anticipates recognizing approximately $97 million in additional shareowner servicing fees on an
annualized basis, with a corresponding amount recognized as distribution expenses based on
respective annualized figures in 2017. For further discussion, refer to Item 8. Financial Statements
and Supplementary Data, Note 3 — Recent Accounting Pronouncements.
Other revenue
Other revenue increased by $25.9 million during the year ended December 31, 2017, compared to
the year ended December 31, 2016. Legacy JCG was the largest driver contributing $30.7 million to
the year ended December 31, 2017. The increase due to legacy JCG was partially offset by
unfavorable foreign currency translation and a $2.4 million reduction in relation to OEIC trading,
primarily due to reduced trading in the UK Property Fund.
Other revenue decreased $12.3 million during the year ended December 31, 2016, compared to
2015, of which $10.1 million is due to the adverse impact of translation of non-USD denominated
income.
Operating Expenses
Operating expenses (in millions):
Employee compensation and benefits
Long-term incentive plans
Distribution expenses
Investment administration
Marketing
General, administrative and occupancy
Depreciation and amortization
Year ended December 31,
2017
2016
2015
2017 vs.
2016
2016 vs.
2015
$
543.3
150.8
277.3
43.8
31.2
202.2
52.8
$ 273.5
87.5
209.1
46.2
13.9
109.8
27.8
$ 317.1
85.9
235.6
48.3
14.2
113.3
23.4
98.6% (13.7)%
72.3%
1.9%
32.6% (11.2)%
(5.2)% (4.3)%
124.5% (2.1)%
84.2% (3.1)%
89.9% 18.8%
Total operating expenses
$ 1,301.4
$ 767.8
$ 837.8
69.5% (8.4)%
Employee compensation and benefits
During the year ended December 31, 2017, employee compensation and benefits increased
$269.8 million compared to the year ended December 31, 2016. This increase was primarily driven
by the inclusion of legacy JCG, which contributed $190.9 million to the year ended December 31,
2017. Deal and integration costs of $47.5 million for the year ended December 31, 2017, also
contributed to the year-over-year variance. The year ended December 31, 2017 was also impacted
by favorable foreign currency translation of $10.7 million.
During the year ended December 31, 2016, employee compensation and benefits decreased
$43.6 million, compared to 2015, which was primarily driven by the favorable impact of translation of
non-USD denominated expenses of $35.9 million. Fixed staff costs increased by $19.4 million,
primarily due to a full-year impact of the Perennial acquisition offset by lower bonus costs of
$27.1 million largely reflecting weaker business performance.
38
Long-term incentive plans
Long-term incentive plans increased $63.3 million during the year ended December 31, 2017,
compared to the year ended December 31, 2016. The increase was primarily driven by legacy JCG,
which contributed $52.4 million in the year ended December 31, 2017. In addition, deal and
integration costs of $17.0 million for the year ended December 31, 2017 contributed to the
year-over-year variance. These increases were offset by a $4.4 million decrease in social security
expenses, driven by lower vesting outcome for the Long-Term Incentive Plan (‘‘LTIP’’) 2014, and
vesting of the final Employee Share Ownership Plan (‘‘ESOP’’) matching award in the previous year.
Favorable foreign currency translation of $3.4 million also benefited the year ended December 31,
2017.
Long-term incentive plans increased by $1.6 million from 2015 to 2016. The increase was primarily
due to $11.3 million of higher amortization of bonus deferrals which were in turn a function of
increasing bonus awards throughout the last three years. This was partially offset by lower social
security costs on award vestings as a result of a decrease in share price and by the favorable
impact of translation of non-USD denominated expense of $9.7 million.
Distribution expenses
Distribution expenses are paid to financial intermediaries for the distribution of JHG’s retail
investment products and are typically calculated based on the amount of the intermediary sourced
AUM. For the year ended December 31, 2017, distribution expenses increased by $68.2 million. The
increase was primarily driven by JCG, which contributed $80.4 million in the year ended
December 31, 2017. The remaining change for the year ended December 31, 2017, was due to the
UK OEIC and SICAV product mix, as discussed in the Management fees section.
For the year ended December 31, 2016, distribution expenses decreased by $26.5 million, which
was mainly due to product mix and lower average Retail AUM, partially offset by one-time
adjustments.
Adoption of updated revenue recognition guidance, particularly relating to principal-agent
considerations, will significantly increase distribution expenses in 2018 and onward. The Group
anticipates recognizing approximately $97 million in additional distribution expense on an annualized
basis, with a corresponding amount recognized as shareowner services based on respective
annualized figures in 2017. For further discussion, refer to Item 8. Financial Statements and
Supplementary Data, Note 3 — Recent Accounting Pronouncements.
Investment administration
Investment administration expenses, which represent back-office operations, decreased $2.4 million
during the year ended December 31, 2017, compared to the same period in 2016. The decrease
was primarily due to favorable foreign currency translation of $1.8 million for the year ended
December 31, 2017.
On October 19, 2017, the Group signed an agreement with BNP Paribas which is expected to close
in March 2018. Under the agreement, BNP Paribas will assume responsibility for the majority of
JHG’s back-office (including fund administration and fund accounting), middle-office and custody
functions in the U.S. As a result of the agreement, the Group currently estimates investment
administration expense savings of approximately $8 million in 2018.
Marketing
Marketing expenses for the year ended December 31, 2017, increased by $17.3 million, compared
to the year ended December 31, 2016. The increase was primarily driven by legacy JCG and
39
Merger-related costs. Expenses in relation to the Merger increased $5.5 million during the year
ended December 31, 2017. Legacy JCG contributed $13.0 million to the year ended December 31,
2017. These increases were partially offset by favorable foreign currency translation for the year
ended December 31, 2017.
General, administrative and occupancy
General, administrative and occupancy expenses increased by $92.4 million during the year ended
December 31, 2017, compared to the year ended December 31, 2016. Deal and integration costs
related to the Merger, including legal and advisory fees, contributed $49.6 million to the year ended
December 31, 2017. Legacy JCG (exclusive of deal and integration costs) contributed $56.9 million
to the year ended December 31, 2017. The year ended December 31, 2017, benefited from a
$6.9 million credit in relation to a sales tax refund dating from April 2013 and a $4.3 million favorable
foreign currency translation.
During the year ended December 31, 2016, general, administrative and occupancy decreased by
$3.5 million compared to 2015. The Group was impacted by foreign currency translation in the
amount of $19.6 million and other favorable variances included one-off legal and professional costs
incurred in 2015. This was offset by deal costs associated with the Merger and increases in
information technology costs.
In 2018, the Group will begin incurring research costs associated with MiFID II. MiFID II is legislative
framework that is intended to strengthen investor protection and improve the functioning of financial
markets making them more efficient, resilient and transparent. Currently, the Group’s estimate of
2018 MiFID II research costs is approximately $19 million.
Depreciation and amortization
Depreciation and amortization expense increased by $25.0 million during the year ended
December 31, 2017, compared to 2016. This was primarily due to amortization of intangibles
recognized as a result of the Merger.
During the year ended December 31, 2016, amortization and depreciation expense increased by
$4.4 million compared to 2015, primarily due to the impairment of intangibles in relation to contracts
from the disposal of the Volantis UK Small Cap alternative team assets in 2017.
Non-Operating Income and Expenses
Non-operating income and expenses (in
millions):
Interest expense
Investment gains (losses), net
Other non-operating income (expenses), net
Income tax provision
Interest expense
Year ended December 31,
2017
2016
2015
2017 vs.
2016
2016 vs.
2015
$ (11.9) $
18.0
(1.0)
211.0
(6.6) $ (20.1)
39.7
0.6
(6.1)
(11.7)
(1.9)
(34.6)
80.3%
(67.2)%
253.8% (129.5)%
(47.4)% 416.7%
467.2%
709.8%
Interest expense increased by $5.3 million during the year ended December 31, 2017, compared to
the year ended December 31, 2016. As a result of the Merger, the Group recognized interest
expense on the 0.750% Convertible Senior Notes due 2018 (the ‘‘2018 Convertible Notes’’) with a
principal value of $116.6 million and the 4.875% Senior Notes due 2025 (‘‘2025 Senior Notes’’) with
a principal value of $300.0 million.
40
During the year ended December 31, 2016, interest expense decreased by $13.5 million compared
to 2015, following the repayment of the 2016 Senior Notes in March 2016 and a favorable
translation impact of $2.3 million.
Investment gains (losses), net
The components of investment gains (losses), net for the years ended December 31, 2017, 2016
and 2015, are as follows (in millions):
Investment gains (losses), net (in millions):
Gain (loss) on investment securities and
derivatives
Gain on sale of equity method investments
Gain on sale of Volantis
Other
Year ended December 31,
2017
2016
2015
2017 vs.
2016
2016 vs.
2015
$
4.0
—
10.2
3.8
$ (12.4) $ 18.3
18.9
—
2.5
—
—
0.7
(132.3)% (167.8)%
n/m*
n/m*
442.9%
n/m*
n/m*
(72.0)%
Investment gains (losses), net
$ 18.0
$ (11.7) $ 39.7
253.8% (129.5)%
*
n/m — Not meaningful
Investment gains (losses), net improved $29.7 million during the year ended December 31, 2017
compared to 2016. Legacy JCG contributed $1.8 million to the year ended December 31, 2017. The
year ended December 31, 2017, was also impacted by the sale of Volantis, which resulted in the
recognition of a $10.2 million gain. The remaining variance for the year ended December 31, 2017 is
due to fair value adjustments associated with investment securities and derivatives.
Investment gains in 2015 primarily represent a gain on sale of equity method investments of
$18.9 million which related to the disposal of the TIAA Henderson Real Estate Limited (‘‘THRE’’)
joint venture and a gain on sale of available for sale investments of $18.3 million on the disposal of
the property fund seed capital investments. In addition in 2016, the Group recorded an unrealized
loss on a legacy Asian private equity investment of $17.7 million, mainly as a result of macro-
economic issues in India.
Income Tax Provision
The Group’s effective tax rates for the years ended December 31, 2017, 2016 and 2015, are as
follows:
Effective tax rate
Year ended December 31,
2017
2016
2015
(47.1)% 16.3% 1.8%
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the ‘‘Act’’). The Act includes a
number of changes to existing U.S. tax laws that impact JHG, most notably a permanent reduction
in the U.S. corporate income tax rate from 35 percent to 21 percent for tax years beginning after
December 31, 2017. In accordance with ASC Topic 740, Income Taxes, JHG recognized the income
tax effects of the Act in its 2017 financial statements, the reporting period in which the Act was
signed into law. As a result of this rate change, JHG’s deferred tax assets and liabilities were
revalued to account for the estimated future impact of the lower federal corporate income tax rate.
The revaluation resulted in a non-cash tax benefit of $345.4 million. In addition, an estimate of the
one-time mandatory tax on earnings of certain foreign subsidiaries that were previously tax deferred
of $4.7 million was recorded. These estimates are determined in accordance with recently issued
41
SEC issued guidance provided in Staff Accounting Bulletin No. 118, Income Tax Accounting
Implications of the Tax Cuts and Jobs Act (‘‘SAB 118’’) allowing taxpayers to record a reasonable
estimate of the impact of the U.S. legislation. In accordance with SAB 118, the actual impact from
the Act may vary from the estimated amounts.
The benefit of the Act’s rate change in 2017 is partially offset by the inclusion of the U.S. based
JCG entities for the seven months after the Merger at the higher U.S. tax rates than the UK statutory
rate, the predominant driver for 2016.
For the year ended December 31, 2016, the Group’s effective tax rate increased to 16.3% from
1.8% for the year ended December 31, 2015. The increase in the effective tax rate was due to a
number of 2015 tax benefits that either did not occur in 2016 or did not occur at the same level in
2016 and changes in the Group’s global mix of pre-tax profits and business growth in higher tax
jurisdictions.
During 2016, tax legislation enacted in the UK to reduce the corporation tax rate in future years
resulted in a $4.0 million net non-cash benefit (2015: $8.1 million benefit) related to the revaluation
of certain deferred tax assets and liabilities. The UK corporation tax rate decreased from 20% to
19% with effect from April 1, 2017 and then to 17% with effect from April 1, 2020.
The Group anticipates its annual statutory tax rate will be in the 21% to 23% range in 2018.
Non-GAAP Financial Measures
JHG reports its financial results in accordance with GAAP. However, in the opinion of JHG
management, the profitability of the Group and its ongoing operations is best evaluated using
additional non-GAAP financial measures. Management uses these performance measures to
evaluate the business and adjusted values are consistent with internal management reporting.
42
JHG pro forma results
The table below reflects the JHG pro forma combined results for the year ended December 31,
2017, as though the Merger had occurred on January 1, 2017.
Revenue:
Management fees
Performance fees
Shareowner servicing fees
Other revenue
Total revenue
Operating expenses:
Employee compensation and benefits
Long-term incentive plans
Distribution expenses
Investment administration
Marketing
General, administrative and occupancy
Depreciation and amortization
Total operating expenses
Operating income
Interest expense
Investment gains, net
Other non-operating (expense) income
Income before taxes
Income tax provision
Net income
Net (income) attributable to noncontrolling interests
Year ended
December 31,
2017 — JHG
Statutory
JCG January
2017 — May
2017
Year ended
December 31,
2017 — JHG
Pro Forma
$ 1,465.1
103.9
71.5
103.2
$ 388.4
(19.2)
48.2
21.5
$ 1,853.5
84.7
119.7
124.7
1,743.7
438.9
2,182.6
543.3
150.8
277.3
43.8
31.2
202.2
52.8
1,301.4
442.3
(11.9)
18.0
(1.0)
447.4
211.0
658.4
(2.9)
155.0
32.0
57.2
—
31.6
62.3
13.9
352.0
86.9
(6.8)
1.5
1.5
83.1
(31.4)
51.7
(2.6)
698.3
182.8
334.5
43.8
62.8
264.5
66.7
1,653.4
529.2
(18.7)
19.5
0.5
530.5
179.6
710.1
(5.5)
Net income attributable to JHG
$
655.5
$
49.1
$
704.6
43
Alternative performance measures
The following is a reconciliation of pro forma revenue, pro forma operating income, pro forma net
income attributable to JHG and pro forma diluted earnings per share to adjusted pro forma revenue,
adjusted pro forma operating income, adjusted pro forma net income attributable to JHG and
adjusted pro forma diluted earnings per share for the year ended December 31, 2017 (in millions,
except per share and operating margin data):
Reconciliation of pro forma revenue to adjusted pro forma revenue
Pro forma revenue
Distribution expenses (1)
Adjusted pro forma revenue
Reconciliation of pro forma operating income to adjusted pro forma operating
income
Pro forma operating income
Employee compensation and benefits (2)
Long-term incentive plans (2)
Marketing (2)
General, administrative and occupancy (2)
Depreciation and amortization (3)
Adjusted pro forma operating income
Pro forma operating margin (4)
Adjusted pro forma operating margin (5)
Reconciliation of pro forma net income attributable to JHG to adjusted pro
forma net income attributable to JHG
Pro forma net income attributable to JHG
Employee compensation and benefits (2)
Long-term incentive plans (2)
Marketing (2)
General, administrative and occupancy (2)
Depreciation and amortization (2)(3)
Interest expense (6)
Investment gains (losses), net (7)
Other non-operating income (expenses), net (6)
Income tax provision (8)
Adjusted pro forma net income attributable to JHG
Less: allocation of earnings to participating stock-based awards
Adjusted pro forma net income attributable to JHG common shareholders
Weighted-average common shares outstanding — diluted (two class)
Pro forma diluted earnings per share (two class) (9)
Adjusted pro forma diluted earnings per share (two class) (10)
Year ended
December 31,
2017
$ 2,182.6
(334.5)
$ 1,848.1
$
529.2
54.1
17.6
28.9
65.8
36.3
$
731.9
24.2%
39.6%
$
$
$
$
704.6
54.1
17.6
28.9
65.8
36.3
2.7
(13.2)
1.7
(394.1)
504.4
(14.2)
490.2
197.9
3.46
2.48
(1) Distribution expenses are paid to financial intermediaries for the distribution of JHG’s investment
products. JHG management believes that the deduction of third-party distribution, service and
advisory expenses from revenue in the computation of net revenue reflects the nature of these
44
expenses as revenue-sharing activities, as these costs are passed through to external parties
that perform functions on behalf of, and distribute, the Group’s managed AUM.
(2) Adjustments primarily represent deal and integration costs in relation to the Merger, including
severance costs, legal costs, consulting fees and write-down of legacy IT systems. JHG
management believes these costs do not represent the ongoing operations of the Group.
(3)
Investment management contracts have been identified as a separately identifiable intangible
asset arising on the acquisition of subsidiaries and businesses. Such contracts are recognized
at the net present value of the expected future cash flows arising from the contracts at the date
of acquisition. For segregated mandate contracts, the intangible asset is amortized on a
straight-line basis over the expected life of the contracts. JHG management believes these
non-cash and acquisition-related costs do not represent the ongoing operations of the Group.
(4) Pro forma operating margin is pro forma operating income divided by pro forma revenue.
(5) Adjusted pro forma operating margin is adjusted pro forma operating income divided by adjusted
pro forma revenue.
(6) Adjustments primarily represent fair value movements on options issued to Dai-ichi, deferred
consideration costs associated with acquisitions prior to the Merger and increased debt expense
as a consequence of the fair value uplift on debt due to acquisition accounting. JHG
management believes these costs do not represent the ongoing operations of the Group.
(7) Adjustment primarily relates to the gain recognized on disposal of the alternative UK small cap
team (‘‘Volantis team’’) on April 1, 2017 and adjustments related to deferred consideration costs
for prior acquisitions. JHG management believes these gains do not represent the ongoing
operation of the Group.
(8) The tax impact of the adjustments is calculated based on the U.S. or foreign statutory tax rate
as they relate to each adjustment; certain adjustments are either not taxable or not
tax-deductible. In addition, the adjustment includes the impact of U.S. tax legislation passed in
December 2017.
(9) Pro forma diluted earnings per share is pro forma net income attributable to JHG common
shareholders divided by weighted-average diluted common shares outstanding.
(10) Adjusted pro forma diluted earnings per share is adjusted pro forma net income attributable to
JHG common shareholders divided by weighted-average diluted common shares outstanding.
Liquidity and Capital Resources
JHG’s capital structure, together with available cash balances, cash flows generated from
operations, and further capital and credit market activities, if necessary, should provide the Group
with sufficient resources to meet present and future cash needs, including operating and other
obligations as they fall due and anticipated future capital requirements.
The following table summarizes key balance sheet data relating to JHG’s liquidity and capital
resources as of December 31, 2017 and 2016 (in millions):
Cash and cash equivalents held by the Group
Investment securities held by the Group
Fees and other receivables
Debt
45
Year ended
December 31,
2017
2016
$ 754.2
$ 280.4
$ 419.6
$ 379.2
$ 279.0
$
79.6
$ 165.5
—
$
Cash and cash equivalents consist primarily of cash at banks held in money market funds. Cash and
cash equivalents held by consolidated variable interest entities (‘‘VIEs’’) and consolidated voting
rights entities (‘‘VREs’’) are not available for general corporate purposes and have been excluded
from the table above.
Investment securities held by the Group represents seeded investment products (exclusive of
consolidated VIEs and VREs), investments related to deferred compensation plans and other less
significant investments.
The Group believes that existing cash and cash from operations should be sufficient to satisfy its
short-term capital requirements. Expected short-term uses of cash include ordinary operating
expenditures, seed capital investments, 2018 Convertible Notes principal, interest and redemption
payments, dividend payments, income tax payments, contingent consideration payments, defined
benefit pension plan contributions and integration costs in relation to the Merger. JHG may also use
available cash for other general corporate purposes and acquisitions.
Cash Flows
A summary of cash flow data for the years ended December 31, 2017, 2016 and 2015, is as follows
(in millions):
Cash flows provided by (used for):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash balance at beginning of year
Year ended December 31,
2017
2016
2015
$ 444.1
519.5
(504.7)
$ 235.1
(108.3)
(338.6)
$ 388.9
56.8
(221.5)
12.1
471.0
323.2
(48.7)
(260.5)
583.7
(19.0)
205.2
378.5
Cash balance at end of year
$ 794.2
$ 323.2
$ 583.7
Operating Activities
Fluctuations in operating cash flows are attributable to changes in net income and working capital
items, which can vary from period to period based on the amount and timing of cash receipts and
payments.
46
Investing Activities
Cash provided by (used for) investing activities for the years ended December 31, 2017, 2016 and
2015, is as follows (in millions):
Cash acquired from acquisition of JCG
Acquisition of subsidiaries, net of cash acquired
Proceeds from:
Investment securities — VIEs, net
Investment securities — seed capital, net
Purchases of:
Investment securities — VIEs, net
Property, equipment and software
Investment income received by consolidated funds
Cash movement on deconsolidation of
consolidated funds
Net cash paid on settled hedges
Proceeds from sale of interests in equity-method
investments
Other
Year ended December 31,
2017
2016
2015
$ 417.2
—
$
— $
—
—
(57.8)
122.4
26.5
—
(17.7)
7.9
(11.2)
(23.7)
—
(1.9)
—
31.6
(76.6)
(14.2)
6.5
(8.4)
(47.9)
—
14.9
(9.3)
(12.1)
—
—
—
—
0.7
122.7
(1.6)
Cash provided by (used for) investing activities
$ 519.5
$ (108.3) $
56.8
Cash inflows from investing activities in 2017 were primarily driven by the Group acquiring cash of
$417.2 million in respect of the Merger, along with the Group receiving proceeds from disposal of
investments within consolidated VIEs of $122.4 million and redemptions of seed capital investment
securities of $26.5 million. JHG periodically adds new investment strategies to its investment product
offerings by providing the initial cash investment or seeding. The primary purpose of seeded
investment products is to generate an investment performance track record in a product to attract
third-party investors. JHG may redeem invested seed capital for a variety of reasons, including when
third-party investments in the relevant product are sufficient to sustain the investment strategy.
These increases are partially offset by net cash paid to settle derivatives used in JHG’s economic
hedge program, and purchases of property, equipment and software.
In 2016, the Group’s consolidated VIEs purchased investment securities of $76.6 million and paid
$47.9 million on settled hedges, offset by the proceeds of disposal of seed capital investment
securities of $31.6 million. In 2015, the Group received $122.7 million from the sale of the Group’s
investment in THRE; this was partially offset by $57.8 million of cash outflows in respect of
consideration paid for the acquisitions of Perennial and 90 West.
47
Financing Activities
Cash used for financing activities for the years ended December 31, 2017, 2016 and 2015, is as
follows (in millions):
Proceeds from settlement of convertible note
hedge
Settlement of stock warrant
Proceeds from issuance of options
Proceeds from stock-based compensation plans
Purchase of common stock for stock-based
compensation plans
Dividends paid to shareholders
Repurchase of common stock as part of share
repurchase program
Repayment of long-term debt
Third-party sales (redemptions) in consolidated
seeded investment products, net
Other
Year ended December 31,
2017
2016
2015
$
$
59.3
(47.8)
25.7
6.0
— $
—
—
11.0
—
—
—
15.6
(52.1)
(256.0)
(54.3)
(157.5)
(96.3)
(161.0)
—
(92.5)
—
(203.4)
(141.4)
(5.9)
65.6
—
(38.2)
—
58.4
—
Cash used for financing activities
$ (504.7) $ (338.6) $ (221.5)
Cash outflows from financing activities in 2017 were primarily due to $256.0 million of dividends paid
to JHG shareholders, third-party redemptions in consolidated seeded investment products of
$141.4 million and payments of $92.5 million to satisfy early conversion notices in relation to the
2018 Convertible Notes. Settlement of the conversion notices, which included principal and the
conversion feature, were wholly settled in cash.
Other Sources of Liquidity
At December 31, 2017, JHG had a $200 million, unsecured, revolving credit facility (‘‘Credit Facility’’)
with Bank of America Merrill Lynch International Limited, as coordinator, book runner and mandated
lead arranger. The Credit Facility includes an option for JHG to request an increase to the overall
amount of the Credit Facility of up to an additional $50.0 million. The Credit Facility had a maturity
date of February 16, 2022, with two one-year extension options that can be exercised at the
discretion of JHG with the lender’s consent on the first and second anniversary of the date of the
agreement, respectively. On the first anniversary of the date of the agreement, the Group exercised
the option to extend the term of the Credit Facility by one year. The revised maturity date of the
Credit Facility is February 16, 2023.
The Credit Facility became effective on the Closing Date and may be used for general corporate
purposes. The Credit Facility bears interest on borrowings outstanding at the relevant interbank offer
rate plus a spread.
The Credit Facility contains a financial covenant with respect to leverage. The financing leverage
ratio cannot exceed 3.00x EBITDA. At the latest practicable date before the date of this report, JHG
was in compliance with all covenants and there were no borrowings under the Credit Facility.
Regulatory Capital
JHG is subject to regulatory oversight by the SEC, FINRA, the U.S. CFTC, the FCA and other
international regulatory bodies. The Group ensures it is compliant with its regulatory obligations at all
48
times. The Group’s main capital requirement relates to the FCA-supervised regulatory group (a
sub-group of JHG), comprising Henderson Group Holdings Asset Management Limited, all of its
subsidiaries and Janus Capital International Limited (‘‘JCIL’’). JCIL is included on the basis of an
Article 134 relationship under the Banking Consolidation Directive. The combined capital requirement
is £275.3 million ($372.4 million), resulting in capital above the regulatory group’s regulatory
requirement of £44.1 million ($59.7 million) as of December 31, 2017, based upon internal
calculations and excluding unaudited current period profits. Capital requirements in other jurisdictions
are not significant.
Contractual Obligations
The following table presents contractual obligations and associated maturities at December 31, 2017
(in millions):
Debt
Interest payments
Capital leases
Operating leases
Total
Less than
1 year
$
97.6
14.7
1.3
34.5
$ 148.1
1 to 3 years
3 to 5 years
$ —
29.3
1.8
59.1
$ 90.2
$ —
29.3
—
50.8
$ 80.1
More than
5 years
$ 300.0
37.7
—
84.5
$ 422.2
Debt maturing in less than one year represents the fair value of the liability and equity components
of the 2018 Convertible Notes as of December 31, 2017. Debt maturing in more than five years
represents the principal value of the 2025 Senior Notes.
Short-Term Liquidity Requirements
Convertible Notes
Upon closing of the Merger, JHG fully and unconditionally guaranteed the obligations of JCG under
its 2018 Convertible Notes, which pay interest at 0.750% semiannually on January 15 and July 15 of
each year and mature on July 15, 2018.
Holders of the 2018 Convertible Notes may convert the notes during a particular calendar quarter if
the last reported sale price of JHG’s common stock is greater than or equal to 130% of the
applicable conversion price for at least 20 trading days during a period of 30 consecutive trading
days ending on the last trading day of the preceding quarter. As of January 1, 2018, the 2018
Convertible Notes met the conversion criteria and are convertible during the first quarter of 2018 at a
conversion rate of 45.1535 shares of JHG common stock per $1,000 principal amount of the 2018
Convertible Notes, which is equivalent to a conversion price of approximately $22.15 per share of
common stock.
During the year ended December 31, 2017, $59.1 million of principal was redeemed and settled with
$92.5 million of cash. As of December 31, 2017, the remaining principal value of the 2018
Convertible Notes was $57.5 million. During the period from January 1, 2018 to February 22, 2018,
an additional $22.5 million in principal was redeemed and settled with cash for a total cash outlay of
$39.1 million, and additional conversion notices amounting to $25.4 million in principal had been
received. JHG intends to settle the conversion notices with cash during the first quarter of 2018.
Options Sold to Dai-Ichi
On the Closing Date of the Merger, JHG sold 20 tranches of conditional options to Dai-ichi Life
Holdings Inc. (‘‘Dai-ichi’’), with each tranche allowing Dai-ichi to purchase 500,000 JHG ordinary
49
shares at a strike price of £29.972 per share (the terms of such options having been adjusted in
accordance with the terms of the Dai-ichi Option Agreement to take account of the effect of the
share consolidation). Refer to Note 2 — Summary of Significant Accounting Policies for additional
information on the share consolidation. The cash consideration received for the options was
£19.8 million ($25.7 million). As of December 31, 2017, the fair value of the options was
$26.1 million. The options can be exercised by Dai-ichi during the period from the Closing Date of
the Merger until October 3, 2018.
Common Stock Purchases
Some of the Group’s executives and employees receive rights over JHG ordinary shares as part of
their remuneration arrangements and employee entitlements. These entitlements may be satisfied
either by the transfer of existing ordinary shares acquired on-market or by the issue of ordinary
shares. See Part 2, Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities — Common Stock Purchases.
At the Annual General Meeting held on April 26, 2017, shareholders authorized JHG to make
on-market purchases of up to 10% of the issued share capital of the Group at completion of the
Merger. Shareholders will be asked to renew this authority at the 2018 Annual General Meeting. The
Group did not make any on-market or off-market share purchases during 2017 in connection with
any share buy-back program and as of the date of this report, there were no current on-market or
off-market buy-backs of the Group’s securities.
Dividends
The payment of cash dividends is within the discretion of the Group’s Board of Directors and
depends on many factors, including, but not limited to, the Group’s results of operations, financial
condition, capital requirements, general business conditions and legal requirements. From the
Closing Date, the Group intends to declare dividends quarterly in USD. Prior to this, the Group
declared dividends in GBP on a semi-annual basis, with an extraordinary first quarter 2017 dividend
declared on April 19, 2017.
Dividends declared and paid during the year ended December 31, 2017, representing the final 2016
and quarterly 2017 dividends were:
Dividend
per share
£ 0.0730
£ 0.0185
$ 0.3200
$ 0.3200
Date declared
February 9, 2017
April 19, 2017
August 7, 2017
November 8, 2017
Dividends paid
(in millions)
$ 102.6
26.0
$
63.7
$
63.7
$
Date paid
May 19, 2017
May 19, 2017
September 1, 2017
December 1, 2017
On February 5, 2018, JHG’s Board of Directors declared a fourth quarter 2017 cash dividend of
$0.32 per share. The dividend will be paid on March 2, 2018, to shareholders of record at the close
of business on February 16, 2018.The Board of Directors will review the numerous factors
mentioned above when determining the first quarter 2018 dividend.
Long-Term Liquidity Requirements
Expected long-term commitments as of December 31, 2017, include principal and interest payments
related to the 2025 Senior Notes, operating and capital lease payments, defined benefit pension plan
contributions, Perkins and Intech senior profits interests awards, Intech appreciation rights and
phantom interests, Intech non-controlling interests and contingent consideration related to the
acquisitions of Geneva, Perennial, VelocityShares and Kapstream. JHG expects to fund its long-term
50
commitments with existing cash, cash generated from operations or by accessing capital and credit
markets as necessary.
2025 Senior Notes
Upon closing of the Merger, JHG fully and unconditionally guaranteed JCG’s obligations under its
2025 Senior Notes. The 2025 Senior Notes have a principal of $300.0 million principal in issue,
which pay interest at 4.875% semiannually on February 1 and August 1 of each year, and mature on
August 1, 2025.
Perkins Senior Profits Interests Awards
Perkins became a wholly owned subsidiary of the Group as a result of the Merger.
On November 18, 2013, Perkins granted senior profits interests awards designed to retain and
incentivize key employees to grow the business. These awards fully vest on December 31, 2018,
with the holders entitled to a total of 10% of Perkins’ annual taxable income. The entitlement to a
percentage of Perkins’ annual taxable income over the vesting period is tiered and starts at 2% in
2015 and increases 2% each year thereafter until reaching 10% in 2019 after fully vesting on
December 31, 2018. In addition, these awards have a formula-driven terminal value based on
Perkins’ revenue. JHG can call and terminate any or all of the awards on December 31, 2018, and
each year thereafter. Holders of such interests can require JHG to purchase the interests in
exchange for the then-applicable formula price on December 31, 2018. The senior profits interests
awards are also subject to termination at premiums or discounts to the formula at the option of JHG
or certain employees, as applicable, upon certain corporate or employment-related events affecting
Perkins or certain employees.
Intech
Intech became a subsidiary of the Group as a result of the Merger.
Intech ownership interests held by a founding member, representing approximately 1.1% aggregate
ownership of Intech, provide this founding member with an entitlement to retain his remaining Intech
interest until his death and provide the option to require JHG to purchase the ownership interests of
Intech at fair value.
Intech has granted long-term incentive awards to retain and incentivize employees. The awards
consist of appreciation rights, profits interests and phantom interests, and are designed to give
recipients an equity-like stake in Intech. The grant date fair value of the appreciation rights is being
amortized on a graded basis over the 10-year vesting period. The awards are exercisable upon
termination of employment from Intech to the extent vested. The profits interests and phantom
interests awards entitle recipients to 9.2% of Intech’s pre-incentive profits.
Contingent Consideration
The total maximum contingent amount payable related to Perennial and Geneva over the entire
contingent consideration period is $47.0 million and $70.4 million, respectively, as of December 31,
2017. For additional details of the contingent consideration in relation to the acquisition of Perennial
and Geneva, please refer to Note 9 — Fair Value Measurements.
As a result of the Merger, the Group is also committed to contingent consideration payments in
respect of the historic JCG acquisitions of Kapstream and VelocityShares.
51
The outstanding Kapstream contingent cash consideration in respect to the initial acquisition of a
51% controlling interest is payable in the third quarter of 2018 if certain Kapstream AUM reach
defined targets as of July 1, 2018. As of December 31, 2017, the total maximum payment remaining
is $4.1 million.
On January 31, 2017, JCG acquired the remaining 49% voting interest in Kapstream. The
transaction included contingent consideration of up to $43.8 million. The contingent consideration will
be payable in three equal installments on the first, second and third anniversary dates of the
acquisition if certain revenue targets are reached and it is indexed to the performance of the premier
share class of the Kapstream Absolute Return Income Fund. On January 31, 2018, the first
anniversary of the acquisition, Kapstream reached defined revenue targets and the Group paid
$15.3 million in February 2018.
Outstanding contingent cash payments in relation to the historic acquisition of VelocityShares are
contingent on certain VelocityShares’ ETPs reaching defined net revenue targets on the third and
fourth anniversaries of the acquisition (in November 2017 and November 2018, respectively).
VelocityShares ETPs reached defined net revenue targets in November 2017, the third anniversary
of the acquisition, and the Group paid contingent consideration of $3.6 million in January 2018. As of
December 31, 2017, the remaining maximum payment for the fourth and final contingent
consideration payment is $8.0 million.
Defined Benefit Pension Plan
The Group’s latest triennial valuation of its defined benefit pension plan resulted in a deficit on a
technical provision’s basis of $39.2 million (£29.0 million). The Group agreed with the trustees of the
plan to make contributions of $11.4 million (£8.4 million) per year for four years beginning in 2017 to
recover the deficit.
Off-Balance Sheet Arrangements
Other than certain lease agreements, JHG is not party to any off-balance sheet arrangements that
may provide, or require the Group to provide, financing, liquidity, market or credit risk support that is
not reflected in JHG’s consolidated financial statements. Refer to the contractual obligations table for
future obligations associated with operating leases.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Group’s consolidated financial statements and accompanying notes have been prepared in
accordance with GAAP. The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting periods.
The Group continually evaluates the accounting policies and estimates used to prepare the
consolidated financial statements. In general, management’s estimates are based on historical
experience, information from third party professionals, as appropriate, and various other assumptions
that are believed to be reasonable under current facts and circumstances. Actual results could differ
from those estimates made by management. The Group’s critical accounting policies and estimates
relate to the areas of investment securities, contingent consideration, goodwill and intangible assets,
retirement benefit plans, and income taxes.
52
Valuation of Investment Securities
The Group records investment securities and classifies them as trading or available-for-sale at fair
value. Fair value is generally determined using observable market data based on recent trading
activity. Where observable market data is unavailable due to a lack of trading activity, the Group
uses internally developed models to estimate fair value and independent third parties to validate
assumptions, when appropriate. Estimating fair value requires significant management judgment,
including benchmarking to similar instruments with observable market data and applying appropriate
discounts that reflect differences between the securities that the Group is valuing and the selected
benchmark. Any variation in the assumptions used to approximate fair value could have a material
adverse effect on JHG’s Consolidated Balance Sheets and results of operations.
The Group periodically evaluates the carrying value of equity method investments and investment
securities classified as available-for-sale for potential impairment. In determining if an impairment
exists, the Group considers the duration, extent and circumstances of any decline in fair value.
Where a fall in the value of an investment is prolonged or significant, it is considered an indication of
impairment.
JHG evaluates the securities in an unrealized loss position in the available-for-sale portfolio for other
than temporary impairment (‘‘OTTI’’) on the basis of the duration of the decline in value of the
security and severity of that decline as well as the Group’s intent and ability to hold these securities
for a period of time sufficient to allow for any anticipated recovery in the market value. For equity
method investments, if circumstances indicate that an OTTI may exist, the investments are
evaluated using market values where available, or the expected future cash flows of the investment.
If it is determined that the impairment on a security is other than temporary, the investment is written
down to fair value. An impairment loss equal to the difference between the carrying value of the
security and its fair value is recognized as an impairment charge within investment gains (losses),
net in JHG’s Consolidated Statements of Comprehensive Income. For available-for-sale investments,
any amounts previously recognized in other comprehensive income in respect of cumulative changes
in fair value are taken to net income on impairment.
There were no impairment charges recognized on investment securities for the years ended
December 31, 2017, 2016 or 2015.
Contingent Consideration
Contingent consideration, resulting from business combinations, is recognized at fair value at the
acquisition date as part of the business combination and discounted where the time value of money
is material. The determination of the fair value is based on discounted cash flows, with the key
assumptions being the probability of meeting each performance target and the discount factor
applied. When the contingent consideration meets the definition of a financial liability, it is
subsequently remeasured to fair value at each reporting date through net income. Finance charges,
where discounting has been applied, are also recognized through net income.
Accounting for Goodwill and Intangible Assets
The recognition and measurement of goodwill and intangible assets requires significant management
estimates and judgment, including the valuation and expected life determination in connection with
the initial purchase price allocation and the ongoing evaluation for impairment. The judgment
exercised by management in arriving at these valuations includes the selection of market growth
rates, fund flow assumptions, expected margins and costs.
Goodwill represents the excess of cost over the fair value of the identifiable net assets of acquired
companies and is not amortized.
53
Indefinite-lived intangible assets primarily represent trademarks and investment management
agreements. Investment management agreements without a contractual termination date are
classified as indefinite lived intangible assets based upon the following: (i) there is no legal or
statutory limitation on the contract period to manage these investment products; (ii) the Group
expects to, and has the ability to operate these investment products indefinitely; (iii) the investment
products have multiple investors and are not reliant on an individual investor or small group of
investors for their continued operation; (iv) the current competitive environment does not indicate a
finite life; and (v) there is a high likelihood of continued renewal based on historical experience. The
assumption that investment management agreements are indefinite-lived assets is reviewed at least
annually or more frequently if facts and circumstances indicate that the useful life is no longer
indefinite.
Definite-lived intangible assets represent certain other investment management contracts, which are
amortized over their estimated lives using the straight line method. The estimated lives of the
definite-lived contracts held vary and range from three years to eight years.
Impairment Testing
Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the assets
to their recorded values
Goodwill and indefinite-lived intangible assets are tested for impairment annually (or more frequently
if changes in circumstances indicate that carrying values may be impaired). The Group may first
assess goodwill and indefinite-lived intangible assets for qualitative factors to determine whether it is
necessary to perform a quantitative impairment test. The qualitative analysis considers entity-specific
and macroeconomic factors and their potential impact on the key assumptions used in the
determination of the fair value of the reporting unit or indefinite-lived intangible asset. A quantitative
impairment test is performed if the results of the qualitative assessment indicate that it is more likely
than not that the fair value of the related reporting unit is less than its carrying value or an indefinite-
lived intangible asset is impaired, or if a qualitative assessment is not performed.
The quantitative goodwill impairment test requires goodwill impairments to be measured on the basis
of the fair value of the reporting unit relative to the reporting unit’s carrying amount.
The quantitative indefinite-lived intangible assets impairment test compares the fair value of the
asset to its carrying value. If the carrying value is higher than the fair value, impairment is
recognized in the amount of the difference in values.
The Group performed its annual impairment tests for goodwill and indefinite-lived intangible assets
as of October 1, 2017. The Group elected to perform a qualitative assessment of the valuation of
goodwill and indefinite-lived intangible assets and concluded it is more likely than not that the fair
values of the Group’s reporting unit and the specific intangible assets exceed their carrying values.
The Group subsequently monitors market conditions and their potential impact on the assumptions
used in the annual tests of fair value to determine whether circumstances have changed that would
more likely than not reduce the fair value of the Group’s reporting unit below its carrying value, or
indicate that indefinite-lived intangible assets might be impaired. The Group considered, among other
things, changes in AUM and weighted-average cost of capital by assessing whether these changes
would impact the reasonableness of the assumptions used in impairment tests as of October 1,
2017. The Group also monitored fluctuations of JHG’s common stock per share price to evaluate the
Group’s market capitalization relative to the reporting unit as a whole. Subsequent to October 1,
2017, there were no impairments to goodwill or indefinite-lived intangible assets as no events
occurred or circumstances changed that would indicate these assets might be impaired.
54
Definite-lived intangible assets are tested for impairment only when there are indications of
impairment. There were no indicators of impairment or impairment charges recognized on
definite-lived intangible assets during the years ended December 31, 2017, 2016 or 2015.
Retirement Benefit Plans
The Group provides employees with retirement benefits through both defined benefit and defined
contribution plans.
The defined benefit obligation is determined annually by independent qualified actuaries using the
projected unit credit method and is measured at the present value of the estimated future cash
outflows using a discount rate based on AA rated corporate bond yields of appropriate duration. The
plan assets are recognized at fair value. The funded status of the defined benefit pension plan, (the
‘‘plan’’), being the resulting surplus or deficit of defined benefit assets less liabilities, is recognized in
the Consolidated Balance Sheets, net of any taxes that would be deducted at source.
Actuarial gains and losses arise as a result of differences between actual experience and actuarial
assumptions. The ‘‘10% corridor’’ method for recognizing actuarial gains and losses has been
adopted by the Group. This means that cumulative actuarial gains or losses up to an amount equal
to 10% of the higher of the liabilities and the assets of the scheme (the ‘‘corridor’’) have no
immediate impact on net income and are instead recognized through other comprehensive income.
Cumulative gains or losses greater than this corridor are amortized to net income over the average
remaining future working lifetime of the active members in the plan.
Net periodic benefit cost is recorded as a component of net income in the Consolidated Statements
of Comprehensive Income and includes service cost, interest cost and the expected return on plan
assets.
The costs of, and period end obligations under, defined benefit pension plans are determined using
actuarial valuations. The actuarial valuation involves making a number of assumptions including
those related to the discount rate, the expected rate of return on assets, future salary increases,
mortality rates and future pension increases. Due to the long-term nature of these plans, such
estimates are subject to significant uncertainty.
The below table shows the movement in funded status that would result from certain sensitivity
changes (in millions):
Discount rate: (cid:31)0.1%
Inflation: +0.1%
Life expectancy: +1 year at age 65
Market value of return seeking portfolio falls 25%
Income Taxes
Decrease in
funded status at
December 31, 2017
$ (13.6)
$
(4.1)
$ (21.6)
$ (48.7)
The Group operates in several countries, states and other taxing jurisdictions through various
subsidiaries and branches, and must allocate income, expenses and earnings under the various
laws and regulations of each of these taxing jurisdictions. Accordingly, the provision for income taxes
represents the total estimate of the liability that the Group has incurred for doing business each year
in all of the locations. Annually the Group files tax returns that represent filing positions within each
jurisdiction and settles return liabilities. Each jurisdiction has the right to audit those returns and may
take different positions with respect to income and expense allocations and taxable earnings
determinations. Because the determinations of the annual provisions are subject to judgments and
55
estimates, it is possible that actual results will vary from those recognized in the Consolidated
Financial Statements. As a result, it is likely that additions to, or reductions of, income tax expense
will occur each year for prior reporting periods as actual tax returns and tax audits are settled.
In the assessment of uncertain tax positions, significant management judgment is required to
estimate the range of possible outcomes and determine the probability, on a more likely than not
basis, of favorable or unfavorable tax outcomes and the potential interest and penalties related to
such unfavorable outcomes. Actual future tax consequences on settlement of the Group’s uncertain
tax positions may be materially different to management’s current estimates.
Deferred tax assets, net of any associated valuation allowance, have been recognized based on
management’s belief that taxable income of the appropriate character, more likely than not, will be
sufficient to realize the benefits of these assets over time. In the event that actual results differ from
expectations, or if historical trends of positive operating income changes, the Group may be required
to record a valuation allowance on some or all of these deferred tax assets, which may have a
significant effect on the financial condition and results of operations of the Group. In assessing
whether a valuation allowance should be established against a deferred income tax asset, the Group
considers the nature, frequency and severity of recent losses, forecasts of future profitability, the
duration of statutory carryback and carryforward periods, among other factors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following information describes the key aspects of certain items for which the Group is exposed
to market risk.
Management Fees
Management fee revenues are generally based upon a percentage of the market value of AUM and
are calculated as a percentage of either the daily, month end or quarter end average asset balance
in accordance with contractual agreements. Accordingly, fluctuations in the financial markets have a
direct effect on the Group’s operating results. Although fluctuations in the financial markets have a
direct effect on the Group’s operating results, AUM may outperform or underperform the financial
markets. As such, quantifying the impact of correlation between AUM and the Group’s operating
results may be misleading.
Performance Fees
Performance fee revenue is derived from a number of funds and clients. As a result, the Group’s
revenues are subject to volatility beyond market based fluctuations discussed in the management
fees section above. Performance fees are specified in certain fund and clients contracts and are
based on investment performance either on an absolute basis or compared to an established index
over a specified period of time. This is often subject to a hurdle rate. Performance fees are
recognized at the end of the contractual period (typically monthly, quarterly or annually) if the stated
performance criteria are achieved. The Group’s performance fees are dependent on internal
performance and market trends and will therefore be subject to year on year volatility. The Group
recognized performance fees of $103.9 million, $54.8 million and $150.8 million for the years ended
December 31, 2017, 2016 and 2015, respectively. At December 31, 2017 and 2016, $64.8 billion
and $36.6 billion of AUM were subject to performance fees, respectively.
Investment Securities
At December 31, 2017, the Group was exposed to market price risk as a result of investment
securities on its Consolidated Balance Sheet. The following is a summary of the effect that a
56
hypothetical 10% increase or decrease in market prices would have on JHG’s investment securities
subject to market price fluctuations as of December 31, 2017 (in millions):
Investment securities:
Trading
Available-for-sale
Total investment securities
Fair value
Fair value
assuming a 10% assuming a 10%
Fair value
increase
decrease
$ 678.1
22.0
$ 700.1
$ 745.9
24.2
$ 770.1
$ 610.3
19.8
$ 630.1
Certain investment securities include debt securities that contribute to the achievement of defined
investment objectives. Debt securities are exposed to interest rate risk and credit risk. Movement in
interest rates would be reflected in the value of the securities; refer to the quantitative analysis
above.
Derivative Instruments
The Group maintains an economic hedge program that uses derivative instruments to mitigate
market volatility of certain seeded investments. Market fluctuations are mitigated using derivative
instruments including futures, credit default swaps, index swaps and total return swaps. The Group
also operates a rolling program of foreign currency forward contracts to mitigate the non-functional
currency exposures arising from certain seed capital investments. The Group was party to the
following derivative instruments as of December 31, 2017 and 2016 (in millions):
December 31, 2017
December 31, 2016
Notional
value
Fair
value
Notional
value
Fair
value
Futures
Credit default swaps
Index swaps
Total return swaps
Foreign currency forward contacts
$ 190.6
$ 117.5
76.7
$
70.3
$
$ 118.8
14.7
$ (1.3) $
$ (3.0) $
34.2
$ (2.1) $
59.5
$ (1.0) $
$ (1.8) $ 170.1
$ —
— $ —
$ (0.8)
$ (1.1)
$ (3.2)
Changes in fair value of derivative instruments are recognized in investment gains (losses), net in
JHG’s Consolidated Statements of Comprehensive Income. Changes in fair value of foreign currency
forward contracts designated as hedges for accounting purposes are recognized in accumulated
other comprehensive income under net investment hedge accounting.
Foreign Currency Exchange Sensitivity
Foreign currency risk is the risk that the Group will sustain losses through adverse movements in
foreign currency exchange rates, where the Group transacts in currencies different to an entity’s
functional currency.
As the Group’s functional currency is USD, the Group is exposed to foreign currency risk through its
exposure to non-USD income, expenses, assets and liabilities of its overseas subsidiaries as well as
net assets and liabilities denominated in a currency other than USD. The currency exposure is
managed by monitoring foreign currency positions. The Group uses foreign currency forward
contracts to reduce or eliminate the currency exposure on certain individual transactions. The Group
also seeks to use natural hedges to reduce exposure. Where there is a mismatch on material
currency flows and the timing is reasonably certain, the positions are actively hedged.
57
The following table illustrates the impact of the below currencies weakening by 10% on all unhedged
financial assets and liabilities denominated in currencies material to the Group other than USD (in
millions):
Great British pound
Singapore dollar
Australian dollar
Japanese yen
Euro
USD
December 31, 2017
December 31, 2016
Net income
attributable to
JHG
Other
comprehensive
income
attributable to
JHG
Net income
attributable to
JHG
Other
comprehensive
income
attributable to
JHG
$ (19.5)
(0.2)
$
$ —
$
0.4
$ 16.4
$ —
$ 150.0
2.6
$
30.0
$
0.4
$
2.0
$
—
$
$ —
(0.1)
$
2.6
$
$
(0.3)
$ (17.6)
$ 17.2
$ —
$ 2.2
$ (0.7)
$ 0.4
$ 1.9
$ 5.8
Amounts as of December 31, 2016 are based on the Group having a functional currency of GBP
during the year.
58
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Financial Statements:
Reports of Independent Registered Public Accounting Firm —
PricewaterhouseCoopers LLP
Consolidated Balance Sheets as of December 31, 2017 and 2016
Consolidated Statements of Comprehensive Income for the Years Ended December 31,
2017, 2016 and 2015
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016
and 2015
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2017,
2016 and 2015
Notes to Consolidated Financial Statements
Financial Statement Schedules:
All schedules are omitted because they are not applicable or are insignificant, or the
required information is shown in the consolidated financial statements or notes thereto.
Page
60
61
62
63
64
65
59
15NOV201217160789
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Janus Henderson Group plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Janus Henderson Group plc and
its subsidiaries as of December 31, 2017 and December 31, 2016, and the related consolidated
statements of comprehensive income, consolidated statements of cash flows, and consolidated
statements of changes in equity for each of the three years in the period ended December 31, 2017,
including the related notes (collectively referred to as the ‘‘consolidated financial statements’’). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and December 31, 2016, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2017
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (‘‘PCAOB’’) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
London, UK
27 February 2018
We have served as the Company’s auditor since 2014.
60
JANUS HENDERSON GROUP PLC
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions, Except Share Data)
ASSETS
Current assets:
Cash and cash equivalents
Investment securities
Fees and other receivables
OEIC and unit trust receivables
Assets of consolidated VIEs:
Cash and cash equivalents
Investment securities
Other current assets
Other current assets
Total current assets
Non-current assets:
Property, equipment and software, net
Intangible assets, net
Goodwill
Retirement benefit asset, net
Other non-current assets
Total assets
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities
Current portion of accrued compensation, benefits and staff costs
Current portion of long-term debt
OEIC and unit trust payables
Liabilities of consolidated VIEs:
Accounts payable and accrued liabilities
Total current liabilities
Non-current liabilities:
Accrued compensation, benefits and staff costs
Long-term debt
Deferred tax liabilities, net
Retirement benefit obligations, net
Other non-current liabilities
Total liabilities
Commitments and contingencies (See Note 18)
REDEEMABLE NONCONTROLLING INTERESTS
EQUITY
Common stock ($1.50 par and £0.125 par, 480,000,000 and 2,194,910,776 shares
authorized; 200,406,138 and 1,131,842,109 shares issued and outstanding,
respectively)
Additional paid-in-capital
Treasury shares (4,071,284 and 38,848,749 shares held, respectively)
Accumulated other comprehensive loss, net of tax
Retained earnings
Total shareholders’ equity
Nonredeemable noncontrolling interests
Total equity
December 31,
2017
December 31,
2016
$
760.1
280.4
419.6
239.9
34.1
419.7
12.9
75.9
$
279.0
79.6
165.5
142.1
44.2
313.7
8.1
28.5
2,242.6
1,060.7
70.6
3,204.8
1,533.9
199.3
21.5
41.2
401.3
741.5
180.2
8.5
$ 7,272.7
$ 2,433.4
$
292.9
398.7
57.2
234.8
21.5
1,005.1
23.0
322.0
752.6
4.6
99.6
2,206.9
190.3
300.6
3,842.9
(155.8)
(301.8)
1,151.4
4,837.3
38.2
4,875.5
$
141.7
147.0
—
137.9
26.2
452.8
8.7
—
70.7
11.9
39.0
583.1
158.0
234.4
1,237.9
(155.1)
(434.5)
764.8
1,647.5
44.8
1,692.3
Total liabilities, redeemable noncontrolling interests and equity
$ 7,272.7
$ 2,433.4
The accompanying notes are an integral part of these consolidated financial statements.
61
JANUS HENDERSON GROUP PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Millions, Except per Share Data)
Revenue:
Management fees
Performance fees
Shareowner servicing fees
Other revenue
Total revenue
Operating expenses:
Employee compensation and benefits
Long-term incentive plans
Distribution expenses
Investment administration
Marketing
General, administrative and occupancy
Depreciation and amortization
Total operating expenses
Operating income
Interest expense
Investment gains (losses), net
Other non-operating income (expenses), net
Income before taxes
Income tax provision
Net income
Net loss (income) attributable to noncontrolling interests
Net income attributable to JHG
Earnings per share attributable to JHG common shareholders:
Basic
Diluted
Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses)
Net unrealized losses on available-for-sale securities
Actuarial gains (losses)
Other comprehensive income (loss), net of tax
Other comprehensive loss (income) attributable to noncontrolling
interests
Other comprehensive income (loss) attributable to JHG
Total comprehensive income (loss)
Total comprehensive loss (income) attributable to noncontrolling
interests
Year ended December 31,
2017
2016
2015
$ 1,465.1
103.9
71.5
103.2
$ 867.8
54.8
—
77.3
$ 914.7
150.8
—
89.6
1,743.7
999.9
1,155.1
543.3
150.8
277.3
43.8
31.2
202.2
52.8
1,301.4
442.3
(11.9)
18.0
(1.0)
447.4
211.0
658.4
(2.9)
273.5
87.5
209.1
46.2
13.9
109.8
27.8
767.8
232.1
(6.6)
(11.7)
(1.9)
211.9
(34.6)
177.3
11.7
317.1
85.9
235.6
48.3
14.2
113.3
23.4
837.8
317.3
(20.1)
39.7
0.6
337.5
(6.1)
331.4
(1.6)
$
$
$
$
$
$
655.5
$ 189.0
$ 329.8
3.97
3.93
$ 1.69
$ 1.66
$
$
2.93
2.78
125.0
(2.0)
(11.1)
111.9
$(247.1) $ (94.5)
(13.3)
(0.7)
(0.4)
15.0
(232.5)
(108.5)
20.8
(12.4)
0.4
132.7
$(244.9) $ (108.1)
770.3
$ (55.2) $ 222.9
17.9
(0.7)
(1.2)
Total comprehensive income (loss) attributable to JHG
$
788.2
$ (55.9) $ 221.7
The accompanying notes are an integral part of these consolidated financial statements.
62
JANUS HENDERSON GROUP PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
CASH FLOWS PROVIDED BY (USED FOR):
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$ 658.4
$ 177.3
$ 331.4
Year ended December 31,
2017
2016
2015
Depreciation and amortization
Deferred income taxes
Stock-based compensation plan expense
Gains (losses) from equity-method investments, net
Investment gains (losses), net
Contributions to pension plans in excess of costs recognized
Other, net
Changes in operating assets and liabilities:
OEIC and unit trust receivables and payables
Other assets
Other accruals and liabilities
Net operating activities
Investing activities:
Cash acquired from acquisition of JCG
Acquisition of subsidiaries, net of cash acquired
Proceeds from:
Investment securities — VIEs, net
Investment securities — seed capital, net
Purchases of:
Investment securities — VIEs, net
Property, equipment and software
Intangibles
Investment income received by consolidated funds
Cash movement on deconsolidation of consolidated funds
Net cash paid on settled hedges
Dividends received from equity-method investments
Dividends attributable to noncontrolling interests
Proceeds from sale of interests in equity-method investments, net
Proceeds from sale of Volantis
Net investing activities
Financing activities:
Settlement of convertible note hedge
Settlement of stock warrant
Proceeds from issuance of options
Proceeds from stock-based compensation plans
Purchase of common stock for stock-based compensation plans
Dividends paid to shareholders
Repurchase of common stock
Repayment of long-term debt
Distributions to noncontrolling interests
Third-party sales (redemptions) in consolidated seeded investment products, net
Principal payments under capital lease obligations
Net financing activities
Cash and cash equivalents:
Effect of foreign exchange rate changes
Net change
At beginning of year
At end of year
Supplemental cash flow information:
Cash paid for interest
Cash paid for income taxes, net of refunds
Reconciliation of cash and cash equivalents:
Cash and cash equivalents
Cash and cash equivalents held in consolidated VIEs
Total cash and cash equivalents
52.8
(355.6)
67.4
0.6
(18.0)
(20.9)
7.2
(0.9)
(117.8)
170.9
444.1
417.2
—
122.4
26.5
—
(17.7)
—
7.9
(11.2)
(23.7)
0.2
(2.6)
—
0.5
27.8
2.0
37.3
3.1
(1.2)
(4.6)
18.1
(4.4)
(6.1)
(14.2)
235.1
—
—
—
31.6
(76.6)
(14.2)
—
6.5
(8.4)
(47.9)
0.7
—
—
—
519.5
(108.3)
59.3
(47.8)
25.7
6.0
(52.1)
(256.0)
—
(92.5)
(5.0)
(141.4)
(0.9)
(504.7)
12.1
471.0
323.2
—
—
—
11.0
(54.3)
(157.5)
—
(203.4)
—
65.6
—
(338.6)
(48.7)
(260.5)
583.7
23.4
(8.1)
43.6
(17.9)
(16.8)
(3.7)
2.3
—
43.8
(9.1)
388.9
—
(57.8)
—
14.9
(9.3)
(12.1)
(4.0)
—
—
—
2.4
—
122.7
—
56.8
—
—
—
15.6
(96.3)
(161.0)
(38.2)
—
—
58.4
—
(221.5)
(19.0)
205.2
378.5
$ 794.2
$ 323.2
$ 583.7
$
8.0
$ 113.1
$
$
7.3
40.7
$
$
16.7
14.4
$ 760.1
34.1
$ 279.0
44.2
$ 530.9
52.8
$ 794.2
$ 323.2
$ 583.7
The accompanying notes are an integral part of these consolidated financial statements.
63
JANUS HENDERSON GROUP PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in Millions)
Balance at December 31, 2014
Net income
Other comprehensive income (loss)
Dividends paid to shareholders
Purchase of common stock for stock-
based compensation plans
Vesting of stock-based compensation
plans
Issuance of common stock for stock-
based compensation plans
Stock-based compensation plan expense
Proceeds from stock-based compensation
plans
Repurchase of common stock
Balance at December 31, 2015
Net income
Other comprehensive income (loss)
Dividends paid to shareholders
Purchase of common stock for stock-
based compensation plans
Vesting of stock-based compensation
plans
Stock-based compensation plan expense
Proceeds from stock-based compensation
plans
Balance at December 31, 2016
Share consolidation
Net income
Other comprehensive income (loss)
Dividends paid to shareholders
Distributions to noncontrolling interests
Derivative instruments acquired on
acquisition
NCI recognized on acquisition of JCG
Fair value adjustments to redeemable
noncontrolling interests
Adjust consideration for post combination
services under unvested stock-based
compensation plans
Redemptions of convertible debt and
settlement of derivative instruments
Tax impact of convertible debt
redemptions and settlement of
derivative instruments
Purchase of common stock for stock-
based compensation plans
Issuance of common stock
Redenomination and reduction of par
value of stock
Vesting of stock-based compensation
plans
Stock-based compensation plan expense
Proceeds from stock-based compensation
plans
Number
of
shares
Common
stock
Additional
paid-in
capital
Accumulated
other
Treasury comprehensive Retained
earnings
loss
Shares
Nonredeemable
noncontrolling
interests
Total
equity
1,139.2
—
—
—
$ 235.8
—
—
—
$ 1,231.8
—
—
—
$ (156.6)
—
—
—
$
(81.5)
—
(108.1)
—
$
652.0
329.8
—
(161.0)
$ 42.9
1.6
(0.4)
—
$ 1,924.4
331.4
(108.5)
(161.0)
—
—
1.6
—
—
(9.0)
1,131.8
—
—
—
—
—
—
—
1,131.8
(1,018.6)
—
—
—
—
—
—
—
—
—
—
—
—
0.3
—
—
(1.7)
234.4
—
—
—
—
—
—
—
234.4
—
—
—
—
—
—
—
—
—
—
—
—
—
6.1
—
—
—
1,237.9
—
—
—
—
—
—
—
1,237.9
—
—
—
0.1
—
31.4
—
—
(51.8)
(22.3)
(2.7)
(96.3)
84.0
(6.4)
—
—
—
(175.3)
—
—
—
(54.3)
74.5
—
—
(155.1)
—
—
—
—
—
—
—
—
—
—
—
—
87.2
—
130.8
—
2,551.2
(52.1)
—
—
—
—
—
(64.6)
64.6
—
—
—
(29.0)
57.5
6.0
—
51.4
—
—
—
—
—
—
—
—
(189.6)
—
(244.9)
—
—
—
—
—
(434.5)
—
—
132.7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(84.0)
—
43.6
15.6
(36.5)
759.5
189.0
—
(157.5)
—
(74.5)
37.3
11.0
764.8
—
655.5
—
(256.0)
—
—
—
(0.4)
—
—
—
—
—
—
(22.4)
9.9
—
—
—
—
—
—
—
44.1
(11.7)
12.4
—
—
—
—
—
44.8
—
1.5
(20.8)
—
(0.6)
—
13.3
—
—
—
—
—
—
—
—
—
—
(96.3)
—
—
43.6
15.6
(38.2)
1,911.0
177.3
(232.5)
(157.5)
(54.3)
—
37.3
11.0
1,692.3
—
657.0
111.9
(255.9)
(0.6)
31.4
13.3
(0.4)
(51.8)
(22.3)
(2.7)
(52.1)
2,682.0
—
—
67.4
6.0
Balance at December 31, 2017
200.4
$ 300.6
$ 3,842.9
$ (155.8)
$ (301.8)
$ 1,151.4
$ 38.2
$ 4,875.5
The accompanying notes are an integral part of these consolidated financial statements.
64
JANUS HENDERSON GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Description of the Business
The Group is an independent global asset manager, specializing in active investment across all
major asset classes. JHG actively manages a broad range of investment products for institutional
and retail investors across five capabilities: Equities, Quantitative Equities, Fixed Income, Multi-Asset
and Alternatives.
On the Closing Date, JCG and Henderson completed the Merger. As a result of the Merger, JCG
and its consolidated subsidiaries became subsidiaries of Henderson, which was renamed to Janus
Henderson Group plc. See Note 4 — Acquisitions, for more information on the Merger.
JHG is a public limited company incorporated in Jersey, Channel Islands, and is tax resident and
domiciled in the UK. JHG’s ordinary shares are traded on the NYSE and the Company’s CDIs are
traded on the ASX.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared according to GAAP. The Group’s
consolidated financial statements include all majority owned subsidiaries and consolidated seeded
investment products, and intercompany accounts and transactions have been eliminated in
consolidation. Events subsequent to the balance sheet date have been evaluated for inclusion in the
accompanying consolidated financial statements through the issuance date.
Prior to the Merger, Henderson’s functional currency was GBP. After consideration of numerous
factors, such as the denomination of the shares, payment of dividends, and the Group’s main
economic environment, management concluded that the post-Merger functional currency of JHG is
USD. All values are rounded to the nearest $100,000 USD, except when otherwise indicated.
Certain balances from prior years have been reclassified in order to conform to the current year
presentation. This has included reclassifications between line items within the investing cash flow
category of the Consolidated Statements of Cash Flows.
Accounting Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the consolidated financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates and the differences could be material. JHG’s significant estimates
relate to investment securities, acquisition accounting, goodwill and intangible assets, retirement
benefit assets and obligations, contingent consideration, equity compensation and income taxes.
Segment Information
JHG is a global asset manager and manages a range of investment products, operating across
various product lines, distribution channels and geographic regions. However, information is reported
to the chief operating decision-makers, the Co-CEOs, on an aggregated basis. Strategic and
financial management decisions are determined centrally by the Co-CEOs and, on this basis, the
Group operates as a single segment investment management business.
65
Consolidation of Investment Products
The Group performs periodic consolidation analyses of its seeded investment products to determine
if the product is a VIE or a voting rights entity (‘‘VRE’’). Factors considered in this assessment
include the entity’s legal organization, the entity’s capital structure and equity ownership, and any de
facto agent implications of the Group’s involvement with the entity. Investment products that are
determined to be VIEs are consolidated if the Group is the primary beneficiary of the entity. VREs
are consolidated if the Group holds the majority voting interest. Upon the occurrence of certain
events (such as contributions and redemptions, either by JHG or third parties, or amendments to the
governing documents of the Group’s investment products), management reviews and reconsiders its
previous conclusion regarding the status of an entity as a VIE or a VRE. Additionally, management
continually reconsiders whether JHG is considered a VIE’s primary beneficiary, and thus
consolidates such entity.
Variable Interest Entities
Certain investment products for which a controlling financial interest is achieved through
arrangements that do not involve or are not directly linked to voting interests are considered VIEs.
JHG reviews factors, including whether or not (i) the entity has equity that is sufficient to permit it to
finance its activities without additional subordinated support from other parties and (ii) the equity
holders at risk have the obligation to absorb losses, the right to receive residual returns and the right
to direct the activities of the product that most significantly impact the entity’s economic performance,
to determine if the investment product is a VIE. The Group re-evaluates such factors as facts and
circumstances change.
The Group consolidates a VIE if JHG is the VIE’s primary beneficiary. The primary beneficiary of a
VIE is defined as the variable interest holder that has a controlling financial interest in the VIE. A
controlling financial interest is defined as (i) the power to direct the activities of the VIE that most
significantly impact its economic performance and (ii) the obligation to absorb losses of the entity or
the right to receive benefits from the entity that potentially could be significant to the VIE.
JHG is the manager of various types of seeded investment products, which may be considered
VIEs. The Group’s involvement in financing the operations of the VIEs is generally limited to its
investments in the entities.
VIEs are generally subject to consolidation by the Company at lower ownership percentages
compared to the 50% threshold applied to VREs and are also subject to specific disclosure
requirements.
Voting Rights Entities
The Group consolidates seeded investment products accounted for as VREs when it is considered
to control such products, which generally exists if JHG has a greater than 50% voting equity interest.
Property, Equipment and Software
Property, equipment and software is recorded at cost. Depreciation is recorded using the straight-line
method over the estimated useful life of the related assets (or the lease term, if shorter).
Depreciation expense totaled $24.6 million, $8.2 million and $7.9 million for the years ended
66
December 31, 2017, 2016 and 2015, respectively. Property, equipment and software are
summarized as follows (in millions):
Furniture, fixtures and computer equipment
Leasehold improvements
Computer software
Property, equipment and software, gross
Accumulated depreciation
Property, equipment and software, net
Depreciation
period
December 31,
2017
2016
3-10 years
Over the shorter of
20 years or the
period of the lease
3-7 years
$
31.9 $ 17.5
21.1
29.8
58.3
35.6
$ 120.0 $ 74.2
(33.0)
(49.4)
$
70.6 $ 41.2
Internally generated software is recorded at cost and depreciated over its estimated useful life.
Internal and external costs incurred in connection with researching or obtaining software for internal
use are expensed as incurred during the preliminary project stage, as are training and maintenance
costs. Internal and external costs incurred for internal use software during the application
development stage are capitalized until such time that the software is substantially complete and
ready for its intended use. Application development stage costs are depreciated on a straight-line
basis over the estimated useful life of the software.
JHG evaluates its property, equipment and software assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The
evaluation is based on an estimate of the future cash flows expected to result from the use of the
asset and its eventual disposal. If expected future undiscounted cash flows are less than the
carrying amount of the asset, an impairment loss is recognized in an amount equal to the excess of
the carrying amount of the asset over the fair value of the asset. There were no impairments of
property, equipment and software for the years ended December 31, 2017, 2016 and 2015.
Deferred Commissions
Initial sales commissions paid to and received from financial intermediaries on sales of certain
wholesale products are deferred and amortized over various periods, not exceeding four years. The
amortization period is based on the average expected life of the product on which the commission is
received. Deferred commissions are recognized as components of other current assets, and of
accounts payable and of accrued liabilities on the Consolidated Balance Sheets.
Equity Method Investments
The Group’s investment in equity method investees, where the Group does not control the investee
but can exert significant influence over the financial and operating policies (generally considered to
be ownership between 20% and 50%), as well as in joint ventures where there is joint control (and
in both cases, where it is not the primary beneficiary of a VIE), are accounted for using the equity
method of accounting.
Investments are initially recognized at cost when purchased for cash, or at the fair value of shares
received where acquired as part of a wider transaction. The investments are subsequently carried at
cost adjusted for the Group’s share of net income or loss and other changes in comprehensive
income of the equity method investee, less any dividends or distributions received by the Group. The
Consolidated Statements of Comprehensive Income includes the Group’s share of net income or
67
loss for the year, or period of ownership, if shorter, within other non-operating income (expenses),
net.
Financial Instruments
Financial assets are recognized at fair value in the Consolidated Balance Sheets when the Group
becomes party to the contractual provisions of an instrument. The fair value recognized is adjusted
for transaction costs, except for financial assets classified as trading where transaction costs are
recognized immediately in net income. Financial assets are derecognized when the rights to receive
cash flows from the investments have expired or where they have been transferred and the Group
has also transferred substantially all the risks and reward of ownership.
Purchases and sales of financial assets are recognized at the trade date. Delivery and settlement
terms are usually determined by established practices in the market concerned.
Debt securities, equity securities and holdings in pooled funds are designated as either trading or
available-for-sale and are measured at subsequent reporting dates at fair value. The Group
determines the classification of its financial assets on initial recognition.
Unrealized gains and losses represent the difference between the fair value of the financial asset at
the reporting date and cost or, if these have been previously revalued, the fair value at the last
reporting date. Realized gains and losses on financial assets are calculated as the difference
between the net sales proceeds and cost or amortized cost using the specific identification method.
Financial liabilities, excluding deferred consideration, derivatives, fund deferral liabilities and
redeemable noncontrolling interests in consolidated funds which are stated at fair value, are stated
at amortized cost using the effective interest rate method. Financial liabilities stated at amortized
cost include the Group’s long term debt. Amortized cost is calculated by taking into account any
issue costs and any discount or premium on settlement. Financial liabilities cease to be recognized
when the obligation under the liability has been discharged or cancelled or has expired.
Trading Securities
Financial assets classified as trading are carried on the Group’s Consolidated Balance Sheets at fair
value. These comprise: the Group’s manager box position representing the Group’s holding in
various OEICs and unit trusts used to cover any net shortfall in units created or liquidated for clients
after the funds are priced; investments in the Group’s fund products held by employee benefit trusts;
certain investments in unconsolidated seed capital investments; and certain investments in
consolidated funds. Gains and losses arising from changes in the fair value of financial assets
classified as trading securities are included within investments gains (losses), net in the
Consolidated Statements of Comprehensive Income. Where investments in the Group’s fund
products are held against outstanding deferred compensation liabilities, any movement in the fair
value of these assets and corresponding movements in the deferred compensation liability are
recognized in the Consolidated Statements of Comprehensive Income.
Available-for-Sale Securities
Financial assets classified as available-for-sale consist of certain unconsolidated seed capital
investments and certain investments in consolidated funds. Available-for-sale securities are carried at
fair value on the Consolidated Balance Sheets, with changes in fair value recorded as a component
of other comprehensive income within the Group’s Consolidated Statements of Comprehensive
Income until realized. When an asset is disposed of, the cumulative change in fair value, previously
recognized in other comprehensive income, is reclassified to net income in the current accounting
period.
68
Seeded Investment Products
The Group periodically adds new investment strategies to its investment product offerings by
providing the initial cash investment or ‘‘seeding.’’ The primary purpose of seeded investment
products is to generate an investment performance track record in a product to attract third-party
investors. JHG’s initial investment in a new product represents 100% ownership in that product.
Seeded investment products are initially consolidated and the individual securities within the portfolio
are accounted for as trading securities. The change in fair value of seeded investment products is
recorded in investment gains (losses), net on JHG’s Consolidated Statements of Comprehensive
Income. Noncontrolling interests in seeded investment products represent third-party ownership
interests and are part of investment securities on JHG’s Consolidated Balance Sheets. These assets
are not available for general corporate purposes and may be redeemed by the third parties at any
time.
Refer to the consolidation discussion in this note for information regarding the consolidation of
certain seeded investment products.
JHG may redeem invested seed capital for a variety of reasons, including when third-party
investments in the relevant product are sufficient to sustain the given investment strategy. The length
of time JCG holds a majority interest in a product varies based on a number of factors, including, but
not limited to, market demand, market conditions and investment performance.
Investments in Advised Mutual Funds and Investments Related to the Economic Hedging of
Deferred Compensation
JHG grants mutual fund share awards to employees that are indexed to certain funds managed by
JHG. Upon vesting, participants receive the value of the mutual fund share awards adjusted for
gains or losses attributable to the mutual funds to which the award was indexed, subject to tax
withholding, or participants receive shares in the mutual fund. When investments in the Group’s fund
products are purchased and held against deferred compensation liabilities, any movement in the fair
value of the assets and corresponding movements in the deferred compensation liability are
recognized in the Consolidated Statements of Comprehensive Income.
The Group maintains deferred compensation plans for certain highly compensated employees and
members of its Board of Directors. Eligible participants may defer a portion of their compensation
and have the ability to earn a return by indexing their deferrals to mutual funds managed by the
Group and its subsidiaries. The Group makes no contributions to the plan. To protect against market
variability of the liability, the Group creates an economic hedge by investing in mutual funds that are
consistent with the deferred amounts and mutual fund elections of the participants. Such investments
remain assets of JHG. Changes in market value of the liability to participants are recognized as
long-term incentive compensation in JHG’s Consolidated Statements of Comprehensive Income, and
changes in the market value of the mutual fund securities are recognized in investment gains
(losses), net on JHG’s Consolidated Statements of Comprehensive Income.
Impairment Evaluation
The Group periodically evaluates the carrying value of equity method investments and investment
securities classified as available-for-sale for potential impairment. In determining if an impairment
exists, the Group considers the duration, extent and circumstances of any decline in fair value.
Where a fall in the value of an investment is prolonged or significant, it is considered an indication of
impairment.
The Group evaluates the securities in an unrealized loss position in the available for sale portfolio for
OTTI on the basis of the duration of the decline in value of the security and severity of that decline
69
as well as the Group’s intent and ability to hold these securities for a period of time sufficient to
allow for any anticipated recovery in the market value. For equity method investments, if
circumstances indicate that an OTTI may exist, the investments are evaluated using market values
where available, or the expected future cash flows of the investment.
If it is determined that the impairment on an equity security is other than temporary, the investment
is written down to fair value. An impairment loss equal to the difference between the carrying value
of the security and its fair value is recognized as an impairment charge within investment gains
(losses), net in the Group’s Consolidated Statements of Comprehensive Income. For
available-for-sale investments, any amounts previously recognized in other comprehensive income in
respect of cumulative changes in fair value are taken to net income on impairment.
No impairment charges were recognized on investment securities for the years ended December 31,
2017, 2016 and 2015.
Trade Receivables
Trade receivables, which generally have 30 day payment terms, are initially recognized at fair value,
normally equivalent to the invoice amount. When the time value of money is material, the fair value
is discounted. Provision for specific doubtful accounts is made when there is evidence that the
Group may not be able to recover balances in full. Balances are written off when the receivable
amount is deemed uncollectable.
OEIC and Unit Trust Receivables and Payables
OEIC and unit trust receivables and payables are in relation to the purchase of units/shares (by
investors) and the liquidation of units/shares (owned by trustees). The amounts are dependent on
the level of trading and fund switches in the four working days leading up to the end of the period.
Since they are held with different counterparties, the amounts are presented gross on the Group’s
Consolidated Balance Sheets.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash held at banks, on demand deposits, highly liquid
short term government securities and investments in money market instruments with a maturity date
of three months or less. Cash balances maintained by consolidated VREs are not considered legally
restricted and are included in cash and cash equivalents on the Consolidated Balance Sheets. Cash
balances held by consolidated VIEs are disclosed separately as a component of assets of
consolidated VIEs on the Consolidated Balance Sheets.
Derivative Instruments
The Group may, from time to time, use derivative financial instruments to mitigate price, interest rate,
foreign currency and credit risk. The Group does not designate derivative instruments as hedges for
accounting purposes, with the exception of certain foreign currency forward contracts used for net
investment hedging.
Derivative instruments are measured at fair value and classified as either other current assets or
accounts payable and accrued liabilities on the Group’s Consolidated Balance Sheets. Changes in
the fair value of derivative instruments are recorded within investment gains (losses), net in the
Group’s Consolidated Statements of Comprehensive Income. Changes in fair value of foreign
currency forward contracts designated as hedges for accounting purposes are recognized in
accumulated other comprehensive income under net investment hedge accounting.
70
The Group’s consolidated seed investments may also be party to derivative instruments. These
derivative instruments are disclosed separately from the Group’s corporate derivative instruments.
Refer to Note 6 — Investment Securities.
Noncontrolling Interests and Redeemable Noncontrolling Interests
Noncontrolling interests that are not subject to redemption rights are classified in permanent equity.
Redeemable noncontrolling interests are classified outside of permanent equity on the Consolidated
Balance Sheets and are measured at the estimated fair value as of the balance sheet date.
Noncontrolling interests in consolidated seed investments are classified as redeemable
noncontrolling interests where there is an obligation on the fund to repurchase units at the investor’s
request. Refer to Note 13 — Noncontrolling Interests for further information.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value of financial
instruments traded in active markets (such as publicly traded securities and derivatives) is based on
quoted market prices at the reporting date. The quoted market price used for financial instruments is
the last traded market price for both financial assets and financial liabilities where the last traded
price falls within the bid ask spread. In circumstances where the last traded price is not within the
bid ask spread, management will determine the point within the bid ask spread that is most
representative of fair value current bid price. The fair value of financial instruments that are not
traded in an active market is determined using valuation techniques commonly used by market
participants, including the use of comparable recent arm’s length transactions, discounted cash flow
analysis and option pricing models. Estimating fair value requires significant management judgment,
including benchmarking to similar instruments with observable market data and applying appropriate
discounts that reflect differences between the securities that the Group is valuing and the selected
benchmark.
Measurements of fair value are classified within a hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value based on whether the inputs to those valuation techniques
are observable or unobservable.
The valuation hierarchy contains three levels:
• Level 1 — Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in
active markets.
• Level 2 — Valuation inputs are quoted market prices for identical assets or liabilities in markets
that are not active, quoted market prices for similar assets and liabilities in active markets, and
other observable inputs directly or indirectly related to the asset or liability being measured.
• Level 3 — Valuation inputs are unobservable and significant to the fair value measurement.
The valuation of an asset or liability may involve inputs from more than one level of the hierarchy.
The level in the fair value hierarchy within which a fair value measurement in its entirety falls is
determined based on the lowest level input that is significant to the fair value measurement.
Level 1 Fair Value Measurements
JHG’s Level 1 fair value measurements consist mostly of seeded investment products, investments
in advised mutual funds, cash equivalents and investments related to deferred compensation plans
with quoted market prices in active markets. The fair value level of consolidated seeded investment
products is determined by the underlying securities of the product. The fair value level of
71
unconsolidated seeded investment products is determined using the respective NAV of each
product.
Level 2 Fair Value Measurements
JHG’s Level 2 fair value measurements consist mostly of consolidated seeded investment products
and JHG’s long-term debt. The fair value of consolidated seeded investment products is determined
by the underlying securities of the product. The fair value of JHG’s long-term debt is determined
using broker quotes and recent trading activity, which are considered Level 2 inputs.
Level 3 Fair Value Measurements
JHG’s assets and liabilities measured at Level 3 are primarily private equity investments,
redeemable noncontrolling interests, contingent deferred consideration and deferred compensation
liabilities which are held against investments in the Group’s fund products, where the significant
valuation inputs are unobservable.
Private equity investments are valued using a combination of the enterprise value / EBITDA multiple
method and the discounted cash flow method. Significant unobservable inputs include discount
rates, EBITDA multiple, and price-earnings ratio, taking into account management’s experience and
knowledge of market conditions of the specific industries.
The fair value of redeemable noncontrolling interests in consolidated funds is primarily driven by the
fair value of the investments in consolidated funds. Details of inputs used to calculate the fair value
of contingent deferred consideration can be found in Note 9 — Fair Value Measurements.
Nonrecurring Fair Value Measurements
Nonrecurring Level 3 fair value measurements include goodwill and intangible assets. The Group
measures the fair value of goodwill and intangible assets on initial recognition using discounted cash
flow analysis that requires assumptions regarding projected future earnings and discount rates.
Because of the significance of the unobservable inputs in the fair value measurements of these
assets and liabilities, such measurements are classified as Level 3. See the ‘Goodwill and Intangible
Assets, net’ accounting policy set forth within Note 2 — Summary of Significant Accounting Policies
for further information.
Income Taxes
The Group provides for current tax expense according to the tax laws in each jurisdiction in which it
operates, using tax rates and laws that have been enacted by the Balance Sheet date.
Deferred income tax assets and liabilities are recorded for temporary differences between the
financial statement and income tax basis of assets and liabilities as measured by the enacted
income tax rates that may be in effect when these differences reverse. The effect of changes in tax
rates on the Group’s deferred tax assets and liabilities is recognized as income tax within net
income in the period that includes the enactment date. Significant management judgment is required
in developing the Group’s provision for income taxes, including the valuation allowances that might
be required against deferred tax assets and the evaluation of unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a tax return.
The Group periodically assesses the recoverability of its deferred tax assets and the need for
valuation allowances on these assets. The Group makes these assessments based on the weight of
available evidence regarding possible sources of future taxable income and estimates relating to the
future performance of the business that results in taxable income.
72
In evaluating uncertain tax positions, the Group considers the probability that the tax benefit can be
sustained on examination by a taxing authority on the basis of its technical merits (‘the recognition
threshold’). For tax positions meeting this threshold, the amount recognized in the financial
statements is the benefit expected to be realized upon settlement with the taxing authority on the
basis of a cumulative-probability assessment of the possible outcomes. For tax positions not meeting
the recognition threshold, no financial statement benefit is recognized. The Group recognizes the
accrual of interest and penalties on uncertain tax positions as a component of the income tax
provision.
Revenue Recognition
Revenue includes management fees and performance fees, net of rebates. Management fees are
recognized in the accounting period in which the associated investment management service is
provided. Performance fees for all fund ranges and separate accounts are recognized on
crystallization and are therefore accounted for when the prescribed performance hurdles are
achieved and it is probable that a fee will be collected as a result. There are no performance fee
contracts where revenue can be reversed or clawed back. There are no cumulative revenues
recognized that would be reversed if all of the existing investments became worthless.
Management fees are generally based upon a percentage of the market value of AUM and are
calculated as a percentage of either the daily, month-end or quarter-end average asset balance in
accordance with contractual agreements. Performance fees are specified in certain fund and client
contracts and are based on investment performance either on an absolute basis or compared to an
established index over a specified period of time. This is often subject to a hurdle rate.
Management fees are primarily received monthly or quarterly while performance fees are usually
received monthly, quarterly or annually by the Group, although the frequency of receipt varies
between agreements. Management and performance fee revenue not yet received is recognized
within fees and other receivables in the Consolidated Balance Sheets.
U.S. Mutual Fund Performance Fees
The investment management fee paid by each U.S. mutual fund subject to a performance fee is the
base management fee plus or minus a performance fee adjustment as determined by the relative
investment performance of the fund compared to a specified benchmark index. Under the
performance-based fee structure, the investment advisory fee paid by each fund consists of two
components: (1) a base fee calculated by applying the contractual fixed rate of the advisory fee to
the fund’s average daily net assets during the previous month, plus or minus (2) a performance fee
adjustment calculated by applying a variable rate of up to 0.15% to the fund’s average daily net
assets during the performance measurement period. The performance measurement period begins
as a trailing period ranging from 12 to 18 months, and each subsequent month is added to each
successive performance measurement period until a 36-month period is achieved. At that point, the
measurement period becomes a rolling 36-month period.
When current fund net assets vary from fund net assets over the performance measurement period,
the performance fee adjustment, as a percentage of fund current assets, may vary significantly.
Under circumstances involving underperformance by a rapidly shrinking fund, the dollar amount of
the negative performance fee adjustment could be more than the dollar amount of the positive base
fee.
The addition of performance fees to all funds without such fees is subject to the approval of both a
majority of the shareholders of such Funds and the Funds’ Independent Board of Trustees.
73
Commissions
Commissions on management fees are accounted for on an accrual basis and are recognized in the
accounting period in which the associated management fee is earned.
Operating Expenses
Operating expenses are accrued and recognized as incurred.
Stock-Based Compensation
The Group issues stock-based awards to employees, all of which are classified as equity settled
stock-based payments. Equity settled stock-based payments are measured at the fair value of the
shares at the grant date. The awards are expensed, with a corresponding increase in reserves, on
either a straight-line basis or a graded basis (depending on vesting conditions) over the vesting
period. Forfeitures are recognized as they occur.
The grant date fair value for stock options is determined using the Black-Scholes option pricing
model, and the grant date fair value of restricted stock is determined from the market price on the
date of grant. The Black-Scholes model requires management to determine certain variables; the
assumptions used in the Black-Scholes option pricing model include dividend yield, expected
volatility, risk free interest rate and expected life. The dividend yield and expected volatility are
determined using historical Group data. The risk free interest rate for options granted is based on
the three year UK treasury coupon at the time of the grant. The expected life of the stock options is
the same as the service conditions applicable to all Group awards.
The Group generally uses the Monte Carlo model to determine the fair value of performance-based
awards. The assumptions used in the Monte Carlo model include dividend yield, share price volatility
and discount rate.
The Group had $9.9 million and $37.3 million of stock-based compensation costs and nil and
$11.0 million of proceeds from stock-based compensation plans included in retained earnings during
the years ended December 31, 2017 and 2016, respectively. Prior to the Group’s Extraordinary
General Meeting (‘‘EGM’’) on April 26, 2017, the Group’s articles of association did not allow the
Group to recognize these items in additional paid-in-capital. A change in the Group’s articles of
association was approved at the EGM and from April 26, 2017, all costs in relation to stock-based
compensation will be recognized in additional paid-in-capital. The accumulated balance in relation to
stock-based compensation plans within retained earnings as of December 31, 2017 and 2016, was
$(105.4) million and $(92.9) million, respectively.
Earnings Per Share
Basic earnings per share attributable to JHG shareholders is calculated by dividing net income
(adjusted for the allocation of earnings to participating restricted stock awards) by the weighted
average number of shares outstanding. JHG has calculated earnings per share using the two class
method. There are some participating restricted stock awards which are paid non forfeitable
dividends. Under the two class method, net income attributable to JHG is adjusted for the allocation
of earnings to participating restricted stock awards.
Diluted earnings per share is calculated in a similar way to basic earnings per share, but is adjusted
for the effect of potential common shares unless they are anti-dilutive.
74
Contingent Consideration
Contingent consideration, resulting from business combinations, is recognized at fair value at the
acquisition date as part of the business combination and discounted where the time value of money
is material. The determination of the fair value is based on discounted cash flows, with the key
assumptions being the probability of meeting each performance target and the discount factor
applied. When the contingent consideration meets the definition of a financial liability, it is
subsequently remeasured to fair value at each reporting date through net income. Finance charges,
where discounting has been applied, are also recognized through net income. See Note 9 — Fair
Value Measurement for further information about contingent consideration on acquisitions taking
place during the reporting period.
Goodwill and Intangible Assets, Net
Goodwill represents the excess of cost over the fair value of the identifiable net assets of acquired
companies and is capitalized in the Consolidated Balance Sheets.
Intangible assets consist primarily of investment management contracts and trademarks acquired as
part of business combinations. Investment management contracts have been identified as separately
identifiable intangible assets arising on the acquisition of subsidiaries or businesses. Such contracts
are recognized at the present value of the expected future cash flows of the investment
management contracts at the date of acquisition. Investment management contracts may be
classified as either indefinite lived investment management contracts or finite lived client
relationships.
Indefinite-lived intangible assets comprise of investment management agreements where the
agreements are with investment companies themselves and not with underlying investors. Such
contracts are typically renewed indefinitely and therefore the Group considers the contract life to be
indefinite and, as a result, the contracts are not amortized. Definite lived intangible assets comprise
of investment management agreements where the agreements are with the underlying investor.
Indefinite-lived intangible assets and goodwill are not amortized. Finite-lived client relationships are
amortized on a straight-line basis over their remaining useful lives.
Goodwill is reviewed for impairment annually or more frequently if changes in circumstances indicate
that the carrying value may be impaired. The Group has determined that it has one reporting unit for
goodwill impairment testing purposes, which is consistent with internal management reporting and
management’s oversight of operations. The Group may first assess goodwill for qualitative factors to
determine whether it is necessary to perform a quantitative impairment test. The qualitative analysis
considers entity-specific and macroeconomic factors and their potential impact on the key
assumptions used in the determination of the fair value of the reporting unit. A quantitative
impairment test is performed if the results of the qualitative assessment indicate that it is more likely
than not that the fair value of the related reporting unit is less than its carrying value, or if a
qualitative assessment is not performed.
Where the fair value is less than the carrying amount, an impairment is recognized. Any impairment
is recognized immediately through net income and cannot subsequently be reversed.
Intangible assets subject to amortization are tested for impairment whenever events or
circumstances indicate that the carrying value may not be recoverable and indefinite-lived assets are
tested for impairment annually or more frequently if changes in circumstances indicate that the
carrying value may be impaired.
75
Goodwill and intangible assets require significant management estimates and judgment, including the
valuation and expected life determination in connection with the initial purchase price allocation and
the ongoing evaluation for impairment.
Foreign Currency
Transactions in foreign currencies are recorded at the appropriate exchange rate prevailing at the
date of the transaction. Foreign currency monetary balances at the reporting date are converted at
the prevailing exchange rate. Foreign currency non-monetary balances carried at fair value or cost
are translated at the rates prevailing at the date when the fair value or cost is determined. Gains and
losses arising on retranslation are recognized as a component of net income, except for available for
sale financial assets where the unhedged changes in fair value are recognized in other
comprehensive income.
On consolidation, the assets and liabilities of the Group’s operations whose functional currency is not
USD are translated at exchange rates prevailing at the reporting date. Income and expense items
are recognized at an average monthly exchange rate. Exchange differences arising, if any, are taken
through other comprehensive income to accumulated other comprehensive income. Where net
investment hedge accounting is applied using foreign currency forward contracts, the fair value
movement on these contracts is also recognized within accumulated other comprehensive income. In
the period in which an operation is disposed of, translation differences previously recognized in
accumulated other comprehensive income are recognized as a component of net income.
Post Employment Retirement Benefits
The Group provides employees with retirement benefits through both defined benefit and defined
contribution plans. The assets of these plans are held separately from the Group’s general assets, in
trustee administered funds.
Contributions to the defined contribution plan are expensed to employee compensation and benefits
on the Consolidated Statements of Comprehensive Income when they become payable.
Defined benefit obligations and the cost of providing benefits are determined annually by
independent qualified actuaries using the projected unit credit method. The Group’s annual
measurement date of the defined benefit plan is December 31. The defined benefit obligation is
measured as the present value of the estimated future cash outflows using a discount rate based on
AA rated corporate bond yields of appropriate duration. The plan assets are recognized at fair value.
The funded status of the defined benefit pension plans (the resulting surplus or deficit of defined
benefit assets less liabilities) is recognized in the Consolidated Balance Sheets, net of any taxes that
would be deducted at source.
Actuarial gains and losses arise as a result of the difference between actual experience and
actuarial assumptions. The ‘10% corridor’ method for recognizing actuarial gains and losses has
been adopted by the Group. This means that cumulative actuarial gains or losses up to an amount
equal to 10% of the higher of the liabilities or assets of the scheme (‘the corridor’) have no
immediate impact on net income and are instead recognized through other comprehensive income.
Cumulative gains or losses greater than the corridor are amortized to net income over the average
remaining future working lifetime of the active members in the plan.
Net periodic benefit cost is recorded as a component of net income in the Consolidated Statements
of Comprehensive Income and includes service cost, interest cost, expected return on plan assets
and any actuarial gains and losses previously recognized as a component of other comprehensive
income which have been amortized in the period. Net periodic benefit costs are recognized as an
operating expense.
76
See Note 15 — Retirement Benefit Plans for further discussion of the Group’s pension plans.
Common Stock
JHG’s common stock, par value $1.50 per share is classified as equity instruments. Equity shares
issued by JHG are recorded at the fair value of the proceeds received or the market price on the
day of issue. Direct issue costs, net of tax, are deducted from additional paid-in-capital within equity.
Treasury shares held are equity shares of JHG acquired by or issued to employee benefit trusts.
Treasury shares held are recorded at cost and are deducted from equity. No gain or loss is
recognized in the Consolidated Statements of Comprehensive Income on the purchase, issue, sale
or cancellation of JHG’s own equity shares.
Share Redenomination and Consolidation
On April 26, 2017, Henderson redenominated its ordinary shares from GBP to USD, resulting in a
change in par value from £0.125 to $0.1547 per share. At that time, Henderson had 1,131,842,110
shares in issue and as a result the ordinary share nominal capital became $175.1 million. The
difference between the revised ordinary share nominal capital balance of $175.1 million and the
previously stated ordinary share nominal capital balance of $234.4 million (converted at the historic
exchange rate rather than the rate required for the redenomination under Jersey company law) was
recognized as a component of additional paid-in-capital. Consequently, the additional paid-in-capital
balance was adjusted from $1,237.9 million to $1,297.2 million.
Additionally, in accordance with a special resolution passed by the shareholders on May 3, 2017, the
par value of the shares of Henderson was reduced to $0.15 per share, from $0.1547 per share, and
the total ordinary share nominal capital became $169.8 million. In accordance with that resolution,
the reduction in the total ordinary share nominal capital of $5.3 million was credited to the additional
paid-in-capital account, which moved from $1,297.2 million to $1,302.5 million.
On April 26, 2017, the shareholders approved a 10-to-1 share consolidation, which took effect on
May 30, 2017. As a result of the share consolidation, the number of shares in issue was reduced by
a factor of 10, and the par value of the shares became $1.50.
Note 3 — Recent Accounting Pronouncements
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (‘‘FASB’’) issued a new revenue recognition
standard. The standard’s core principle is that a company will recognize revenue to depict the
transfer of goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. In addition, the standard
specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands
disclosure requirements for revenue recognition. The revenue standard is effective for annual
reporting periods beginning after December 15, 2017, including interim periods within that reporting
period. The Company is evaluating the effect of adopting this new accounting standard, including the
amending Accounting Standards Update (‘‘ASU’’). Management reviewed the terms and conditions of
its revenue contracts and does not expect a significant change in the timing of revenue recognition
for its management fees, performance fees, servicing fees and its other revenue upon adoption of
the new guidance. However, the Group’s evaluation is not complete.
In March 2016, the FASB issued an amendment to its principal-versus-agent guidance in the FASB’s
new revenue standard. The key provisions of the amendment are assessing the nature of the
entity’s promise to the customer, identifying the specified goods or services, and applying the control
principle and indicators of control. The amendment is effective for annual reporting periods beginning
77
after December 15, 2017, including interim periods within those annual reporting periods. In addition,
entities are required to adopt the amendment by using the same transition method they used to
adopt the new revenue standard. The Company’s principal-versus-agent assessment focused on
treatment of distribution fees collected from mutual fund assets and whether such fees should be
reported as revenue (1) on a gross basis or (2) on a net basis, where such fees are reduced by
distribution fees paid by the Company to intermediaries. Currently, certain distribution fees are
presented on a gross basis, while others are presented on a net basis, with respective presentations
dictated by the terms of the underlying distribution agreements. Presentation of distribution fees will
be made on a gross basis upon adoption of the accounting guidance. The Company currently
expects such presentation to increase annual revenue by approximately $97 million with a
corresponding increase in annual expense based on respective annualized figures in 2017. The
guidance will be adopted on a retrospective basis. The retrospective basis will require the
restatement of prior period revenue and expense amounts, but will not impact operating income or
net income figures.
Financial Instruments
In January 2016, the FASB issued amendments to its financial instruments standard, including
changes relating to the accounting for equity investments and the presentation and disclosure
requirements for financial instruments. Under the amended guidance, all equity investments in
unconsolidated entities (other than those accounted for using the equity method of accounting) will
generally be measured at fair value through earnings. There will no longer be an available-for-sale
classification (changes in fair value reported in other comprehensive income) for equity securities
with readily determinable fair values. The amended guidance also requires financial assets and
financial liabilities to be presented separately in the notes to the consolidated financial statements,
grouped by measurement category (e.g., fair value, amortized cost, lower of cost or market value)
and form of financial asset (e.g., loans, securities). The standard is effective for fiscal years
beginning after December 15, 2017, including interim periods within those fiscal years.
As of December 31, 2017, the Group has available-for-sale investment securities that have been
measured at fair value through other comprehensive income. Upon adoption of the standard in 2018,
changes in fair value related to these securities will be recorded to investment gains (losses), net on
JHG’s Consolidated Statements of Comprehensive Income. In addition, a cumulative effect
adjustment will be recorded to the 2018 retained earnings beginning balance to remove the
accumulated balance in other comprehensive income. Adoption of the standard will not have a
material impact on JHG’s results of operations or cash flows.
Leases
In February 2016, the FASB issued a new standard on accounting for leases. The new standard
represents a significant change to lease accounting and introduces a lessee model that brings most
leases on to the balance sheet. The standard also aligns certain of the underlying principles of the
new lessor model with those in the FASB’s new revenue recognition standard. Furthermore, the new
standard addresses other concerns related to the current leases model. The standard is effective for
calendar periods beginning after December 15, 2018. The Group is evaluating the effect of adopting
this new accounting standard.
Statement of Cash Flows
In August 2016, the FASB issued an ASU to clarify guidance on the classification of certain cash
receipts and cash payments in the statements of cash flows. The FASB issued the ASU with the
intent of reducing diversity in practice regarding eight types of cash flows. The ASU is effective for
annual reporting periods beginning after December 15, 2017, including interim periods within those
78
annual reporting periods. Management does not expect the adoption to have a material impact on
the Consolidated Statements of Cash Flows.
In November 2016, the FASB issued an ASU to clarify guidance on the classification and
presentation of restricted cash in the statements of cash flows. The ASU is effective for annual
reporting periods beginning after December 15, 2017, including interim periods within those annual
reporting periods. Management does not expect the adoption to have a material impact on the
Consolidated Statements of Cash Flows.
Goodwill Impairment Testing
In January 2017, the FASB issued an ASU which simplifies the accounting for goodwill impairments
by eliminating step two from the goodwill impairment test. The ASU requires goodwill impairments to
be measured on the basis of the fair value of the reporting unit relative to the reporting unit’s
carrying amount rather than on the basis of the implied amount of goodwill relative to the goodwill
balance of the reporting unit. The ASU is effective for annual and interim impairment tests for
periods beginning after December 15, 2021. Early adoption is allowed for annual and interim
impairment tests occurring after January 1, 2017. The Group early adopted the guidance effective
January 1, 2017, and applied the guidance to its annual impairment tests in 2017.
Hedge Accounting
In August 2017, the FASB issued an ASU that amends hedge accounting. The ASU expands the
strategies eligible for hedge accounting, changes how companies assess hedge effectiveness and
will require new disclosures and presentation. The ASU is effective on January 1, 2019, for calendar
year-end companies; however, early adoption is permitted. The Group is evaluating the effect of
adopting this new accounting standard.
Retirement Benefit Plans
In March 2017, the FASB issued an ASU that requires the bifurcation of net periodic pension costs.
The service cost component will be presented with other employee compensation costs in operating
income, while the other components of net periodic pension costs will be presented separately
outside of operations. The guidance is effective for annual reporting periods beginning after
December 15, 2017, and interim periods within that reporting period. The Group anticipates
reclassifying approximately $2.7 million of other components excluding service costs outside of
operating expenses on an annualized basis.
Note 4 — Acquisitions
Merger with JCG
On the Closing Date, pursuant to the Agreement and Plan of Merger dated as of October 3, 2016
(the ‘‘Merger Agreement’’), by and among JCG, a Delaware corporation, Henderson, a company
incorporated in Jersey, and Horizon Orbit Corp., a Delaware corporation and a direct and wholly
owned subsidiary of Henderson (‘‘Merger Sub’’), Merger Sub merged with and into JCG, with JCG
surviving such merger as a direct and wholly owned subsidiary of Henderson. Upon closing of the
Merger, Henderson became the parent holding company for the combined group and was renamed
Janus Henderson Group plc.
Upon closing of the Merger, holders of JCG common stock received 0.47190 fully paid and
non-assessable JHG ordinary shares with a par value of $1.50 per share (the ‘‘Ordinary Shares’’) for
each share of JCG common stock held, plus cash in lieu of any fractional shares based on
prevailing market prices. Effective immediately prior to the closing of the Merger, Henderson
79
implemented a share consolidation of ordinary shares at a ratio of one Ordinary Share (or CDI, as
applicable) for every 10 ordinary shares (or CDIs, as applicable) outstanding.
The fair value of consideration transferred to JCG common stockholders was $2,630.2 million,
representing 87.2 million shares of JHG transferred at a share price of $30.75 each as of the
Closing Date, adjusted for a post-combination stock-based compensation charge for unvested shares
in relation to JCG share plans.
The issuance of JHG shares in connection with the Merger was registered under the Securities Act
of 1933, as amended, pursuant to JHG’s registration statement on Form F- 4 (File No. 333- 216824)
filed with the SEC on March 20, 2017 (the ‘‘Registration Statement’’).
Fair Values of Assets Acquired and Liabilities Assumed
Preliminary estimates of fair values of the assets acquired and liabilities assumed were based on
information available as of the closing of the Merger. The Group evaluated the underlying inputs and
assumptions used in its valuations and finalized its purchase price allocation as of December 31,
2017. Certain adjustments were recorded to goodwill, deferred tax liabilities, other non-current
liabilities and noncontrolling interests.
The final allocation of the consideration transferred to the assets acquired and liabilities assumed are
presented in the following table (in millions):
Assets:
Cash and cash equivalents
Investment securities
Fees and other receivables
Other current assets, net
Property, equipment and software
Intangible assets
Goodwill
Other non-current assets, net
Liabilities:
Long-term debt
Deferred tax liabilities
Accounts payable and accrued liabilities
Other non-current liabilities
Noncontrolling interests
Preliminary purchase
price allocation
Adjustments
Final purchase
price allocation
$
417.2
270.4
133.7
119.4
32.3
2,785.0
697.9
10.6
481.8
1,025.6
243.8
55.2
59.4
$ —
—
—
—
—
—
28.6
—
8.7
—
0.8
(10.4)
$
417.2
270.4
133.7
119.4
32.3
2,785.0
726.5
10.6
481.8
1,034.3
243.8
56.0
49.0
Net assets acquired
$ 2,600.7
$ 29.5
$ 2,630.2
Goodwill
Goodwill primarily represents the value JHG expects to obtain from growth opportunities and
synergies for the combined operations. Goodwill is not deductible for tax purposes.
Intangible Assets
Acquired intangible assets include the value of investment advisory agreements for mutual funds,
separate accounts and ETPs. Also included are the values of acquired trademarks, which include
trademarks for Janus Capital Management LLC, Intech, Kapstream, Perkins and VelocityShares.
80
Acquired intangible assets and their weighted-average estimated useful lives are presented in the
following table (in millions):
Investment management contracts:
Mutual funds
Separate accounts
ETNs
ETFs
Trademarks
Total
Useful
life (weighted-
average in years)
Indefinite
15
15
Indefinite
Indefinite
Fair value
$ 2,155.0
202.0
33.0
14.0
381.0
$ 2,785.0
Debt
The fair value of JHG’s debt was valued using broker quotes and recent trading activity, which are
considered fair value Level 2 inputs.
The acquired 2018 Convertible Notes may be wholly or partially settled in cash, and thereby the
liability and conversion feature components are accounted for separately. The $115.2 million liability
component at the Closing Date was determined by discounting future contractual cash flows at a
1.9% rate, which is consistent with the estimated market interest rate for similar senior notes with no
conversion option. The liability component will accrete up to the face value of $116.6 million, through
interest expense, over the remaining term of the notes. The $42.9 million equity component was
determined as the difference between the liability component and the fair value of the 2018
Convertible Notes at the Closing Date.
The 2025 Senior Notes were recorded at their fair value of $323.7 million at the time of the Merger.
The 2025 Senior Notes include unamortized debt premium, net at December 31, 2017, of
$22.0 million, which will be amortized over the remaining life of the 2025 Senior Notes through
interest expense. The unamortized debt premium is recorded as a liability within long-term debt on
JHG’s Consolidated Balance Sheets.
Deferred Tax Liabilities, Net
Deferred income taxes primarily relate to deferred income tax balances acquired from JCG and the
deferred tax impact of fair value adjustments to the assets and liabilities acquired from JCG,
including intangible assets and long-term debt. Deferred income taxes were provisionally estimated
based on statutory tax rates in the jurisdictions of the legal entities where the acquired assets and
liabilities are taxed. Tax rates used are continually assessed, and updates to deferred income tax
estimates are based on any changes to provisional valuations of the related assets and liabilities
and refinement of the effective tax rates, which could result in changes to these provisional values.
Pro Forma Results of Operations
The following table presents summarized unaudited supplemental pro forma operating results as if
the Merger had occurred at the beginning of each of the periods presented (in millions):
Revenue
Net income attributable to JHG
$ 2,182.6
704.6
$
$ 2,010.6
336.2
$
$ 2,231.3
485.6
$
Year ended December 31,
2017
2016
2015
81
JCG Results of Operations
Unaudited revenue (inclusive of revenue from certain mandates transferred to JCG from Henderson
after the Merger) and net income of JCG from the Closing Date through the end of December 31,
2017, included in JHG’s Consolidated Statements of Comprehensive Income are presented in the
following table (in millions):
Revenue
Net income attributable to JCG
Options
Closing Date —
December 31, 2017
$ 752.9
$ 354.0
On the Closing Date of the Merger, JHG sold 20 tranches of conditional options to Dai-ichi, with
each tranche allowing Dai-ichi to purchase 500,000 JHG ordinary shares at a strike price of £29.972
per share (the terms of such options having been adjusted in accordance with the terms of the
Dai-ichi Option Agreement to take account of the effect of the share consolidation). The cash
consideration received for the options was £19.8 million ($25.7 million). The options can be
exercised by Dai-ichi during the period from the Closing Date of the Merger until October 3, 2018.
As of December 31, 2017, the fair value of the options was $26.1 million.
Contingent Consideration
Acquisitions prior to the Merger included contingent consideration. Refer to Note 9 — Fair Value
Measurements for a detailed discussion of the terms of the contingent consideration.
Note 5 — Consolidation
Variable Interest Entities
Consolidated Variable Interest Entities
JHG’s consolidated VIEs as of December 31, 2017, include certain consolidated seeded investment
products in which the Group has an investment and acts as the investment manager. The assets of
these VIEs are not available to JHG or the creditors of JHG. JHG may not, under any
circumstances, access cash and cash equivalents held by consolidated VIEs to use in its operating
activities or otherwise. In addition, the investors in these VIEs have no recourse to the credit of the
Group.
Consolidated VIE assets and liabilities, presented after intercompany eliminations, at December 31,
2017 and 2016, are as follows (in millions):
Investment securities
Cash and cash equivalents
Other current assets
Accounts payable and accrued liabilities
Total
Redeemable noncontrolling interests in consolidated
VIEs
Nonredeemable noncontrolling interests in
consolidated VIEs
JHG’s net interest in consolidated VIEs
December 31,
2017
December 31,
2016
$ 419.7
34.1
12.9
(21.5)
445.2
$ 313.7
44.2
8.1
(26.2)
339.8
(168.3)
(158.0)
(24.9)
(44.8)
$ 252.0
$ 137.0
82
Unconsolidated Variable Interest Entities
At December 31, 2017 and 2016, JHG’s carrying value of investment securities included on the
Consolidated Balance Sheets pertaining to unconsolidated VIEs was $6.2 million and nil,
respectively. JHG’s total exposure to unconsolidated VIEs represents the value of its economic
ownership interest in the investment securities.
Voting Rights Entities
Consolidated Voting Rights Entities
The following table presents the balances related to consolidated VREs that were recorded on JHG’s
Consolidated Balance Sheets, including JHG’s net interest in these products (in millions):
Investment securities
Cash and cash equivalents
Other current assets
Accounts payable and accrued liabilities
Total
Redeemable noncontrolling interests in consolidated
VREs
December 31,
2017
December 31,
2016
$ 18.9
5.9
0.6
(2.2)
23.2
(6.6)
$ 5.1
—
—
—
5.1
—
JHG’s net interest in consolidated VREs
$ 16.6
$ 5.1
JHG’s total exposure to consolidated VREs represents the value of its economic ownership interest
in these seeded investment products. JHG may not, under any circumstances, access cash and
cash equivalents held by consolidated VREs to use in its operating activities or for any other
purpose.
Unconsolidated Variable Rights Entities
At December 31, 2017 and 2016, JHG’s carrying value of investment securities included on the
Consolidated Balance Sheets pertaining to unconsolidated VREs was $50.0 million and $4.9 million,
respectively. JHG’s total exposure to unconsolidated VIEs represents the value of its economic
ownership interest in the investment securities.
83
Note 6 — Investment Securities
JHG’s investment securities as of December 31, 2017 and 2016, are summarized as follows (in
millions):
Trading securities:
Seeded investment products:
Consolidated VIEs
Consolidated VREs
Unconsolidated VIEs and VREs
Separate accounts
Pooled investment funds
Total seeded investment products
Investments related to deferred compensation plans
Other investments
Total trading securities
Available-for-sale securities:
Seeded investment products:
Consolidated VIEs
Unconsolidated VIEs and VREs
Total available-for-sale securities
Total investment securities
December 31,
2017
2016
$ 402.8
18.9
51.1
75.6
27.5
$ 288.0
5.1
4.5
—
—
575.9
94.0
8.2
678.1
16.9
5.1
22.0
297.6
66.5
3.1
367.2
25.7
0.4
26.1
$ 700.1
$ 393.3
Trading Securities
Net unrealized gains (losses) on trading securities held as of December 31, 2017, 2016 and 2015,
are summarized as follows (in millions):
Trading securities still held at period end
$ 25.2
$ 8.4
$ (5.6)
Available-for-Sale Securities
The following is a summary of available-for-sale securities as of December 31, 2017 and 2016 (in
millions):
Year ended December 31,
2017
2016
2015
December 31, 2017:
Available-for-sale securities
December 31, 2016:
Available-for-sale securities
Gross
unrealized
investment
Cost
Gains
Losses
Foreign
currency
translation
Fair value
$ 18.5
$ 2.7
$ —
$ 0.8
$ 22.0
$ 15.1
$ 3.4
$ —
$ 7.6
$ 26.1
84
Derivative Instruments
JHG maintains an economic hedge program that uses derivative instruments to hedge against
market volatility of certain seeded investments by using index and commodity futures (‘‘futures’’),
credit default swaps, index swaps and total return swaps (‘‘TRSs’’). Certain foreign currency
exposures associated with the Group’s seeded investment products are also hedged by using
foreign currency forward contracts.
JHG was party to the following derivative instruments as of December 31, 2017 and 2016 (in
millions):
Futures
Credit default swaps
Index swaps
Total return swaps
Foreign currency forward contracts
Notional Value
December 31,
2017
December 31,
2016
$ 190.6
117.5
76.7
70.3
118.8
$
14.7
—
34.2
59.5
170.1
The derivative instruments are not designated as hedges for accounting purposes, with the
exception of foreign currency forward contracts used for net investment hedging. Changes in fair
value of the futures, index swaps, TRSs and credit default swaps are recognized in investment gains
(losses), net in JHG’s Consolidated Statements of Comprehensive Income. Changes in the fair value
of the foreign currency forward contracts designated as hedges for accounting purposes are
recognized in other comprehensive income (loss), net of tax on JHG’s Consolidated Statements of
Comprehensive Income.
The value of the individual derivative contracts are recognized on a gross basis and included in
other current assets or accounts payable and accrued liabilities on the Consolidated Balance Sheets.
The Group has entered into netting arrangements with certain counterparties. The impacts of any
potential netting are shown below.
The following tables illustrate the effect of offsetting derivative instruments on JHG’s Consolidated
Balance Sheets as of December 31, 2017 and 2016 (in millions):
December 31, 2017
Gross amounts Gross amounts
offset by
derivative
instruments
offset by
cash collateral
pledged
Net amounts
Gross amounts
Assets:
Futures
Total assets
Liabilities:
Futures
Foreign currency
forward contracts
Total return swaps
Index swaps
Credit default
swaps
Total liabilities
$
$
$
0.9
0.9
(2.2)
(1.8)
(1.0)
(2.1)
$ (0.9)
$ (0.9)
$ —
$ —
$ —
$ —
$ 0.9
$ —
$ (1.3)
—
—
—
0.9
1.0
2.1
0.9
$ 4.9
(0.9)
—
—
(2.1)
$ (4.3)
(3.0)
$ (10.1)
—
$ 0.9
85
December 31, 2016
Gross amounts Gross amounts
offset by
derivative
instruments
offset by
cash collateral
pledged
Gross amounts
Liabilities:
Total return swaps
Index swaps
Foreign currency
forward contracts
Total liabilities
$ (1.1)
(0.8)
(3.2)
$ (5.1)
$ —
—
—
$ —
$ 1.1
0.5
—
$ 1.6
Net amounts
$ —
(0.3)
(3.2)
$ (3.5)
The Group recognized the following net foreign currency translation gains (losses) on hedged seed
investments denominated in currencies other than the Group’s functional currency and net gains
(losses) associated with foreign currency forward contracts under net investment hedge accounting
for the years ended December 31, 2017, 2016 and 2015 (in millions):
Foreign currency translation
Foreign currency forward contracts
Total
Year ended December 31,
2017
2016
2015
$ (3.2) $ 29.6
(29.6)
3.2
$ 3.5
(3.5)
$ — $ — $ —
The foreign currency translation gains and losses on foreign currency forward contracts associated
with the net investment hedge are recognized in other comprehensive income (loss), net of tax in
JHG’s Consolidated Statements of Comprehensive Income.
Derivative Instruments in Consolidated Seeded Investment Products
Certain of the Group’s consolidated seeded investment products utilize derivative instruments to
contribute to the achievement of defined investment objectives. These derivative instruments are
classified within other current assets or accounts payable and accrued liabilities on JHG’s
Consolidated Balance Sheets. Gains and losses on these derivative instruments are classified within
investment gains (losses), net in JHG’s Consolidated Statements of Comprehensive Income.
JHG’s consolidated seeded investment products were party to the following derivative instruments as
of December 31, 2017 and 2016 (in millions):
Futures
Contracts for differences
Credit default swaps
Total return swaps
Interest rate swaps
Options
Swaptions
Foreign currency forward contracts
Notional Value
December 31,
2017
December 31,
2016
$ 241.2
10.2
15.0
36.7
58.3
144.3
2.7
135.9
$
22.3
9.2
1.8
—
8.3
184.8
1.7
120.0
86
The following table illustrates the effect of offsetting derivative instruments within consolidated
seeded investment products on JHG’s Consolidated Balance Sheets as of December 31, 2017 (in
millions):
December 31, 2017
Gross amounts
offset by
derivative
instruments
Gross amounts
offset by
cash collateral
Net amounts
Gross amounts
$ 3.3
$ (1.7)
$ —
$ 1.6
0.1
0.2
0.1
0.1
1.5
0.1
1.1
$ 6.5
$ (1.7)
(0.2)
(1.0)
(0.2)
(1.2)
$ (4.3)
—
(0.1)
—
(0.1)
(0.3)
—
(0.4)
$ (2.6)
$ 1.7
0.1
0.1
0.2
0.4
$ 2.5
—
—
—
—
—
—
2.3
$ 2.3
$ —
—
—
—
(0.1)
$ (0.1)
0.1
0.1
0.1
—
1.2
0.1
3.0
$ 6.2
$ —
(0.1)
(0.9)
—
(0.9)
$ (1.9)
Assets:
Futures
Contracts for
differences
Interest rate swaps
Total return swaps
Credit default
swaps
Options
Swaptions
Foreign currency
forward contracts
Total
Liabilities:
Futures
Interest rate swaps
Credit default
swaps
Options
Foreign currency
forward contracts
Total
87
The following table illustrates the effect of offsetting derivative instruments within consolidated
seeded investment products on JHG’s Consolidated Balance Sheets as of December 31, 2016 (in
millions):
December 31, 2016
Gross amounts
offset by
derivative
instruments
Gross amounts
offset by
cash collateral
Net amounts
Gross amounts
Assets:
Futures
Contracts for
differences
Interest rate swaps
Options
Foreign currency
forward contracts
Total assets
Liabilities:
Futures
Contracts for
differences
Interest rate swaps
Credit default
swaps
Options
Foreign currency
forward contracts
Total liabilities
$ 0.6
$ (0.1)
$ —
$ 0.5
0.3
0.1
3.1
0.4
$ 4.5
(0.1)
(0.1)
(1.2)
—
$ (1.5)
—
—
—
(0.4)
$ (0.4)
0.2
—
1.9
—
$ 2.6
$ (0.1)
$ 0.1
$ —
$ —
(0.1)
(0.1)
(0.1)
(1.2)
(2.4)
$ (4.0)
0.1
0.1
—
1.2
—
—
—
—
—
$ 1.5
0.3
$ 0.3
—
—
(0.1)
—
(2.1)
$ (2.2)
As of December 31, 2017 and 2016, certain consolidated seeded investment products sold credit
protection through the use of credit default swap contracts. The contracts provide alternative credit
risk exposure to individual companies and countries outside of traditional bond markets. The terms
of the credit default swap contracts range from one to five years.
As sellers in credit default swap contracts, the consolidated seeded investment products would be
required to pay the notional value of a referenced debt obligation to the counterparty in the event of
a default on the debt obligation by the issuer. The notional value represents the estimated maximum
potential undiscounted amount of future payments required upon the occurrence of a credit default
event. As of December 31, 2017 and 2016, the notional values of the agreements totaled
$4.0 million and nil, respectively. The credit default swap contracts include recourse provisions that
allow for recovery of a certain percentage of amounts paid upon the occurrence of a credit default
event. As of December 31, 2017 and 2016, the fair value of the credit default swap contracts selling
protection was $0.1 million and nil respectively.
88
Investment Gains (Losses), Net
Investment gains (losses), net on JHG’s Consolidated Statements of Comprehensive Income
included the following for the years ended December 31, 2017, 2016 and 2015 (in millions):
Seeded investment products
Fair value movements on derivatives
Gain on sale of equity method investments
Gain on sale of Volantis
Other
Investment gains (losses), net
Year ended December 31,
2017
2016
2015
$ 26.0
(22.0)
—
10.2
3.8
$
0.5
(12.9)
—
—
0.7
$ 17.3
1.0
18.9
—
2.5
$ 18.0
$ (11.7) $ 39.7
Purchases, Sales, Settlements and Maturities
Cash flows related to investment securities for the years ended December 31, 2017, 2016 and 2015,
are summarized as follows (in millions):
2017
2016
2015
Year ended December 31,
Purchases
and
settlements
Sales,
settlements
and
maturities
Trading securities
Available-for-sale securities
$ (792.3)
(35.2)
$ 931.0
45.4
Total cash flows
$ (827.5)
$ 976.4
Purchases
and
settlements
$ (81.6)
—
$ (81.6)
Sales,
settlements
and
maturities
$ 5.0
31.6
$ 36.6
Purchases
and
settlements
$ (40.3)
—
$ (40.3)
Sales,
settlements
and
maturities
$ 5.3
40.6
$ 45.9
Note 7 — Goodwill and Intangible Assets
JHG’s goodwill and intangible assets are summarized below (in millions):
December 31,
2016
Merger
Amortization
Foreign
currency
translation
December 31,
2017
Indefinite-lived intangible assets:
Investment management
agreements
Trademarks
Definite-lived intangible assets:
Client relationships
Accumulated amortization
Net intangible assets
$ 334.8
—
$ 2,169.0
381.0
$ —
—
$ 40.1
0.2
$ 2,543.9
381.2
126.9
(60.4)
$ 401.3
235.0
—
$ 2,785.0
—
(22.9)
$ (22.9)
7.5
(6.4)
$ 41.4
369.4
(89.7)
$ 3,204.8
Goodwill
$ 741.5
$
726.5
$ —
$ 65.9
$ 1,533.9
Indefinite-lived intangible assets represent certain investment management contracts where the
Group expects both the renewal of the contracts and the cash flows generated by them to continue
indefinitely. Trademarks primarily relate to JCG and were acquired as a result of the Merger.
Definite-lived intangible assets represent client relationships, which are amortized over their
estimated lives using the straight-line method. The estimated weighted-average life of the client
relationships is approximately 13 years.
89
The opening goodwill balance originates from the various acquisitions the Group has undertaken.
The Merger goodwill balance represents goodwill recorded at the Closing Date of the Merger. Refer
to Note 4 — Acquisitions, for additional information on goodwill and intangible assets acquired from
the Merger.
Foreign currency translation movements in the table primarily relate to the translation of the
intangible assets and goodwill balances denominated in non-USD currencies to the Group’s
functional and presentational currency of USD using the closing foreign currency exchange rate at
the end of each reporting period.
Expected future amortization expense related to definite-lived intangible assets is summarized below
(in millions):
Year ended December 31,
2018
2019
2020
2021
2022
Thereafter
Total
Impairment Testing
Amount
$
29.7
29.7
29.7
26.8
18.3
145.5
$ 279.7
The Group elected to perform a qualitative assessment of the valuation of goodwill and indefinite-
lived intangible assets for its 2017 impairment test and concluded it is more likely than not that the
fair values of the Group’s reporting unit and the specific intangible assets exceed their carrying
values.
The 2016 impairment test of indefinite-lived intangible assets indicated an impairment loss of
$4.9 million which was recognized within depreciation and amortization on the Group’s Consolidated
Statement of Comprehensive Income for the year ended December 31, 2016. No goodwill
impairment losses were identified during the 2015 impairment test.
Definite-lived intangible assets are tested for impairment if there is an indication of impairment. No
indicators of impairment were identified.
Note 8 — Equity Method Investments
Equity method investments of $5.9 million and $0.2 million were recognized on the Group’s
Consolidated Balance Sheets within ‘other non-current assets’ as at December 31, 2017 and 2016,
respectively.
The Group holds interests in the following equity method investments including joint ventures
managed through shareholder agreements with third-party investors, accounted for under the equity
method:
Country of
incorporation
and principal
place of operation
Functional
Currency
2017
Percentage
Owned
2016
Percentage
Owned
Long Tail Alpha
Optimum Investment Management Limited
Northern Pines Henderson Capital GP LLC
Northern Pines Henderson Capital LLC
USA
UK
USA
USA
USD
GBP
USD
USD
20%
50%
—%
—%
20%
50%
50%
50%
90
The Group’s share of net loss from equity method investments recognized within net income was
$0.6 million and $3.1 million at December 31, 2017 and 2016, respectively. During 2016, the Group
received a share of profit from its equity method investments of $0.7 million. An impairment loss of
$3.8 million was also recognized in relation to the Group’s shareholding in Northern Pines as a
result of the decision to wind up this joint venture.
Note 9 — Fair Value Measurements
The following table presents assets, liabilities and redeemable noncontrolling interests presented in
the consolidated financial statements or disclosed in the notes to the consolidated financial
statements at fair value on a recurring basis as of December 31, 2017 (in millions):
Fair value measurements using:
Quoted prices in
active markets for
identical assets
and liabilities
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable inputs
(Level 3)
Total
$ 422.5
$
—
$
—
$
422.5
114.1
180.6
16.9
5.1
316.7
0.9
2.9
—
251.4
94.5
—
—
345.9
—
3.6
—
37.3
0.2
—
—
37.5
—
—
9.0
402.8
275.3
16.9
5.1
700.1
0.9
6.5
9.0
$ 743.0
$ 349.5
$ 46.5
$ 1,139.0
$
1.8
$
2.5
$
—
$
4.3
Assets:
Cash equivalents
Investment securities:
Consolidated VIEs — trading
Other — trading
Consolidated VIEs —
available-for-sale
Other — available-for-sale
Total investment securities
Seed hedge derivatives
Derivatives in consolidated
seeded investment products
Contingent consideration
Total assets
Liabilities:
Derivatives in consolidated
seeded investment products
Financial liabilities in
consolidated seeded
investment
products
Seed hedge derivatives
Current portion of long-term
debt (1)
Long-term debt (1)
Deferred bonuses
Contingent consideration
Dai-ichi options
11.6
5.9
—
—
—
—
—
—
4.2
57.3
323.4
—
—
—
—
—
—
—
64.7
76.6
26.1
11.6
10.1
57.3
323.4
64.7
76.6
26.1
574.1
174.9
15.4
$
$
$ 174.9
15.4
$ 190.3
$
190.3
Total liabilities
$
19.3
$ 387.4
$ 167.4
Redeemable noncontrolling
interests:
Consolidated seeded
investment products
Intech
Total redeemable
noncontrolling interests
$
$
—
—
—
$
$
—
—
—
(1) Carried at amortized cost and disclosed at fair value.
91
The following table presents assets, liabilities and redeemable noncontrolling interests presented in
the consolidated financial statements or disclosed in the notes to the consolidated financial
statements at fair value on a recurring basis as of December 31, 2016 (in millions):
Fair value measurements using:
Quoted prices in
active markets for
identical assets
and liabilities
(Level 1)
Significant other
observable inputs unobservable inputs
Significant
(Level 2)
(Level 3)
Total
$ 128.2
66.1
$ 117.1
13.1
$ 42.7
—
$ 288.0
79.2
20.3
0.4
215.0
3.4
5.4
—
135.6
0.6
—
—
42.7
—
25.7
0.4
393.3
4.0
$ 218.4
$ 136.2
$ 42.7
$ 397.3
$
1.3
$
2.2
$
—
$
3.5
16.2
—
—
—
$
17.5
$
—
—
—
—
5.1
7.3
—
$
$
—
25.5
42.9
—
16.2
25.5
42.9
5.1
$ 68.4
$ 93.2
$ 158.0
$ 158.0
Assets:
Investment securities:
Consolidated VIEs — trading
Other — trading
Consolidated VIEs —
available-for-sale
Other — available-for-sale
Total investment securities
Derivatives in consolidated seeded
investment products
Total assets
Liabilities:
Derivatives in consolidated seeded
investment products
Financial liabilities in consolidated
seeded investment products
Contingent consideration
Deferred bonuses
Seed hedge derivatives
Total liabilities
Total redeemable noncontrolling interests
in consolidated seeded investment
products
Level 1 Fair Value Measurements
JHG’s Level 1 fair value measurements consist mostly of seeded investment products, investments
in advised mutual funds, cash equivalents and investments related to deferred compensation plans
with quoted market prices in active markets. The fair value level of consolidated seeded investment
products is determined by the underlying securities of the product. The fair value level of
unconsolidated seeded investment products is determined using the respective NAV of each
product.
Level 2 Fair Value Measurements
JHG’s Level 2 fair value measurements consist mostly of consolidated seeded investment products
and JHG’s long-term debt. The fair value of consolidated seeded investment products is determined
by the underlying securities of the product. The fair value of JHG’s long-term debt is determined
using broker quotes and recent trading activity, which are considered Level 2 inputs.
92
Level 3 Fair Value Measurements
Investment Products
As of December 31, 2017, and December 31, 2016, certain securities within consolidated VIEs were
valued using significant unobservable inputs, resulting in Level 3 classification.
Disposal of Volantis
On April 1, 2017, the Group completed the sale of Volantis. Consideration for the sale was a 10%
share of the management and performance fees generated by Volantis for a period of three years.
The fair value of the Volantis contingent consideration is estimated at each reporting date by
forecasting revenues over the contingency period of three years. Significant unobservable inputs
used in the valuation are limited to forecast revenues, which factor in expected growth in AUM
based on performance and industry trends. Increases in forecast revenue increase the fair value of
the consideration, while decreases in forecast revenue decrease the fair value. The forecasted share
of revenues is then discounted back to the valuation date using an 11.8% discount rate. As of
December 31, 2017, the fair value of the Volantis contingent consideration asset was $9.0 million.
Contingent Consideration
Acquisition of Geneva
The consideration payable on the acquisition of Geneva Capital Management LLC (‘‘Geneva’’) in
2014 included two contingent tranches of up to $45.4 million and $25.0 million, payable over six
years. There was a $3.0 million fair value adjustment in the year ended December 31, 2017. As of
December 31, 2017 and 2016, the contingent consideration had a fair value of $19.3 million and
$20.3 million, respectively, and was included in other non-current liabilities on JHG’s Consolidated
Balance Sheets.
The fair value of the Geneva contingent consideration is estimated at each reporting date by
forecasting revenue, as defined by the sale and purchase agreement, over the contingency period
and by determining whether targets will be met. Significant unobservable inputs used in the valuation
are limited to forecast revenues, which factor in expected growth in AUM based on performance and
industry trends.
Acquisition of Perennial
The consideration payable on the acquisition of Perennial Fixed Interest Partners Pty Ltd and
Perennial Growth Management Pty Ltd (together ‘‘Perennial’’) included contingent consideration
payable in 2017 and 2019 if revenues of the Perennial equities business meet certain targets. The
total maximum payment over the remaining contingent consideration period is $5.9 million as of
December 31, 2017. In addition, there is a maximum amount of $41.2 million payable in two
tranches in 2019 and 2020, which have employee service conditions attached (‘‘earn-out’’). The
earn-out is accrued over the service period as compensation expense and is based on net
management fee revenue. Fair value adjustments to the consideration during the year ended
December 31, 2017, resulted in a $1.8 million decrease to the liability. As of December 31, 2017
and 2016, the contingent consideration and earn-out had a combined fair value of $7.0 million and
$5.2 million, respectively, which is included in other non-current liabilities on JHG’s Consolidated
Balance Sheets.
The fair value of the Perennial contingent consideration and earn-out is calculated at each reporting
date by forecasting Perennial revenues over the contingency period and determining whether the
93
forecasted amounts meet the defined targets. The significant unobservable input used in the
valuation is forecasted revenue.
Acquisition of Kapstream
JCG’s acquisition of Kapstream was a two-stage acquisition. The original acquisition of 51% in July
2015 had contingent consideration payable at 18 and 36 months after acquisition if certain
Kapstream AUM reach defined targets.
The purchase of the remaining 49% had contingent consideration of up to $43.8 million. Payment of
the contingent consideration is subject to all Kapstream products and certain products advised by
the Group, reaching defined revenue targets on the first, second and third anniversaries of
January 31, 2017. The contingent consideration will be payable in three equal installments on the
anniversary dates and is indexed to the performance of the premier share class of the Kapstream
Absolute Return Income Fund. Upon achieving the defined revenue targets, the holders receive the
value of the contingent consideration adjusted for gains or losses attributable to the mutual fund to
which the contingent consideration is indexed, subject to tax withholding. On January 31, 2018, the
first anniversary of the acquisition, Kapstream reached defined revenue targets and the Group paid
$15.3 million in February 2018.
No fair value adjustment was necessary in the year ended December 31, 2017. As of December 31,
2017, the aggregate contingent consideration had a fair value of $44.2 million; $18.8 million is
included in accounts payable and accrued liabilities, and $25.4 million is included in other
non-current liabilities on JHG’s Consolidated Balance Sheets. As of December 31, 2017, the total
maximum payment over the remaining contingent consideration period (first, second and third
anniversaries) is $48.6 million. The total maximum payment includes fair value adjustments
associated with the consideration, which is indexed to the performance of a certain fund.
The fair value of the Kapstream contingent consideration is calculated at each reporting date by
forecasting certain Kapstream AUM or defined revenue over the contingency period and determining
whether the forecasted amounts meet the defined targets. Significant unobservable inputs used in
the valuation are limited to forecasted Kapstream AUM and performance against defined revenue
targets.
Acquisition of VelocityShares
JCG’s acquisition of VelocityShares in 2014 included contingent consideration. The remaining
contingent consideration is payable on the third and fourth anniversaries of the acquisition, in
amounts up to $8.0 million each. The payments are contingent on certain VelocityShares’ ETPs
reaching defined net revenue targets. VelocityShares ETPs reached defined net revenue targets in
November 2017, the third anniversary of the acquisition, and the Group paid contingent
consideration of $3.6 million in January 2018. The total remaining maximum payment for the fourth
and final contingent consideration payment is $8.0 million.
Fair value adjustments to the consideration during the year ended December 31, 2017, resulted in a
$0.8 million decrease to the liability. As of December 31, 2017, the contingent consideration had a
fair value of $6.1 million. The fair value is included in accounts payable and accrued liabilities on
JHG’s Consolidated Balance Sheets.
The fair value of the VelocityShares contingent consideration is calculated at each reporting date by
forecasting net ETP revenue, as defined by the purchase agreement, over the contingency period
and by determining whether net forecasted ETP revenue targets are achieved. Significant
unobservable inputs used in the valuation are considered non-public data and limited to forecasted
gross revenues and certain expense items, which are deducted from these revenues.
94
Deferred Bonuses
Deferred bonuses represent liabilities to employees over the vesting period that will be settled by
investments in JHG products.
Dai-ichi Options
As of December 31, 2017, the fair value of the options sold to Dai-ichi was $26.1 million. The fair
value was determined using a Black-Scholes option pricing model. The Black-Scholes model
requires management to estimate certain variables, primarily the volatility of the underlying shares.
Changes in the fair value of the options are recognized in other non-operating income (expense), net
in JHG’s Consolidated Statements of Comprehensive Income.
Redeemable Noncontrolling Interests in Intech
Intech became a subsidiary of the Group as a result of the Merger. Redeemable noncontrolling
interests in Intech are measured at fair value on a quarterly basis or more frequently if events or
circumstances indicate that a material change in the fair value of Intech has occurred. The fair value
of Intech is determined using a valuation methodology that incorporates observable metrics from
publicly traded peer companies as valuation comparables and adjustments related to investment
performance and changes in AUM.
Redeemable Noncontrolling Interests in Consolidated Seeded Investment Products
Redeemable noncontrolling interests in consolidated seeded investment products are measured at
fair value. Their fair values are primarily driven by the fair value of the investments in consolidated
funds. The fair value of redeemable noncontrolling interests may also fluctuate from period to period
based on changes in the Group’s relative ownership percentage of seed investments.
Changes in Fair Value
Changes in fair value of JHG’s Level 3 assets for the years ended December 31, 2017 and 2016,
are as follows (in millions):
Beginning of year fair value
Balance acquired from the Merger
Additions
Settlements
Transfers to Level 2
Movement recognized in net income
Movements recognized in other comprehensive income
Foreign currency translation
End of year fair value
Year ended
December 31,
2017
2016
$ 42.7
3.0
10.9
(11.5)
(1.1)
2.2
0.2
0.1
$ 58.2
—
0.4
—
—
(17.5)
10.4
(8.8)
$ 46.5
$ 42.7
95
Changes in fair value of JHG’s individual Level 3 liabilities and redeemable noncontrolling interests
for the years ended December 31, 2017 and 2016, are as follows (in millions):
Year ended December 31,
2017
2016
Contingent Deferred Dai-ichi noncontrolling Contingent Deferred noncontrolling
consideration bonuses option
interests
consideration bonuses
interests
Redeemable
Redeemable
Beginning of year fair
value
Balances acquired
from the Merger
Additions
Changes in ownership
Net movement in
bonus deferrals
Fair value adjustments
Unrealized gains
(losses)
Amortization of Intech
appreciation rights
Distributions
Foreign currency
translation
$ 25.5
$ 42.9 $ —
$ 158.0
$ 19.5
$ 35.7
$
82.9
45.4
—
—
—
3.0
—
—
—
2.7
—
—
—
19.4
—
—
—
—
—
25.7
—
—
(0.6)
—
—
—
2.4
1.0
35.8
—
3.7
—
2.0
(11.0)
2.3
(0.3)
(0.2)
—
10.0
—
—
—
—
—
—
—
—
—
14.2
—
—
—
—
—
—
61.7
—
—
35.3
—
—
(4.0)
(7.0)
(21.9)
End of year fair value
$ 76.6
$ 64.7 $ 26.1
$ 190.3
$ 25.5
$ 42.9
$ 158.0
Significant Unobservable Inputs
Valuation techniques and significant unobservable inputs used in the valuation of JHG’s material
Level 3 asset, the Group’s private equity investment included within consolidated VIEs, as of
December 31, 2017, and December 31, 2016, are as follows (in millions):
As of December 31, 2017
Fair
value
Valuation
technique
Significant
unobservable
inputs
Investment securities of
$ 37.3 Discounted Discount rate
consolidated VIEs — trading
cash flow
EBITDA multiple
Price-earnings ratio
As of December 31, 2016
Fair
value
Valuation
technique
Significant
unobservable
inputs
Investment securities of
$ 42.7 Discounted Discount rate
consolidated VIEs — trading
cash flow
EBITDA multiple
Price-earnings ratio
Range
(weighted-average)
12.0%-15.0% (14.3)%
11.6-15.1 (14.3)
22.6-61.3 (52.4)
Range
(weighted-average)
12.0%-30.0% (16.3)%
8.7-11.0 (9.1)
17.2-24.0 (18.4)
Nonrecurring Fair Value Measurements
Nonrecurring Level 3 fair value measurements include goodwill and intangible assets. The Group
measures the fair value of goodwill and intangible assets on initial recognition using discounted cash
flow analysis that requires assumptions regarding projected future earnings and discount rates. Due
to the significance of the unobservable inputs in the fair value measurements of these assets, such
measurements are classified as Level 3. Goodwill and intangible assets were part of the preliminary
allocation of the consideration transferred to the assets acquired and liabilities assumed from the
Merger. Refer to Note 4 — Acquisitions for additional information.
96
Transfers between Fair Value Levels
The underlying securities of funds and separate accounts may trade on a foreign stock exchange. In
some cases, the closing price of such securities may be adjusted to capture the effects of any
post-closing activity affecting the markets in which they trade. Security prices are adjusted based
upon historical impacts for similar post-close activity. These adjustments result in the securities being
classified as Level 2 and may also result in movements of securities between Level 1 and Level 2.
Transfers are recognized at the end of each reporting period. Transfers from Level 3 to Level 2 were
$1.1 million for the year ended December 31, 2017. There were no transfers between Level 1 and
Level 2 for the year ended December 31, 2017.
Note 10 — Debt
Debt as of December 31, 2017 and 2016, consisted of the following (in millions):
4.875% Senior Notes due 2025
0.750% Convertible Senior Notes due 2018
Total debt
Less: Current portion of long-term debt
Total long-term debt
4.875% Senior Notes Due 2025
December 31,
2017
December 31,
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
$ 322.0
57.2
$ 323.4
57.3
$ — $ —
—
—
379.2
57.2
380.7
57.3
—
—
—
—
$ 322.0
$ 323.4
$ — $ —
As a result of the Merger, the Group assumed 2025 Senior Notes with a principal value of
$300.0 million, which pay interest at 4.875% semiannually on February 1 and August 1 of each year
and mature on August 1, 2025. The 2025 Senior Notes were recorded at their fair value of
$323.7 million at the time of the Merger. The 2025 Senior Notes include unamortized debt premium,
net at December 31, 2017, of $22.0 million, which will be amortized over the remaining life of the
2025 Senior Notes. The unamortized debt premium is recorded as a liability within long-term debt on
JHG’s Consolidated Balance Sheets.
0.750% Convertible Senior Notes Due 2018
As a result of the Merger, the Group assumed 2018 Convertible Notes with a principal value of
$116.6 million. The 2018 Convertible Notes pay interest at 0.750% semiannually on January 15 and
July 15 of each year and mature on July 15, 2018. The 2018 Convertible Notes had a fair value of
$158.1 million at the time of the Merger. The 2018 Convertible Notes may be wholly or partially
settled in cash at the election of JHG and thereby the liability and conversion feature components of
the 2018 Convertible Notes were accounted for separately. The $115.2 million liability component at
the Closing Date was determined by discounting future contractual cash flows at a 1.9% rate, which
is consistent with the estimated market interest rate for similar senior notes with no conversion
option. The $42.9 million equity component was determined as the difference between the liability
component and the fair value of 2018 Convertible Notes at the Closing Date. The fair value as of
December 31, 2017, in the table above represents the fair value of the liability component. Upon
closing of the Merger, JHG fully and unconditionally guaranteed the obligations of JCG in relation to
the 2018 Convertible Notes and 2025 Senior Notes.
97
Holders of the 2018 Convertible Notes may convert the notes during a particular calendar quarter if
the last reported sale price of JHG’s common stock is greater than or equal to 130% of the
applicable conversion price for at least 20 trading days during a period of 30 consecutive trading
days ending on the last trading day of the preceding quarter. During the year ended December 31,
2017, $59.1 million of principal was redeemed and settled with cash for a total cash outlay of
$92.5 million. Additional conversion notices were received in 2018; refer to Note 22 — Subsequent
Events for additional information. As of December 31, 2017, the face value of the 2018 Convertible
Notes was $57.5 million. As of January 1, 2018, the 2018 Convertible Notes met the conversion
criteria and are convertible during the first quarter 2018 at a conversion rate of 45.1535 shares of
JHG common stock per $1,000 principal amount of the 2018 Convertible Notes, which is equivalent
to a conversion price of approximately $22.15 per share of common stock.
Convertible Note Hedge and Warrants
Prior to the Merger, JCG entered into convertible note hedge and warrant transactions. The
instruments were intended to reduce the potential for future dilution to shareholders by effectively
increasing the initial conversion price of the 2018 Convertible Notes. The convertible note hedge and
warrants were terminated by the Group in June 2017, and JHG received $59.3 million and paid
$47.8 million to settle the contracts. The net proceeds from the settlements were recorded in
additional paid-in-capital on the Group’s Consolidated Balance Sheets.
7.25% Senior Notes due 2016
In March 2011, Henderson issued £150.0 million ($240.4 million) of 2016 Senior Notes which were
unsecured, unrated and repayable in full on March 24, 2016. The 2016 Senior Notes paid interest at
7.25% semi-annually on March 24 and September 24. The interest on the 2016 Senior Notes was
amortized over the five year term to interest expense in the Consolidated Statements of
Comprehensive Income. The 2016 Senior Notes were repaid in full at their maturity on March 24,
2016.
The Group was in compliance with all covenants attached to the 2016 Senior Notes up to the date
of repayment. The covenants included the requirement to provide notice of any actual or potential
default event and the preparation of audited accounts for each accounting period.
Credit Facility
At December 31, 2017, JHG had a $200 million, unsecured, revolving credit facility (‘‘Credit Facility’’)
with Bank of America Merrill Lynch International Limited, as coordinator, book runner and mandated
lead arranger. JHG and its subsidiaries can use the Credit Facility for general corporate purposes.
The rate of interest for each interest period is the aggregate of the applicable margin, which is based
on JHG’s long-term credit rating and the London Interbank Offered Rate (‘‘LIBOR’’); the Euro
Interbank Offered Rate (‘‘EURIBOR’’) in relation to any loan in euro (‘‘EUR’’); or in relation to any
loan in Australian dollar (‘‘AUD’’), the benchmark rate for that currency. JHG is required to pay a
quarterly commitment fee on any unused portion of the Credit Facility, which is also based on JHG’s
long-term credit rating. Under the Credit Facility, the financing leverage ratio cannot exceed 3.00x
EBITDA. At December 31, 2017, JHG was in compliance with all covenants, and there were no
borrowings under the Credit Facility at December 31, 2017, or from inception of the Credit Facility.
The Credit Facility had a maturity date of February 16, 2022, with two one-year extension options
that can be exercised at the discretion of JHG with the lender’s consent on the first and second
anniversary of the date of the agreement, respectively. On the first anniversary of the date of the
agreement, the Group exercised the option to extend the term of the Credit Facility by one year. The
revised maturity date of the Credit Facility is February 16, 2023.
98
Note 11 — Income Taxes
The components of the Group’s provision for income taxes for the years ended December 31, 2017,
2016 and 2015, are as follows (in millions):
Current:
UK
U.S. including state and local
International
Total current income taxes
Deferred:
UK
U.S. including state and local
International
Total deferred income taxes (benefits)
Year ended December 31,
2017
2016
2015
$
51.5
83.1
10.0
$ 30.3
1.1
1.2
$ 3.5
4.3
6.4
144.6
32.6
14.2
0.3
(354.4)
(1.5)
(355.6)
(2.2)
3.0
1.2
2.0
(5.6)
(2.1)
(0.4)
(8.1)
Total income tax expense
$ (211.0) $ 34.6
$ 6.1
The components of the Group’s total income before taxes for the years ended December 31, 2017,
2016 and 2015, are as follows (in millions):
UK
U.S.
International
Total income before taxes
Year ended December 31,
2017
2016
2015
$ 229.0
190.5
27.9
$ 180.9
(0.1)
31.1
$ 201.0
7.8
128.7
$ 447.4
$ 211.9
$ 337.5
The Group’s top holding company is tax resident in the UK and is subject to the tax laws and
regulations of that country. The following is a reconciliation between the UK statutory corporation tax
rate and the effective tax rate on the Group’s income from operations.
Year ended
December 31,
2017
2016
2015
UK statutory corporation tax rate
Effect of foreign tax rates
Impact of Property disposal (1)
Equity-based compensation
Finalization of positions with HMRC (2)
Tax adjustments
Non-deductible costs associated with the Merger
Impact of changes in statutory tax rates on deferred taxes
Taxes applicable to prior years
Other, net
Effective income tax rate, controlling interest
Net income attributable to noncontrolling interests
Total effective income tax rate
19.3% 20.0% 20.3%
(1.1)
7.4
—
0.2
0.3
0.7
1.2
(77.4)
(0.4)
1.7
(5.9)
— (2.3)
(3.7)
(3.1)
0.3
—
(2.4)
(1.0)
(0.3)
(3.4)
(0.8)
0.6
0.8
(1.9)
0.9
0.1
(47.0)% 15.2% 1.9%
1.1
(47.1)% 16.3% 1.8%
(0.1)
(0.1)
(1) This incorporates the tax impact of the disposal of THRE during 2015.
99
(2) Her Majesty’s Revenue and Customs (‘HMRC’), tax authority of the UK.
The Group operates in several taxing jurisdictions around the world, each with its own statutory tax
rate and set of tax laws and regulations. As a result, the future blended average statutory tax rate is
dependent on changes to such laws and regulations and the mix of profits and losses of the Group’s
subsidiaries. The Group’s blended average statutory tax rate increased subsequent to the Merger
with JCG.
Tax Legislation
The Group has significant tax expense and tax current and deferred payable impact associated with
the Act enacted on December 22, 2017, which resulted in an income tax benefit of $340.7 million.
The Act includes significant changes to the U.S. corporate income tax system: it reduces the U.S.
federal corporate tax rate from 35.0% to 21.0% as of January 1, 2018; it shifts the U.S. to a
modified territorial tax regime which requires companies to pay a one-time mandatory tax on
earnings of certain foreign subsidiaries that were previously tax deferred; and it creates new taxes
on certain foreign-sourced earnings. Income tax effects resulting from changes in tax laws are
accounted for by the Group in accordance with the authoritative guidance, which requires that these
tax effects be recognized in the period in which the law is enacted and the effects are recorded as a
component of provision for income taxes from continuing operations.
On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income
Tax Accounting Implications of the Tax Cuts and Jobs Act (‘‘SAB 118’’) directing taxpayers to
consider the impact of the Act as ‘‘provisional’’ when they do not have the necessary information
available, prepared or analyzed (including computations) in reasonable detail to complete their
accounting for the change in tax law. In accordance with SAB 118, the estimated income tax benefit
of $340.7 million represents the Group’s best estimate based on interpretation of the Act as the
Group is still accumulating data to finalize the underlying calculations, or in certain cases, the U.S.
Treasury is expected to issue further guidance on the application of certain provisions of the Act. In
accordance with SAB 118, the additional estimated income tax benefit related to the revaluation of
deferred tax assets and liabilities of $345.4 million and tax expense related to the one-time tax on
the previously deferred earnings of foreign subsidiaries of $4.7m is considered provisional and will
be finalized before December 22, 2018.
During 2016, tax legislation enacted in the UK to reduce the corporation tax rate in future years
resulted in a $4.0 million net non cash benefit (2015: $8.1 million benefit) related to the revaluation
of certain deferred tax assets and liabilities. The UK corporation tax rate reduced from 20% to 19%
with effect from April 1, 2017 and then to 17% with effect from April 1, 2020.
100
Deferred Taxes
The significant components of the Group’s deferred tax assets and liabilities as of December 31,
2017 and 2016, are as follows (in millions):
Deferred tax assets:
Compensation and staff benefits
Loss carryforwards
Accrued liabilities
Debt premium
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Retirement benefits
Goodwill and acquired intangible assets
Other
Gross deferred tax liabilities
Net deferred tax (liabilities)
December 31,
2017
2016
$
$
$
55.2
59.4
2.2
6.2
7.9
$ 16.5
18.8
1.1
—
1.2
130.9
(57.2)
37.6
(18.8)
73.7
$ 18.8
(24.4) $ (19.2)
(59.2)
(2.8)
(795.4)
(6.5)
(826.3)
(81.2)
$ (752.6) $ (62.4)
Deferred tax assets and liabilities that relate to the same jurisdiction are recorded net on the Group’s
Consolidated Balance Sheets as non-current balances and as of December 31, 2017 and 2016, are
as follows (in millions):
Deferred tax assets, net (included in other non-current
assets)
Deferred tax liabilities, net
Net deferred tax (liabilities)
December 31,
2017
2016
$
— $
(752.6)
8.3
(70.7)
$ (752.6) $ (62.4)
A valuation allowance has been established against the deferred tax assets related to the Group’s
tax loss carryforward where a history of losses in the respective tax jurisdiction makes it unlikely that
the deferred tax asset will be realized or where it is unlikely that the Group would generate sufficient
taxable income of the appropriate character to realize the full benefit of the deferred tax asset. The
valuation allowance for deferred tax assets increased by $38.4 million in 2017. The increase is
primarily attributable to foreign net operating losses and capital losses.
The Group has made no provision for income taxes on undistributed earnings of foreign subsidiaries
as most dividends distributed by foreign subsidiaries to their direct parent and ultimately to the
Group’s top holding company attract no additional tax. The U.S subsidiaries evaluated liquidity
requirements in the U.S. and the capital requirements of the Group’s foreign subsidiaries and
concluded that foreign earnings be indefinitely reinvested.
101
Unrecognized Tax Benefits
The Group operates in several tax jurisdictions and a number of years may elapse before an
uncertain tax position, for which the Group has unrecognized tax benefits, is finally resolved. A
reconciliation of the beginning and ending liability for the years ended December 31, 2017, 2016 and
2015, is as follows (in millions):
Balance, as of January 1
Balance acquired from the Merger
Additions for tax positions of current year
Additions/(reduction) for tax positions of prior years
Reduction due to settlement with taxing authorities
Reduction due to statute expirations
Foreign currency translation
Balance, as of December 31
Year ended December 31,
2017
2016
2015
$
2.5
5.0
3.4
0.8
(0.9)
(0.9)
0.3
$ 18.4
—
—
—
(13.1)
—
(2.8)
$ 19.1
—
1.0
(0.6)
—
—
(1.1)
$ 10.2
$
2.5
$ 18.4
The entire unrecognized tax benefits, if recognized, would favorably affect the Group’s effective tax
rate in future periods.
The Group recognizes interest and penalties on uncertain tax positions as a component of the
income tax provision. At December 31, 2017, 2016 and 2015 the total accrued interest balance
relating to uncertain tax positions was $1.5 million, $0.7 million and $1.2 million, respectively.
Potential penalties at December 31, 2017, 2016 and 2015 were insignificant and have not been
accrued.
The Group is subject to U.S. federal income tax, state and local income tax, UK income tax and
income tax in several other jurisdictions, all of which can be examined by the relevant taxing
authorities. For the Group’s major tax jurisdictions, the tax years that remain open to examination by
the taxing authorities at December 31, 2017 are 2014 and onwards for U.S. Federal tax and a
number of State tax. A handful of States have open years from 2008 and onwards. The tax years
from 2015 and onwards remain open for the UK.
The Internal Revenue Service (‘‘IRS’’) is examining the Henderson U.S. federal tax filing for the year
ended December 31, 2014. In addition, a number of tax years from 2005 onwards remain open for a
limited number of subsidiaries in the UK while cases involving other taxpayers are being litigated
through the judicial system, the results of which will resolve the Group’s position for these open
years. While examination outcomes are subject to significant uncertainty, they are not expected to
be material as the Group has recognized a tax benefit only for those positions that meet the more
likely than not recognition threshold. It is reasonably possible that the total amounts of unrecognized
tax benefits will change within the next 12 months due to completion of tax authorities’ exams or the
expiration of statutes of limitations. Management estimates that the existing liability for uncertain tax
positions could decrease by approximately $1.1 million within the next 12 months, ignoring changes
due to foreign currency translation.
102
Note 12 — Other Financial Statement Captions
Other current assets on JHG’s Consolidated Balance Sheets at December 31, 2017 and 2016, are
composed of the following (in millions):
Prepaid expenses
Deferred acquisition costs
Current corporation tax
Other current assets
Total other current assets
December 31,
2017
2016
$ 24.1
0.6
3.5
47.7
$ 10.8
3.3
0.9
13.5
$ 75.9
$ 28.5
Other non-current assets on the Consolidated Balance Sheets of $21.5 million as of December 31,
2017, primarily relate to deferred consideration for Volantis and equity-method investments. The
$8.5 million balance as of December 31, 2016, primarily relates to deferred tax assets.
Accounts payable and accrued liabilities on JHG’s Consolidated Balance Sheets at December 31,
2017 and 2016, comprise the following (in millions):
Accrued commissions
Accrued rebates
Other accrued liabilities
Total other accrued liabilities
Current corporation tax
Contingent consideration
Dai-ichi option
Derivatives
Other current liabilities
December 31,
2017
2016
$
44.4
24.4
48.0
$ 41.0
23.4
41.9
$ 116.8
$ 106.3
33.7
24.9
26.1
10.5
80.9
17.6
—
—
—
17.8
Total accounts payable and accrued liabilities
$ 292.9
$ 141.7
Other non-current liabilities on JHG’s Consolidated Balance Sheets at December 31, 2017 and 2016,
comprise the following (in millions):
Non-current tax liabilities
Other creditors
Deferred consideration
Other non-current accrued liabilities
Total other non-current liabilities
December 31,
2017
2016
$ 13.7
20.7
26.2
39.0
$
2.1
—
25.5
11.4
$ 99.6
$ 39.0
Other creditors included within other non-current liabilities primarily comprise the non current portion
of onerous lease obligations as of December 31, 2017 and 2016. As a result of historic acquisitions,
the Group became party to three material operating leases in respect of 1 Knightsbridge Green,
London, 8 Lancelot Place, London and Rex House, Queen Street, London. At the reporting date, the
lease in respect of 1 Knightsbridge Green had expired and the onerous leases in respect of the
other two offices run for a further period of six years and nine years respectively. At the cease use
103
date of these properties a loss contingency, net of expected sub lease rental income, was
recognized in respect of these properties as an accrued liability on the Group’s Consolidated
Balance Sheets at the net present value of the net expected future cash outflows.
Other non-current accrued liabilities primarily represent deferred consideration payable on the
acquisition of Geneva and Perennial.
Note 13 — Noncontrolling Interests
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests as of December 31, 2017 and 2016, consisted of the following
(in millions):
Consolidated seeded investment products
Intech:
Appreciation rights
Founding member ownership interests
Total redeemable noncontrolling interests
December 31,
2017
2016
$ 174.9
$ 158.0
11.0
4.4
—
—
$ 190.3
$ 158.0
Consolidated Seeded Investment Products
Noncontrolling interests in consolidated seeded investment products are classified as redeemable
noncontrolling interests when there is an obligation to repurchase units at the investor’s request.
Redeemable noncontrolling interests in consolidated seed investment products may fluctuate from
period to period and are impacted by changes in JHG’s relative ownership, changes in the amount
of third-party investment in seeded products and volatility in the market value of the seeded
products’ underlying securities. Third-party redemption of investments is redeemed from the
respective product’s net assets and cannot be redeemed from the assets of other seeded products
or from the assets of JHG.
The following table presents the movement in redeemable noncontrolling interests in consolidated
seeded investment products for the years ended December 31, 2017, 2016 and 2015 (in millions):
Opening balance
Balance acquired from the Merger
Changes in market value
Changes in ownership
Foreign currency translation
Closing balance
Year ended December 31,
2017
2016
2015
$ 158.0
23.2
(9.8)
3.7
(0.2)
$
82.9
—
35.3
61.7
(21.9)
$
4.4
—
(5.9)
84.5
(0.1)
$ 174.9
$ 158.0
$ 82.9
Changes in ownership reflect third-party investment in consolidated seeded investment products,
additional seed capital investment or seed capital redemptions.
Intech
Intech became a subsidiary of the Group as a result of the Merger. Intech ownership interests held
by a founding member had an estimated fair value of $4.4 million as of December 31, 2017,
representing an approximate 1.1% ownership of Intech. This founding member is entitled to retain
his remaining Intech interests until his death and has the option to require JHG to purchase his
ownership interests of Intech at fair value.
104
Intech appreciation rights are being amortized on a graded vesting method over the respective
vesting period. The appreciation rights are exercisable upon termination of employment from Intech
to the extent vested. Upon exercise, the appreciation rights are settled in Intech equity.
Nonredeemable Noncontrolling Interests
Nonredeemable noncontrolling interests as of December 31, 2017 and 2016, are as follows
(in millions):
Nonredeemable noncontrolling interests in:
Seed capital investments
Intech
Total nonredeemable noncontrolling interests
December 31,
2017
2016
$ 24.9
13.3
$ 44.8
—
$ 38.2
$ 44.8
Note 14 — Long-Term Incentive Compensation
The Group operates the following stock-based compensation plans: Restricted Share Plan,
Employee Share Ownership Plan, Long-Term Incentive Plan, Deferred Equity Plan, Buy As You
Earn Share Plan, Company Share Option Plan, Executive Shared Ownership Plan, Sharesave Plan,
Restricted Stock Awards, Price Vesting Units, Mutual Fund Share Awards and Profits Interests and
Other Awards. Further details on the material plans in operation during 2017 are set out below:
Deferred Equity Plan (‘‘DEP’’)
Employees who receive cash-based incentive awards over a preset threshold, have an element
deferred. The deferred awards are deferred into the Company’s shares, or into Group managed
funds. The DEP trustee purchases Company shares and units or shares in Group managed funds
and holds them in trust. Awards are deferred for up to three years and vest in three equal tranches
if employees satisfy employment conditions at each vesting date
The expense of deferred short-term incentive awards is recognized in net income over the period of
deferral on a graded basis, the fair value of which is determined by prevailing share price or unit
price at grant date.
Restricted Share Plan (‘‘RSP’’)
The RSP allows employees to receive shares in the Group for nil consideration at a future point,
usually after three years, and are recognized in net income on a graded basis. The awards are
typically granted for staff recruitment and retention purposes — all awards have employment
conditions and larger awards generally have performance hurdles. The Compensation Committee
approves all awards to Code Staff (employees who perform a significant influence function, senior
management and individuals whose professional activities could have a material impact on a firm’s
risk profile), any awards over £500,000 and award vestings that exceed £50,000. The fair value of
the shares granted is the average intra trading price of the preceding five business days.
Buy As You Earn Share Plan (‘‘BAYE’’)
The BAYE is a HMRC approved plan. Eligible employees purchase shares in the Group by investing
monthly, up to £150 (annual limit £1,800), which is deducted from their gross salary. For each share
purchased (‘partnership share’), for no additional payment, two free matching shares are awarded.
Matching shares will be forfeited if purchased shares are withdrawn from the trust within one year.
105
The non-UK version of the BAYE operates on a similar basis to that of the UK, but each purchased
share is matched with one partnership share, which is not subject to forfeiture.
Sharesave Plan (‘‘SAYE’’)
The SAYE is a HMRC approved plan. UK employees may participate in more than one scheme but
only up to a maximum of £500 per month across all schemes. Employees who participate in the
SAYE contribute a monthly amount from their net salary to a savings account. The SAYE vesting
period is three years for UK employees.
At the end of the three year vesting period, the employees in the 2017 SAYE can exercise their
share options using the funds in their savings account, to subscribe for shares at a pre-set price.
The pre-set price was £18.40 per share for 2017 (2016 SAYE: £20.60 and 2015 SAYE: £22.70), a
20% discount to the average share price five business days prior to the award. Employees have up
to six months after the three year vesting period to exercise their options and subscribe for shares.
Forfeiture provisions apply in the case of approved and unapproved leavers.
The U.S. Employee Share Purchase Plan (‘ESPP’) operates on the same principles as the UK
SAYE, but has a two year savings period and a lower discount at 15%. In 2017, ESPP was not
offered to U.S. employees. The pre-set option price of prior year awards were $31.20 for 2016
ESPP and $35.50 for 2015 ESPP. Employees may participate in more than one plan, but only up to
a plan maximum of $312.50 per month across all plans.
Company Share Option Plan (‘‘CSOP’’)
CSOP is a HMRC approved share option plan with the maximum value of unvested options at any
time limited to £30,000 for UK employees. No such restrictions apply for overseas employees.
Employees can buy Group shares after a three year vesting period at an option price fixed at the
start of the scheme. There are no Group performance conditions attached to the options, only
employment conditions that must be satisfied, and the exercise period is two years, while U.S.
employees have three months to exercise. Executive Directors are not eligible to participate in the
CSOP, but they may hold awards made prior to their executive appointment. The CSOP plans are
valued using the Black Scholes Option Pricing Model and recognized in net income on a straight line
basis. The 2017 CSOP option price was £22.80 (2016 CSOP: £26.10 and 2015 CSOP: £28.48). The
2014 CSOP became exercisable for UK employees in April 2017; the option price was £26.71. The
2015 CSOP became available to exercise for U.S. employees in April 2017 as the U.S. CSOP is a
two year plan.
Executive Shared Ownership Plan (‘‘ExSOP’’)
The ExSOP is an employee share ownership plan and is aimed at encouraging employee share
ownership at middle management level. Executive Directors do not participate in the ExSOP.
Certain employees are invited to acquire jointly, with an employee benefit trust, the beneficial interest
in a number of Company shares under the terms of a joint ownership agreement (‘JOA’). Under a
JOA, the employee will benefit from any growth in value in excess of a hurdle price fixed at the time
of the award subject to employment conditions being satisfied on the vesting date.
The ExSOP scheme is valued using the Black Scholes Option Pricing Model and is recognized in
net income on a straight line basis. For the 2017 ExSOP, the market price at grant was £22.62
(ExSOP 2016: £25.00 and ExSOP 2015: £28.21) per share. The hurdle price was set at £24.90
(2016: £28.45 and 2015: £31.05) per share. The shares have a three year vesting period with a
subsequent two year exercise period. The 2014 ExSOP became exercisable for employees in April
2017 with a market price at grant of £26.81 and a hurdle price at £29.22.
106
Restricted Stock Awards (‘‘RSA’’)
Restricted Stock Awards are generally issued as part of annual variable compensation and for
recruitment and retention purposes in accordance with Amended and Restated 2010 LTI Plan, the
JCG 2005 Long Term Incentive Stock Plan and the 2012 EIA Plan. Awards generally vest over a
three- or four-year period.
Price-Vesting Units
JCG granted 137,178 price-vesting units to its Chief Executive Officer on December 31, 2014,
valued at $2.2 million. At the Closing Date, the price-vesting units were converted to JHG price-
vesting units with a value of $2.3 million and were measured based on operating profit margin
performance and converted into a time-based award vesting on December 31, 2017. On
December 31, 2017, 75,634 price-vesting units vested.
JCG granted 138,901 price-vesting units to its Chief Executive Officer on December 31, 2015,
valued at $1.9 million. These price-vesting units may or may not vest in whole or in part, three years
after the date of grant, depending on JHG’s three-year Total Shareholder Return (‘‘TSR’’)
performance relative to a peer group during the vesting period. At the Closing Date, the price-vesting
units were converted to 65,548 JHG price-vesting units with a value of $2.0 million. The performance
criteria will remain in place post-Merger through the life of the price-vesting units.
JCG granted 134,666 price-vesting units to its Chief Executive Officer on December 31, 2016,
valued at $1.8 million. These price-vesting units may or may not vest in whole or in part, three years
after the date of grant, depending on JHG’s three-year TSR performance relative to a peer group
during the vesting period. At the Closing Date, the price-vesting units were converted to 63,549 JHG
price-vesting units with a value of $2.0 million. The performance criteria will remain in place
post-Merger through the life of the price-vesting units.
Mutual Fund Share Awards (‘‘MFSA’’)
Mutual Fund Share Awards are generally issued as part of annual variable compensation and for
recruitment and retention purposes. At December 31, 2017, the cost basis of unvested mutual fund
share awards totaled $57.8 million ($49.8 million are time-based and $8.0 million are performance-
based). The awards are indexed to certain mutual funds managed by the Group. Upon vesting,
participants receive the value of the award adjusted for gains or losses attributable to the mutual
funds to which the award was indexed, subject to tax withholding. Time-based awards generally vest
four years from the grant date. The performance-based mutual fund share awards vest five years
after the grant date if certain performance criteria are achieved.
Perkins Senior Profits Interests Awards
On November 18, 2013, Perkins granted senior profits interests awards, which fully vest on
December 31, 2018, and are entitled to a total of 10% of Perkins’ annual taxable income. The
entitlement to a percentage of Perkins’ annual taxable income over the vesting period is tiered and
starts at 2% in 2015 and increases 2% each year thereafter until reaching 10% after fully vesting on
December 31, 2018. In addition, these awards have a formula-driven terminal value based on
Perkins’ revenue. JHG can call and terminate any or all of the awards on December 31, 2018, and
each year thereafter. Holders of such interests can require JHG to purchase the interests in
exchange for the then-applicable formula price on December 31, 2018. The senior profits interests
are also subject to termination at premiums or discounts to the formula at the option of JHG or
certain employees, as applicable, upon certain corporate or employment-related events affecting
Perkins or certain employees. As of December 31, 2017, the formula-driven value was zero and
there was no liability on JHG’s Consolidated Balance Sheets.
107
Intech Long-Term Incentive Awards
In October 2014, Intech granted long-term incentive awards to retain and incentivize employees. The
awards consisted of appreciation rights, profits interests and phantom interests, and are designed to
give recipients and equity-like stake in Intech. Upon the Closing Date of the Merger, the appreciation
rights had fair value of $13.3 million which is being amortized on a graded basis over the 10-year
vesting schedule. The appreciation rights are exercisable upon termination of employment from
Intech and to the extent vested. Upon exercise, the appreciation rights are settled in Intech equity.
The profits interests and phantom interests awards entitle recipients to 9.2% of Intech’s pre-incentive
profits.
Additional appreciation rights were granted in February 2015 and March 2016. Upon the closing date
of the Merger, the 2015 and 2016 appreciation rights had fair value of $0.9 million and $1.8 million,
respectively, which is being amortized on a graded basis over the remaining vesting schedule. The
appreciation rights are exercisable upon termination of employment from Intech and to the extent
vested. Upon exercise, the appreciation rights are settled in Intech equity.
The fair values of the appreciation rights were estimated using the Black-Scholes option pricing
model with the following assumptions:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (in years)
Grant date fair value (in millions)
Merger date fair value (in millions)
Assumptions
October 2014
grant
February 2015 March 2016
grant
grant
1.98%
34%
2.53%
12
$ 23.2
$ 13.3
2.56%
30%
1.81%
6
2.0
0.9
$
$
2.89%
28%
1.93%
6
2.6
1.8
$
$
The dividend yield and expected volatility were determined using historical data from publicly traded
peers. The risk-free interest rate for the 2014 grant is based on the 10-year U.S. Treasury note at
the time of the grant while the risk-free interest rates for the 2015 and 2016 grants are based on the
average of the five-year and seven-year U.S. Treasury notes at the time of the grant. The expected
life of the appreciation rights was estimated based upon the assumption that recipients terminate
upon vesting and exercise a certain percentage of their rights each year over the following four
years.
Intech profits interests and phantom interests entitle holders to periodic distributions of a portion of
Intech operating income. Distributions are made during employment and, for profits interests,
post-employment for up to 10 years. Phantom interests are entitled to a one-time distribution at
termination of employment. Compensation expense for post-employment distributions is based upon
the present value of expected future distributions and will be recognized pro rata over the 10-year
vesting schedule for profits interests and five years for phantom interests. The present value of these
payments was determined using a 2% discount rate, which represents the interest rate on a 20-year
U.S. Treasury note. As of December 31, 2017, the total undiscounted estimated post-employment
payments for profits interests and phantom interests was $49.8 million (the majority will not be paid
until 10 to 20 years after the grant date). The estimated post-employment payments will be
evaluated and adjusted quarterly, as necessary, with changes recorded in results of operations. As
of December 31, 2017, the carrying value of the liability associated with the Intech profits interests
and phantom interests was $13.6 million and is included in other non-current assets on JHG’s
Consolidated Balance Sheets.
108
Long-Term Incentive Plan (‘‘LTIP’’)
LTIP awards provide selected employees restricted shares or nil cost options that have employment
and performance conditions. Employees who have been awarded such options have five years to
exercise their options following the three year vesting period for 2013 LTIP and five and four years
to exercise their options following the three and four year vesting periods (respectively) for 2014
LTIP.
For 2014 LTIP, if the Group TSR is between the 50th and 75th percentiles, the amount vesting will
increase on a linear basis. The Compensation Committee must also be satisfied the Group TSR
reflects the underlying performance of the Group. The performance hurdle was 95% relative to
Group TSR and 5% on risk and sustainability metrics. Employees must also satisfy employment
conditions at each anniversary date for the shares to vest.
Two-thirds of the 2015 and 2016 LTIP can be exercised from the end of year three and one-third
from the end of year four.
The 2015 and 2016 LTIP award vesting and release of the award are subject to performance
against the following performance conditions measured (as appropriate) over, or at the end of, the
relevant three or four year performance period (in respect of the first and second tranche of the
award respectively):
2015 and 2016 awards criteria (pre-Merger)
Weighting
Market conditions
FTSE 350
ASX 100
Non-Market
Net Fund Flows Condition
Investment Performance Condition
Operating Margin Condition
People Strategy Condition
25%
25%
15%
15%
10%
10%
Following the completion of the Merger with JCG, the Compensation Committee reviewed the
performance metrics under the existing LTIP plans and proposed changes to ensure that the metrics
remain relevant and appropriate for the objectives and goals of the combined Group. 2014 LTIP
vesting conditions remain unchanged and the existing performance metrics were measured as at
May 30, 2017 to determine the appropriate level of vesting. The vested portion of the 2015 and 2016
LTIP awards remain subject to the original metrics (measured at the Merger completion date) while
the new criteria were applied to the unvested portion:
2015 and 2016 awards criteria (post-Merger)
Weighting
Market conditions
Relative TSR
Non-Market
Relative investment performance
Relative net income before tax growth
50%
25%
25%
In respect of the first tranche of the award, an additional holding period of two years shall apply
commencing on the relevant vesting date, during which time the participant may not sell, pledge,
charge, assign, dispose of or otherwise transfer ownership of the underlying share pertaining to the
award, other than to meet mandatory liabilities to tax and/or social security contributions. In respect
of the second tranche of the award, an additional holding period of one year shall apply commencing
on the relevant vesting date with similar conditions.
109
The performance period for the first tranche of 2014 LTIP was completed on December 31, 2016
and 3% of awards vested in April 2017. The performance period for the second tranche of 2014
LTIP was completed on December 31, 2017 and 3% of awards will vest in April 2018. The Monte
Carlo model was used to value the options of the 2015 and 2016 plans.
The performance period for the first tranche of 2015 LTIP was completed on December 31, 2017.
25% of the pre-Merger awards and 74.6% of the post-Merger awards will vest in April 2018.
The components of the Group’s long-term incentive compensation expense for the years ended
December 31, 2017, 2016 and 2015 are summarized as follows (in millions):
DEP
LTIP
RSP
BAYE
ExSOP
CSOP
SAYE
RSA
ESOP
Stock-based payments expense
DEP Funds — liability settled
MFSA — liability settled
Profits interests and other
Social Security costs
$
Year ended December 31,
2017
2016
2015
17.6
6.4
3.4
3.2
1.5
1.1
0.8
32.8
—
66.8
41.4
20.7
12.3
10.3
$ 17.5
7.5
5.1
3.0
1.9
1.4
0.7
—
0.2
37.3
35.0
—
—
13.2
$ 18.6
8.7
8.3
2.9
2.0
1.7
0.8
—
0.6
43.6
24.6
—
—
16.5
Total charge to the Consolidated Statements of
Comprehensive Income
$ 151.5
$ 85.5
$ 84.7
At December 31, 2017, unrecognized and unearned compensation, based on vesting outcomes as
of December 31, 2017 on the 2017 LTIP, and the weighted-average number of years over which the
compensation cost will be recognized is summarized as follows (in millions):
Unrecognized
compensation
Weighted-
average years
DEP
LTIP
RSP
BAYE
ExSOP
CSOP
SAYE
RSA
Stock-based payments expense
DEP Funds — Liability settled
MFSA — liability settled
Profits interests and other
Social Security costs
$
11.8
11.9
8.4
1.0
1.9
2.9
3.4
49.0
90.3
29.7
21.5
37.9
19.2
Total remaining charge to the Consolidated
Statements of Comprehensive Income
$ 198.6
1.4
1.4
1.9
0.6
1.7
1.8
2.2
2.7
2.2
1.4
2.4
6.2
1.0
2.7
110
The Group generally grants annual long-term incentive awards in March and April in relation to
annual awards but also throughout the year due to seasonality of performance fee bonuses.
Stock Options
Stock options were granted to employees in 2017, 2016 and 2015. The fair value of stock options
granted to the Group’s employees in 2017 was estimated on the date of each grant using the Black-
Scholes option pricing model and a Monte Carlo Model, with the following assumptions:
Black-Scholes Options Pricing Model
Year ended December 31,
2017
2016
CSOP
U.S. CSOP
ExSOP
SAYE
CSOP
U.S. CSOP
ExSOP
SAYE
U.S. SAYE
Fair value of
options granted
(pence)
Assumptions:
Dividend yield
Expected volatility
Risk-free interest
rate
Expected life
(years)
33.43
32.81
27.78
75.28
33.51
27.01
27.40
58.49
64.71
4.64%
3.98%
32.41% 35.19% 32.41% 32.13% 30.26% 29.67% 30.26% 29.72% 29.35%
4.64% 3.99% 4.12%
4.12% 3.98%
4.64%
4.12%
0.27%
0.16%
0.27% 0.19% 0.58%
0.45%
0.58% 0.53%
0.40%
3
2
3
3
3
2
3
3
2
Monte Carlo Model — LTIP 2015
Fair Values:
Relative TSR
Relative investment performance
Relative net income before tax growth
Assumptions:
Date of grant
Start of performance period
End of performance period
Vesting date
Date of modification (‘‘DoM’’)
Share price at DoM
Risk free discount rate
Dividend yield
Share price volatility in GBP
Holding period adjustment
Percentage based on pre-modification
performance conditions
Year ended December 31, 2017
% Allocation
of award
Tranche 1
Tranche 2
50%
25%
25%
118.96p
209.76p
209.76p
124.11p
206.59p
206.59p
May 1, 2015
January 1, 2015
May 1, 2015
January 1, 2015
December 31, 2017 December 31, 2018
May 1, 2019
May 1, 2017
233.7p
0.1%pa
4.5% pa
30% pa
6.2%
May 1, 2018
May 1, 2017
233.7p
0.1% pa
4.5% pa
30% pa
9.0%
80%
60%
111
Monte Carlo Model — LTIP 2016
Year Ended December 31, 2017
% allocation
of award
Tranche 1
Tranche 2
Fair values:
Relative TSR
Relative investment performance
Relative net income before tax growth
50%
25%
25%
120.98p
200.42p
200.42p
123.64p
197.39p
197.39p
Assumptions:
Date of grant
Start of performance period
End of performance period
Vesting date
Date of modification (‘‘DoM’’)
Share price at DoM
Risk free discount rate
Dividend yield
Share price volatility in GBP
Holding period adjustment
May 1, 2016
January 1, 2016
May 1, 2016
January 1, 2016
December 31, 2018 December 31, 2019
March 24, 2020
May 30, 2017
233.7p
0.1%pa
4.5% pa
30% pa
6.2%
March 24, 2019
May 30, 2017
233.7p
0.1% pa
4.5% pa
30% pa
9.0%
Expected volatility was determined using an average of Henderson’s historical volatility. Expected life
was determined using the vesting periods of each grant. The risk-free interest rate for periods within
the contractual life of the options is based on the UK Treasury 3 year coupon rate and 2 year
coupon rate respectively at grant date.
The table below summarizes the Group’s outstanding options, exercisable options and options
vested or expected to vest for the years ended December 31, 2017, 2016 and 2015:
2017
2016
2015
Shares
Weighted-
average
price
Shares
Weighted-
average
price
Shares
Weighted-
average
price
1.97
45,560,242
(41,004,619) $ 19.82
$
43,890,407
£ 1.34
— £ —
50,187,980
£ 0.93
— £ —
92,949
2,042,321
$ 18.76
$ 13.66
(404,735) $ 20.32
7.41
(1,966,452) $
16,251,758
(11,039,274)
(3,542,649)
— £ —
£ 1.53
£ 0.73
£ 1.81
15,375,429
(12,818,494)
(8,854,508)
— £ —
£ 1.70
£ 0.79
£ 0.45
4,319,706
$ 22.55
45,560,242
£ 1.53
43,890,407
£ 1.34
663,342
$ 34.67
5,014,642
£ 0.87
2,419,325
£ 0.66
2,999,811
$ 15.57
24,849,673
£ 0.44
39,184,673
£ 1.13
Outstanding at
January 1
Share consolidation
Acquired from
Merger
Granted
Exercised
Forfeited
Outstanding at
December 31
Exercisable (1)
Vested or expected to
vest
Included in the above table is the Group’s nil cost LTIP options which constitute the majority of
forfeitures.
(1) The number of exercisable options represents instruments for which all vesting criteria have
been satisfied and whose exercise price was below the closing price of the Group’s common
stock as of the end of the period.
112
The following table summarizes the intrinsic value of exercised, outstanding and exercisable options
at December 31, 2017, 2016 and 2015 (in millions):
Exercised
Outstanding
Exercisable
Deferred Equity Plan
December 31,
2017
2016
2015
2.8
$
$ 15.9
3.9
$
£ 18.9
£ 47.7
7.5
£
£ 26.7
£ 77.0
5.9
£
The table below summarizes DEP unvested stock awards for the years ended December 31, 2017,
2016 and 2015:
2017
2016
2015
Shares
Weighted-
average
price
Shares
Weighted-
average
price
Shares
Weighted-
average
price
Outstanding at
January 1
Share consolidation
Adjustment
Granted
Exercised
Forfeited
Unvested at
December 31
Restricted Stock Awards
$
3.17
16,466,630
(14,825,509) $ 31.64
$ 15.43
1,275
919,967
$ 31.40
(873,810) $ 31.33
(246,462) $ 28.06
26,653,694
£ 1.79
— £ —
— £ —
£ 2.47
£ 1.63
£ 1.59
9,134,443
(16,862,324)
(2,459,183)
39,546,315
£ 1.44
— £ —
£ 2.18
£ 2.82
£ 1.40
£ 2.05
8,210
6,742,546
(18,464,223)
(1,179,154)
1,442,091
$ 32.36
16,466,630
£ 2.46
26,653,694
£ 1.79
The table below summarizes unvested restricted stock awards for the year ended December 31,
2017:
2017
Weighted-
average
price
Shares
Outstanding at January 1
Acquired from the Merger
Granted
Exercised
Forfeited
Unvested at December 31
Note 15 — Retirement Benefit Plans
Defined Contribution Plans
— $
4,068,619
73,982
—
$ 30.72
$ 35.08
(444,884) $ 30.73
(160,496) $ 30.72
3,537,221
$ 30.81
The Group operates two separate defined contribution retirement benefit plans; a 401(k) plan for
U.S. employees and a separate plan for international employees.
Substantially all U.S. full-time employees of JHG are eligible to participate in a company-sponsored
401(k) plan. During the year ended December 31, 2017, JHG matched 5.0% of employee-eligible
113
compensation in the 401(k) Plan. Expenses related to the 401(k) plan are included in employee
compensation and benefits on JHG’s Consolidated Statements of Comprehensive Income and were
$8.6 million during the year ended December 31, 2017. The assets of the plan are held separately
from those of the Group in trustee administered funds.
Substantially all non-U.S. full-time employees of JHG are eligible to participate in company-
sponsored defined contribution plans. The total amounts charged to the Consolidated Statements of
Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 in respect of the
non-U.S. defined contribution plan was $11.8 million, $11.6 million and $11.7 million, respectively,
which represents contributions paid or payable to this plan by the Group.
Defined Benefit Plans
The main defined benefit pension plan sponsored by the Group is the defined benefit section of the
Janus Henderson Group UK Pension Scheme (‘‘JHGPS’’ or the ‘‘Plan’’), previously the Henderson
Group Pension Scheme, which closed to new members on November 15, 1999. The JHGPS is
funded by contributions to a separately administered fund.
Benefits in the defined benefit section of the JHGPS are based on service and final salary. The plan
is approved by HMRC for tax purposes and is operated separately from the Group and managed by
an independent Trustee board. The Trustee is responsible for payment of the benefits and
management of the JHGPS assets. The Group also has a contractual obligation to provide certain
members of the JHGPS with additional defined benefits on an unfunded basis.
The JHGPS is subject to UK regulations, which require the Group and the Trustee to agree to a
funding strategy and contribution schedule for the scheme.
The Group’s latest triennial valuation of the JHGPS has resulted in a deficit on a technical provisions
basis of $39.2 million (£29.0 million). The Group agreed with the trustees of the plan to make
contributions of $11.4 million (£8.4 million) per year for four years starting from 2017 to recover the
deficit.
114
Plan assets and benefit obligations
The Plan assets and defined benefit obligations of the JHGPS and the unapproved pension plan
were valued as of December 31, 2017. The Group’s plan assets, benefit obligations and funded
status as at the December 31 measurement date are as follows (in millions):
Change in plan assets:
Fair value of plan assets as of January 1
Return on plan assets
Employer contributions
Benefits paid
Settlements
Foreign currency translation
Fair value of plan assets as of December 31
Change in benefit obligation:
Benefit obligation as of January 1
Service cost
Interest cost
Settlements
Benefits paid
Actuarial loss
Foreign currency translation
Benefit obligation as of December 31
Funded status as at year end
Tax at source
December 31,
2017
2016
$ 877.3
34.8
20.5
(13.8)
(58.6)
81.6
$ 877.2
183.3
3.0
(30.8)
—
(155.4)
941.8
877.3
(679.2)
(1.2)
(19.2)
58.6
13.8
(29.8)
(62.1)
(719.1)
222.7
(28.0)
(674.5)
(1.2)
(22.6)
—
30.8
(131.6)
119.9
(679.2)
198.1
(29.8)
Net retirement benefit asset recognized in the Consolidated Balance Sheets
$ 194.7
$ 168.3
Amounts recognized on the Consolidated Balance Sheet, net of tax at source as at December 31,
2017 and 2016, consist of the following (in millions):
Retirement benefit assets recognized in the Consolidated Balance Sheets:
Janus Henderson Group UK Pension Scheme
$ 199.3
$ 180.2
Retirement benefit obligations recognized in the Consolidated Balance Sheets:
Janus Henderson Group unapproved pension scheme
(4.6)
(11.9)
Net retirement benefit asset recognized in the Consolidated Balance Sheets:
$ 194.7
$ 168.3
December 31,
2017
2016
115
The following key assumptions were used in determining the defined benefit obligation as at
December 31, 2017 and 2016:
Discount rate
Inflation — salaries
Inflation — RPI
Inflation — CPI
Pension increases (RPI capped at 5% p.a.)
Pension increases (RPI capped at 2.5% p.a.)
Life expectancy of male aged 60 at accounting date
Life expectancy of male aged 60 in 15 years time
December 31,
2017
2016
2.6% 2.9%
2.5% 2.5%
3.1% 3.2%
2.0% 2.1%
3.0% 3.0%
2.1% 2.1%
28.3
29.4
28.6
29.9
The discount rate applied to the plan obligations is based on AA-rated corporate bond yields with
similar maturities.
Plan assets
The fair values of the JHGPS plan assets as at December 31, 2017 and 2016, by major asset class,
are as follows (in millions):
Cash and cash equivalents
Money market instruments
Forward foreign exchange contracts
Bond assets
Equity investments
Total assets at fair value
December 31,
2017
2016
$
10.8
1.7
0.4
745.2
183.7
$
3.9
—
(0.8)
694.0
180.2
$ 941.8
$ 877.3
As of December 31, 2017, $231.1 million of JHGPS assets were held in JHG managed funds.
The assets of the JHGPS are allocated to a growth portfolio and to bond assets. The majority of the
growth portfolio is invested in pooled diversified funds, with the objective of achieving a level of
growth greater than the bond portfolio. The bond portfolio is managed on a segregated basis, with
the primary objective of meeting the cash flows as they mature.
The strategic allocation as at December 31, 2017 and 2016 was broadly 25% growth portfolio and
75% bond assets.
As of December 31, 2017, $232.8 million of the JHGPS plan assets held were classified as Level 2
in the fair value hierarchy, with the remainder classified as Level 1.
The following table shows a reconciliation of the beginning and ending fair value measurement for
Level 3 assets (in millions):
Fair value of Level 3 assets at beginning of year
Losses recognized in the period
Purchases, sales and settlements, net
Fair value of Level 3 assets at end of year
116
December 31,
2017
2016
$ — $ 0.4
(0.3)
(0.1)
—
—
$ — $ —
The expected rate of return on assets for the financial period ending December 31, 2017 was 2.6%
p.a. based on financial conditions as at December 31, 2016 (2016: 3.4% p.a.). This rate is derived
by taking the weighted average of the long-term expected rate of return on each of the asset classes
in JHGPS’s target asset allocation. The expected rate of return has been determined based on
yields on either long-dated government bonds or relevant corporate bonds, dependent on the class
of asset in question, adjusted where appropriate based on the individual characteristics of each
asset class.
Actuarial gains and losses
Cumulative amounts recognized in accumulated other comprehensive income and the actuarial gain,
net of tax deducted at source, credited to other comprehensive income for the years ended
December 31, 2017 and 2016 are shown below (in millions):
Opening accumulated unamortized actuarial gain
Current year actuarial gain (loss)
Tax at source on current year actuarial gain (loss)
Release of actuarial gain due to settlement event
Release of tax at source due to settlement event
Closing accumulated unamortized actuarial gain
December 31,
2017
2016
$ 32.1
(15.3)
4.7
(1.6)
1.1
$ 17.1
26.1
(11.1)
—
—
$ 21.0
$ 32.1
No actuarial gains were amortized from accumulated other comprehensive income during the year
ended December 31, 2017 (2016: nil). No actuarial gains are expected to be amortized from
accumulated other comprehensive income into net periodic benefit cost during 2018.
Net periodic benefit cost
The components of net periodic benefit cost in respect of defined benefit plans for the years ended
December 31, 2017, 2016 and 2015 include the following (in millions):
Service cost
Settlement gain
Interest cost
Expected return on plan assets
Net periodic benefit credit
Contributions to money purchase section
Total cost
December 31,
2017
2016
2015
$
(1.2) $
1.6
(19.2)
20.3
(1.2) $ (1.5)
—
(25.8)
27.8
—
(22.6)
25.6
1.5
(7.4)
1.8
(7.5)
0.5
(8.1)
$
(5.9) $
(5.7) $ (7.6)
117
The following key assumptions were used in determining the net periodic benefit cost for the years
ended December 31, 2017, 2016 and 2015 (in millions):
Discount rate
Inflation — salaries
Inflation — RPI
Inflation — CPI
Pension increases (RPI capped at 5% p.a.)
Pension increases (RPI capped at 2.5% p.a.)
Expected return on plan assets
Amortization period for net actuarial gains/losses at
beginning of the year
December 31,
2017
2016
2015
2.9% 3.8% 3.6%
2.5% 2.5% 2.5%
3.2% 3.0% 3.1%
2.1% 2.0% 2.1%
3.0% 2.9% 3.0%
2.1% 2.0% 2.1%
2.6% 3.4% 3.2%
11.0
11.0
11.0
Cash flows
Employer contributions of $20.5 million were paid in relation to the Group’s defined benefit pension
plans during 2017 (excluding credits to members’ Money Purchase accounts). The Group expects to
contribute approximately $12.9 million to the JHGPS (excluding credits to members’ Money purchase
accounts) in the year ended December 31, 2018. This includes the additional contributions agreed
with the Trustees.
The expected future benefit payments for the Group’s pension plan are as follows (in millions):
2018
2019
2020
2021
2022
2023-2027
17.6
$
19.3
$
19.9
$
21.6
$
$
23.3
$ 134.5
118
Note 16 — Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss, net of tax, for the years ended December 31,
2017 and 2016, are as follows (in millions):
Year ended December 31,
2017
2016
Available- Retirement
Foreign
currency
for-sale
securities
benefit
asset, net
Total
Available- Retirement
Foreign
currency
for-sale
securities
benefit
asset, net
Total
Beginning balance
$ (471.3)
$ 4.7
$ 32.1
$ (434.5) $ (211.8)
$ 5.1
$ 17.1
$ (189.6)
Other comprehensive
income (loss) before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
income (loss)
Total other
comprehensive
income (loss)
Less: other
comprehensive loss
(income) attributable
to noncontrolling
interests
125.0
1.9
(10.6)
116.3
(247.1)
0.8
15.0
(231.3)
—
(3.9)
(0.5)
(4.4)
—
(1.2)
—
(1.2)
125.0
(2.0)
(11.1)
111.9
(247.1)
(0.4)
15.0
(232.5)
21.0
(0.2)
—
20.8
(12.4)
—
—
(12.4)
Ending balance
$ (325.3)
$ 2.5
$ 21.0
$ (301.8) $ (471.3)
$ 4.7
$ 32.1
$ (434.5)
The components of other comprehensive income (loss), net of tax for the years ended December 31,
2017, 2016 and 2015, are as follows (in millions):
Year ended December 31, 2017
Net unrealized losses on available-for-sale securities
Foreign currency translation adjustments
Retirement benefit asset, net
Reclassifications to net income
Total other comprehensive income
Year ended December 31, 2016
Net unrealized gains on available-for-sale securities
Foreign currency translation adjustments
Retirement benefit asset, net
Reclassifications to net income
Total other comprehensive income loss
Year ended December 31, 2015
Net unrealized gains on available-for-sale securities
Foreign currency translation adjustments
Retirement benefit asset, net
Reclassifications to net income
Total other comprehensive income loss
119
Pre-tax
amount
Tax
expense
Net
amount
$
1.9
125.0
(10.2)
(4.4)
$ — $
—
(0.4)
—
1.9
125.0
(10.6)
(4.4)
$ 112.3
$ (0.4) $ 111.9
Pre-tax
amount
Tax
benefit
Net
amount
$
0.8
(247.4)
14.7
(1.2)
$ — $
0.3
0.3
—
0.8
(247.1)
15.0
(1.2)
$ (233.1) $ 0.6
$ (232.5)
Pre-tax
amount
Tax
expense
Net
amount
$
1.4
(94.5)
(0.5)
(14.7)
$ — $
—
(0.2)
—
1.4
(94.5)
(0.7)
(14.7)
$ (108.3) $ (0.2) $ (108.5)
Note 17 — Earnings and Dividends Per Share
Earnings Per Share
The following is a summary of the earnings per share calculation for the years ended December 31,
2017, 2016 and 2015 (in millions, except per share data):
Year ended December 31,
2017
2016
2015
Net income attributable to JHG
Less: Allocation of earnings to participating stock-based awards
$ 655.5
(17.3)
$ 189.0
(4.5)
$ 329.8
(9.0)
Net income attributable to JHG common shareholders
$ 638.2
$ 184.5
$ 320.8
Weighted-average common shares outstanding — basic
Dilutive effect of non-participating stock-based awards
Weighted-average diluted common shares outstanding — diluted
160.7
1.6
162.3
109.1
2.0
111.1
109.3
6.1
115.4
Earnings per share:
Basic
Diluted (two class)
$
$
3.97
3.93
$
$
1.69
1.66
$
$
2.93
2.78
The share numbers in the table above have been updated to reflect the share consolidation on
April 26, 2017. Refer to Note 2 — Summary of Significant Accounting Policies, for additional
information on the share consolidation. The potential dilutive effect of redemptions of the Group’s
2018 Convertible Notes has been excluded from the calculations above. Redemptions to date have
been settled wholly in cash, and the Group has the ability and intent to settle future redemptions
wholly in cash.
The following instruments are anti-dilutive and have not been included in the weighted-average
diluted shares outstanding calculation (in millions):
Unvested nonparticipating stock awards
Dai-ichi options
Dividends Per Share
Year ended
December 31,
2017
2016
2015
0.8
10.0
7.8
—
1.9
—
The payment of cash dividends is within the discretion of JHG’s Board of Directors and depends on
many factors, including, but not limited to, the Group’s results of operations, financial condition,
capital requirements, and general business conditions and legal requirements. From the Closing
Date, the Group intends to declare dividends quarterly in USD; prior to the Merger, the Group
declared dividends in GBP on a semi-annual basis, with an extraordinary first quarter 2017 dividend
declared on April 19, 2017.
The following is a summary of cash dividends declared and paid for the years ended December 31,
2017, 2016 and 2015, in GBP and USD:
Year ended December 31,
2017
2016
2015
Dividends paid per share — pre-Merger — in GBP
Dividends paid per share — post-Merger — in USD
£ 0.0915
$ 0.6400
120
£ 0.1040
$
— $
£ 0.0950
—
The pre-Merger share numbers in the table above have not been updated to reflect the share
consolidation on April 26, 2017. Refer to Note 2 — ’Summary of Significant Accounting Policies’, for
additional information on the share consolidation.
Note 18 — Commitments and Contingencies
Commitments and contingencies may arise in the normal course of business. Commitments and
contingencies as of December 31, 2017 are discussed below.
Operating and Capital Leases
As of December 31, 2017, future minimum rental commitments under non-cancelable operating and
capital leases are as follows (in millions):
Year ended December 31,
2018
2019
2020
2021
2022
Thereafter
Total
Amount
$
35.8
31.9
29.0
26.4
24.4
84.5
$ 232.0
Litigation and Other Regulatory Matters
JHG is periodically involved in various legal proceedings and other regulatory matters. Although
there can be no assurances, based on information currently available, management believes that it
is probable that the ultimate outcome of matters that are pending or threatened will not have a
material effect on JHG’s consolidated financial statements.
Note 19 — Related Party Transactions
Disclosures relating to equity method investments and the Group pension scheme can be found in
Note 8 and Note 15 respectively. Transactions between JHG and its controlled subsidiaries have
been eliminated on consolidation and are not disclosed in this note.
Certain managed funds are deemed to be related parties of the Group under the related party
guidance. The Group earns fees from the funds for which it acts as investment manager and the
balance sheet includes amount due from these managed funds.
During the years ended December 31, 2017, 2016 and 2015, the Group recognized revenues of
$1,473.5 million, $885.0 million and $1,082.8 million, respectively, from the funds it manages that are
related parties and not consolidated, in the Consolidated Statements of Comprehensive Income.
The following table reflects amounts in the Consolidated Balance Sheets relating to fees receivable
from managed funds which are deemed to be related parties (in millions):
12b-1 plan fees (1)
Year ended
December 31,
2017
2016
$ 12.1
$ —
121
Accrued income
Accounts receivable
As of December 31
2017
2016
$ 261.6
39.8
$ 130.8
3.1
(1) The annual marketing or distribution fees on a mutual fund.
Dai-ichi is a significant shareholder of the Group. Investment management fees (included in the
revenue figure above) for the years ended December 31, 2017 and 2016, were $11.0 million and nil,
respectively.
Seed investments held in managed funds are disclosed in Note 5 — Consolidation.
Note 20 — Geographic Information
The following summary provides information concerning the Group’s principal geographic areas for
the years ended and as of December 31, 2017, 2016 and 2015 (in millions):
Operating revenues
U.S.
UK
Luxembourg
International
Total
Year ended December 31,
2017
2016
2015
$
$
703.8
653.2
280.9
105.8
$ 172.1
518.4
282.7
26.7
172.0
699.7
273.5
9.9
$ 1,743.7
$ 999.9
$ 1,155.1
Operating revenues are attributed to countries based on the location in which revenues are earned.
Long-lived assets
UK
U.S.
Australia
Other
Total
As of
December 31,
2017
2016
$
397.0
2,629.8
245.1
3.5
$ 321.9
54.0
—
25.4
$ 3,175.4
$ 401.3
Long-lived assets include property, equipment, software and intangible assets.
122
Note 21 — Selected Quarterly Financial Data (Unaudited)
(in millions, except per share amounts)
Operating revenue
Operating income
Net income
Net income attributable to noncontrolling
interests
Net income attributable to JHG
Basic earnings per share attributable to JHG
common shareholders
Diluted earnings per share attributable to
JHG common shareholders
(in millions, except per share amounts)
Operating revenue
Operating income
Net income
Net income attributable to noncontrolling
interests
Net income attributable to JHG
Basic earnings per share attributable to JHG
common shareholders
Diluted earnings per share attributable to JHG
common shareholders
Note 22 — Subsequent Events
BNP Paribas Securities Services
First
quarter
Second
quarter
2017
Third
quarter
Fourth
quarter
Full
year
$ 229.5
50.8
42.6
$ 384.8
56.7
41.5
$ 537.4
138.2
102.2
$ 592.0
196.6
472.1
$ 1,743.7
442.3
658.4
—
42.6
0.38
0.38
0.2
41.7
0.29
0.28
$
$
$
$
(2.7)
99.5
(0.4)
471.7
(2.9)
655.5
$
$
0.49
0.49
$
$
2.34
2.32
$
$
3.97
3.93
First
quarter
Second
quarter
2016
Third
quarter
Fourth
quarter
Full
year
$ 254.4
65.6
54.6
$ 257.1
56.4
40.2
$ 245.0
64.1
53.6
$ 243.4
46.0
28.9
$ 999.9
232.1
177.3
(3.1)
51.5
$
$
0.46
0.44
$
$
6.1
46.3
0.42
0.40
(0.2)
53.4
$
$
0.48
0.46
$
$
8.9
37.8
0.34
0.33
11.7
189.0
$
$
1.69
1.66
On October 19, 2017, the Group signed an agreement with BNP Paribas. BNP Paribas will assume
responsibility for the majority of JHG’s back-office (including fund administration and fund
accounting), middle-office and custody functions in the U.S. BNP Paribas will pay JHG net
consideration of approximately $36 million for the operations upon closing, which is anticipated for
March 2018.
0.750% Convertible Senior Notes Due 2018
Holders of the 2018 Convertible Notes may convert the notes during a particular calendar quarter if
the last reported sale price of JHG’s common stock is greater than or equal to 130% of the
applicable conversion price for at least 20 trading days during a period of 30 consecutive trading
days ending on the last trading day of the preceding quarter. As of January 1, 2018, the 2018
Convertible Notes met the conversion criteria and are convertible during the first quarter 2018 at a
conversion rate of 45.1535 shares of JHG common stock per $1,000 principal amount of the 2018
Convertible Notes, which is equivalent to a conversion price of approximately $22.15 per share of
common stock.
During the period from January 1, 2018 to February 22, 2018, an additional $22.5 million in principal
was redeemed and settled with cash for a total cash outlay of $39.1 million, and additional
123
conversion notices amounting to $25.4 million in principal had been received. JHG intends to settle
the conversion notices with cash during the first quarter 2018.
Dividend
On February 5, 2018, JHG’s Board of Directors declared a fourth quarter 2017 cash dividend of
$0.32 per share. The dividend will be paid on March 2, 2018, to shareholders of record at the close
of business on February 16, 2018.
124
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of December 31, 2017, JHG’s management evaluated the effectiveness of the design and
operation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act). Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by the Group
in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the Group’s management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Disclosure controls and procedures are designed by the Group to ensure that it records, processes,
summarizes and reports in a timely manner the information it must disclose in reports that it files
with or submits to the SEC. Richard M. Weil, Co-Chief Executive Officer, Andrew J. Formica,
Co-Chief Executive Officer, and Roger Thompson, Chief Financial Officer, reviewed and participated
in management’s evaluation of the disclosure controls and procedures. Based on this evaluation,
Mr. Weil, Mr. Formica and Mr. Thompson concluded that as of the date of their evaluation, JHG’s
disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting
This Annual Report on Form 10-K does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the Company’s registered public
accounting firm due to a transition period established by rules of the SEC for newly public
companies.
Changes in Internal Control Over Financial Reporting
There were no changes in JHG’s internal control over financial reporting (as that term is defined in
Rule 13a-15(f) under the Exchange Act), that occurred during the fiscal quarter ended December 31,
2017 that have materially affected, or are reasonably likely to materially affect, JHG’s internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10 of Part III of Form 10-K requires registrants to furnish the information required by the
following items of Regulations S-K, Part 400: Items 401 (Directors, Executive Officers, Promoters
and Control Persons), 405 (Compliance with Section 16(a) of the Exchange Act), 406 (Code of
Ethics) and 407(c)(3) (Material Changes to Procedures for Shareholder Nomination of Directors),
(d)(4) (Names of audit committee members) and (d)(5) (Audit Committee Financial Expert). Because
the Company is a ‘‘foreign private issuer’’ as defined by Rule 3b-4 under the Securities Exchange of
1934, as amended, it is not required to comply with Section 16(a) of the Exchange Act. Accordingly,
the Company has not provided the information called for in Item 405.
125
Directors
Richard Gillingwater, Glenn Schafer, Andrew Formica, Richard Weil, Sarah Arkle, Kalpana Desai,
Jeffrey Diermeier, Kevin Dolan, Eugene Flood, Jr., Lawrence Kochard, Angela Seymour-Jackson,
Tatsusaburo Yamamoto are the current directors of the Company, holding office until the 2018
annual general meeting or until their successors are elected and qualify. Ages shown below are as
of February 22, 2018.
Sarah Arkle | Age 61
Independent Non-Executive Director since May 2017. Ms Arkle was a Non-Executive Director of
Henderson Group from September 2012 to May 2017 and is currently the Chair of the Board Risk
Committee and member of the Audit Committee and Nominating and Governance Committee.
Experience
Ms Arkle has been in the financial industry for over 34 years. She joined Allied Dunbar Asset
Management in 1983 which became Threadneedle in 1994. She was Vice Chairman of
Threadneedle until the end of July 2012 and was Chief Investment Officer until December 2010, a
role she held for 10 years. Previously, Ms Arkle worked at the Far Eastern stockbroker WI Carr
(Overseas) Limited and was an advisor to the South Yorkshire Pension Fund. Ms Arkle is currently a
Non-Executive Director of Foreign & Colonial Investment Trust plc and Chair of J.P. Morgan
Emerging Markets Investment Trust plc. Ms Arkle has also been a member of the Royal Commission
of the Great Exhibition of 1851 Finance Committee since January 2017. Ms. Arkle holds an MA in
Management Studies from Cambridge University and is an associate of the Institute of Chartered
Secretaries and Administrators.
Ms Arkle’s qualifications to serve on the Board include her over 34 years of asset management
experience as a fund manager, chief investment officer and as vice chairman of Threadneedle. The
Board also takes into consideration her experience and contribution as a legacy non-executive
director of Henderson Group plc from 2012 to May 2017.
Kalpana Desai | Age 50
Independent Non-Executive Director since May 2017. Ms Desai was a Non-Executive Director of
Henderson Group from October 2015 to May 2017 and is currently a member of the Audit
Committee and Nominating and Governance Committee.
Experience
Ms Desai has over 30 years of international advisory and investment banking experience, primarily
gained in the Asia-Pacific region. Until 2013, Ms Desai was Head of Macquarie Capital Asia, the
investment banking division of Macquarie Group Limited, headquartered in Australia. Prior to this,
she was Head of the Asia-Pacific Mergers & Acquisitions Group and a Managing Director from 2001
in the investment banking division of Bank of America Merrill Lynch based in Hong Kong. Earlier,
Ms Desai worked in the corporate finance divisions of Barclays de Zoete Wedd in London and Hong
Kong and at J. Henry Schroder Wagg in London, having started her career in the financial services
division of Coopers & Lybrand Consulting in London. She was a member of the Takeovers and
Mergers Panel of the Securities and Futures Commission in Hong Kong from 2007 to 2014. She is
currently a Non-Executive Director of Canaccord Genuity Group Inc., headquartered in Canada.
Ms Desai has a BSc in Economics from the London School of Economics and Political Science and
qualified as a Chartered Accountant (ACA) at PricewaterhouseCoopers in London in 1991.
126
Ms Desai’s qualifications to serve on the Board include her over 30 years of international advisory
and investment banking experience, primarily gained in the Asia-Pacific region, including her
experience gained as Head of the Asia-Pacific Mergers & Acquisitions Group and a Managing
Director from 2001 in the investment banking division of Bank of America Merrill Lynch based in
Hong Kong. The Board also takes into consideration Ms Desai’s qualification as a Chartered
Accountant (ACA).
Jeffrey Diermeier | Age 65
Independent Non-Executive Director since May 2017. Mr Diermeier was an Independent Director of
Janus Capital Group from March 2008 to May 2017 and is currently the Chair of the Board Audit
Committee and member of the Nominating and Governance Committee and the Risk Committee.
Experience
Mr Diermeier is a Director of the University of Wisconsin Foundation, a non-profit fundraising and
endowment management organization, and former Chairman of its Investment Committee. In
January 2011, Mr Diermeier became a Director of Adams Street Partners, a private equity firm
located in Chicago. Between 2010 and 2017 he was a co-owner and Chairman of L.B. White
Company, a heating equipment manufacturer. He is also a minority owner of Stairway Partners, LLC,
a registered investment adviser located in Chicago, and was an advisory board member from 2005
to December 2012. He was a Trustee of the Board of the Financial Accounting Foundation, which
oversees the Financial Accounting Standards Board and the Government Accounting Standards
Board, from January 2009 to December 2015 and Chairman of the Trustees from November 2012 to
December 2015. From 2005 until January 2009, he served as President and Chief Executive Officer
of the CFA Institute, a non-profit educational organization for investment professionals in
Charlottesville, Virginia, and previously in a number of capacities in the global asset management
division of UBS and predecessor organisations, primarily Brinson Partners, Inc., beginning as an
Equity Analyst and culminating as its Global Chief Investment Officer from 2000 to 2004.
Mr Diermeier holds the Chartered Financial Analyst designation. Mr Diermeier has a BBA in Finance
and Investments from the University of Wisconsin — Madison and an MBA in Finance and
Investments from the University of Wisconsin — Madison.
Mr Diermeier’s qualifications to serve on the Board include extensive oversight experience related to
financial reporting and corporate governance standards as a trustee of the Board of the Financial
Accounting Foundation, CFA Institute experience, mutual fund and investment adviser oversight
experience while at UBS, corporate oversight as a member of several boards of directors and
committees, and his general executive management experience at UBS and its predecessor entity.
Kevin Dolan | Age 64
Independent Non-Executive Director since May 2017. Mr Dolan was a Non-Executive Director of
Henderson Group from September 2011 to May 2017 and is currently a member of the Nominating
and Governance Committee and Risk Committee.
Experience
Mr Dolan has been in the financial services industry for 36 years and has extensive experience in
M&A transactions, both in Europe and the U.S. Mr Dolan has held various executive positions,
including as Chief Executive of the Asset Management Division of Bank of Ireland Group and Chief
Executive of Edmond de Rothschild Asset Management. He spent 10 years with the AXA Group
where he was Chief Executive Officer of AXA Investment Managers Paris, and Global Deputy Chief
Executive Officer of AXA Investment Management. He was Chief Executive of La Fayette Investment
127
Management in London from 2006 until 2009. Mr Dolan was a Director of Meeschaert Gestion
Priv ´ee until 2015, is the founding partner of Anafin LLC, and a senior advisor to One Peak Partners.
Mr Dolan has a BS in Business Administration from Georgetown University.
Mr Dolan’s qualifications to serve on the Board include his over 36 years’ experience in the financial
industry, notably his chief executive experience at La Fayette Investment Management, Bank of
Ireland Group and with Edmond de Rothschild Asset Management and AXA Group. The Board also
takes into consideration his experience and contribution as a legacy non-executive director of
Henderson Group plc from 2011 to May 2017.
Eugene Flood Jr. | Age 62
Independent Non-Executive Director since May 2017. Mr Flood was a Non-Executive Director of
Janus Capital Group from January 2014 to May 2017 and is currently a member of the Nominating
and Governance Committee, Risk Committee and Audit Committee.
Experience
Currently, Mr Flood also serves as Chairman of the advisory board for the Institute for Global Health
and Infectious Diseases at the University of North Carolina Chapel Hill; is a Trustee of the Financial
Accounting Foundation; and, has been a Director of the Research Corporation for Science
Advancement since 2015. Previously, Mr Flood served as a Director of The Foundation for the
Carolinas from 2012 to 2015. He was Executive Vice President of TIAA-CREF from 2011 until his
retirement in 2012, serving on the CREF Board of Trustees and the TIAA-CREF Mutual Fund Board
of Trustees for seven years, and chairing the Investment Committee. Prior to joining TIAA-CREF as
an executive in 2011, Mr Flood spent 12 years with Smith Breeden Associates, a North Carolina-
based fixed income asset manager, as President and Chief Executive Officer. Mr Flood also served
with Morgan Stanley in a range of trading and investment positions from 1987 to 1999 and was an
Assistant Professor of Finance at Stanford Business School from 1982 to 1987. Mr Flood earned a
Bachelor of Arts degree in economics from Harvard University and a PhD in economics from the
Massachusetts Institute of Technology.
Mr Flood Jr’s qualifications to serve on the Board include his extensive investment management,
mutual fund and investment adviser experience as a trustee for CREF and TIAA-CREF, his senior
management experience with Smith Breeden Associates and Morgan Stanley, and his economic-
focused academic background. The Board also takes into account that Mr Flood has a Ph.D. in
Economics from the Massachusetts Institute of Technology.
Andrew Formica | Age 46
Co-Chief Executive Officer and Executive Director since May 2017.
Experience
Andrew Formica is Co-Chief Executive of Janus Henderson and has been an Executive Director
since May 2017. Mr Formica was Chief Executive and an Executive Director of Henderson Group
from November 2008 to May 2017. He has been with Henderson since 1998 and in the fund
management industry since 1993. Mr Formica has held various senior roles with Henderson and he
has been a member of the executive committee since 2004. Prior to being appointed Chief
Executive, he served as Joint Managing Director of the Listed Assets business (from September
2006) and as Head of Equities (from September 2004). In the early part of his career, he was an
equity manager and analyst for Henderson. Mr Formica was a director of TIAA Henderson Real
Estate Limited from April 2014 to July 2015. Mr Formica is the deputy chairman of the board of The
Investment Association and has served as a non-executive director of Hammerson plc since
128
November 2015. Mr Formica received a B Econ and MA in Economics from Macquarie University
and a MBA from London Business School. He is a Fellow of the Institute of Actuaries in both the UK
and Australia. Mr Formica has 25 years of financial industry experience.
Mr Formica’s qualifications to serve on the Board include his current role as co-CEO of the
Company in addition to his 25 years of funds management experience gained with Henderson Group
prior to the merger, including his role as Chief Executive and an Executive Director of Henderson
Group from November 2008 to May 2017.
Richard Gillingwater | Age 61
Non-Executive Director and Chairman since May 2017. He was a Non-Executive Director of the
Henderson Group Board from February 2013 to May 2017, taking the position of Chairman in May
2013. He is currently the Chair of the Nominating and Governance Committee and a member of the
Compensation Committee.
Experience
Mr Gillingwater started his career in investment banking in 1980 at Kleinwort Benson, where he
spent ten years. After this he moved to BZW and, in due course, became joint Head of Corporate
Finance. BZW was taken over by Credit Suisse First Boston and he ultimately became Chairman of
European Investment Banking at Credit Suisse First Boston. In 2003, he was asked by the UK
Government to found and become the Chief Executive and later, Chairman of the Shareholder
Executive. In 2007, he became Dean of Cass Business School which role he held until 2012.In his
Non Executive career, Mr Gillingwater has been Chairman of CDC Group plc and has also been a
Non-Executive Director of P&O, Debenhams, Tomkins, Qinetiq Group, Kidde, Hiscox Ltd and Wm
Morrison Supermarkets plc. Mr Gillingwater is Chairman of SSE plc and Non Executive Director of
Helical plc. Mr Gillingwater holds an MA in Law, St Edmund Hall, Oxford University and a MBA from
the International Institute for Management Development (IMD) in Lausanne. Mr Gillingwater is a
qualified solicitor.
Mr Gillingwater’s qualifications to serve on the Board include his broad industry experience as
Chairman of European Investment Banking at Credit Suisse First Boston, Chairman of the
Shareholder Executive and Dean of the Cass Business School, in addition to his extensive
experience as a non-executive director of a number of other high profile publicly listed companies,
including as Chairman of Henderson Group from May 2013 to May 2017.
Lawrence Kochard | Age 61
Independent Non-Executive Director since May 2017. Mr Kochard was an Independent Director of
Janus Capital Group from March 2008 to May 2017 and is currently the Chair of the Compensation
Committee and a member of the Nominating and Governance Committee.
Experience
Mr Kochard is Chief Investment Officer at Makena Capital Management. Until January 2018, he was
the Chief Executive Officer and Chief Investment Officer of the University of Virginia Investment
Management Company. Mr Kochard has served as a Director of the Virginia Commonwealth
University Investment Management Company since 2015, as a Director and the Chair of the
Investment Committee for the Virginia Environmental Endowment since 2013 and a Member of the
Investment Advisory Committee of the Virginia Retirement System since March 2011, serving as
Chair since 2017. He previously served as the Chairman of the College of William & Mary
Investment Committee from 2005 to October 2011. From 2004 to 2010, he was the Chief Investment
Officer for Georgetown University, and from 2001 to 2004 was Managing Director of Equity and
129
Hedge Fund Investments for the Virginia Retirement System. Mr Kochard worked as an Assistant
Professor of Finance at the McIntire School of Commerce at the University of Virginia from 1999 to
2001. He started his career in financial analysis and planning, corporate finance and capital markets
for E.I. DuPont de Nemours and Company, Fannie Mae and The Goldman Sachs Group, Inc.
Mr Kochard holds the Chartered Financial Analyst designation and a Ph.D. in economics from the
University of Virginia.
Mr Kochard’s qualifications to serve on the Board include his extensive experience related to
investment management, investment adviser oversight, general executive management and his
economic-focused academic background while a senior executive officer on the investment teams of
University of Virginia, Georgetown University, Virginia Retirement System, Fannie Mae, and The
Goldman Sachs Group. The Board also takes into account that Mr Kochard has a Ph.D. in
Economics from the University of Virginia.
Glenn Schafer | Age 68
Vice-Chairman and Independent Non-Executive Director since May 2017. Mr Schafer was a Director
of Janus Capital Group from December 2007 to May 2017, taking the position of Chairman in April
2012. He is a member of the Compensation Committee and the Nominating and Governance
Committee.
Experience
Mr Schafer serves as a Director of GeoOptics LLC, a weather satellite manufacturer. Mr Schafer
served as a Director of the Michigan State University Foundation from 2004 to 2014. Mr Shafer was
Vice Chairman of Pacific Life Insurance Company (Pacific Life) from April 2005 until his retirement in
December 2005; a member of Pacific Life’s Board of Directors and President of Pacific Life from
1995 to 2005; and, Executive Vice President and Chief Financial Officer of Pacific Life from 1991 to
1995. From 2006 to 2007, he served on the Board of Directors for Scottish Re Group. Between
2006 and 2017 Mr Schafer was a Director of Genesis Healthcare, Inc., the successor company
resulting from the merger with Skilled Healthcare Group, Inc. to which Mr Schafer was a director.
Mr Schafer also served as a Director of Mercury General Corporation, an insurance holding
company, between 2015 up until his resignation in February 2018. Mr Schafer has a BS from
Michigan State University and an MBA from the University of Detroit.
Mr Schafer’s qualifications to serve on the Board include his extensive accounting and financial
experience as a former Chief Financial Officer at Pacific Life, investment and capital management
experience as a senior executive and board member of Pacific Life, corporate oversight experience
as a member of several boards of directors and committees, including as Chairman of Janus Capital
Group from April 2012 to May 2017 and his general executive management experience gained as a
senior executive and board member of Pacific Life.
130
Angela Seymour-Jackson | Age 51
Independent Non-Executive Director of Janus Henderson since May 2017. Ms Seymour-Jackson
was a Non-Executive Director of Henderson Group from January 2014 to May 2017 and is currently
a member of the Compensation Committee and the Nominating and Governance Committee. She
also chairs Henderson Global Holdings Asset Management Limited (a holding company of the legacy
Henderson Group).
Experience
Ms Seymour-Jackson has over 25 years’ experience in retail financial services. She has held various
senior marketing and distribution roles in Norwich Union Insurance, General Accident Insurance,
CGU plc and Aviva. She was Chief Executive Officer of RAC Motoring Services Limited from 2010
until 2012. She joined Aegon UK in May 2012 and was appointed Managing Director of the
Workplace Solutions Division in December 2012. Ms Seymour-Jackson was a Senior Advisor to
Lloyds Banking Group (insurance) until October 2017. She is a Non-Executive Director of Rentokil
Initial plc, Page Group plc and esure Group plc, and is also Deputy Chair and Senior Independent
Director at Gocompare.com Group plc. Ms. Seymour-Jackson has a BA (Hons) in French and
European Studies from the University of East Anglia, a diploma from the Chartered Institute of
Marketing and an MSc in Marketing.
Ms Seymour-Jackson’s qualifications to serve on the Board include her extensive background in
retail financial services including her experience gained in various senior marketing and distribution
roles at Norwich Union Insurance, CGU plc and Aviva UK Life as well as her senior executive
experience at RAC Motoring Services Limited and Aegon UK. The Board also takes into
consideration her experience and contribution as a non-executive director of Henderson Group from
January 2014 to May 2017.
Richard Weil | Age 54
Co-Chief Executive Officer and Executive Director since May 2017.
Experience
Richard Weil is Co-Chief Executive Officer of Janus Henderson and also serves as a member of the
Board. In this role, Mr Weil, in conjunction with Andrew Formica, is responsible for the strategic
direction and overall day-to-day management of the firm. He also co-leads the firm’s executive
committee. He has held this position since the merger of Janus Capital Group and Henderson
Global Investors in May 2017. Prior to this, Mr Weil was Chief Executive Officer of Janus, a position
he had held since joining the firm in 2010. Prior to this, Mr Weil spent 15 years with PIMCO where
most recently he served as the global head of PIMCO Advisory, a member of PIMCO’s executive
committee, and a member of the board of trustees of the PIMCO Funds. Previous to his
appointment as global head of PIMCO Advisory, he served as chief operating officer of PIMCO, a
position he held for 10 years, in which time he successfully led the development of PIMCO’s global
business and founded their German operations. Mr Weil also previously served as PIMCO
Advisors L.P.’s general counsel. Prior to joining PIMCO in 1996, Mr Weil was with Bankers Trust
Global Asset Management and Simpson Thacher & Bartlett LLP in New York. Mr Weil earned his
bachelor of arts degree in economics from Duke University and his juris doctorate from the
University of Chicago Law School. He has 24 years of financial industry experience.
Mr Weil’s qualifications to serve on the Board include his current role as co-CEO of the Company in
addition to his extensive business and legal experience in the investment management industry, his
general executive management experience as a senior executive officer at PIMCO and as a lawyer
131
at Simpson Thacher & Bartlett LLP. The Board also considered his extensive experience in the
development and oversight of global company operations including his experience gained as Chief
Executive Officer of Janus Capital Group from 2010 to May 2017.
Tatsusaburo Yamamoto | Age 53
Independent Non-Executive Director since May 2017. Mr Yamamoto was an Independent Director of
Janus Capital Group from July 2015 to May 2017 and is currently a member of the Nominating and
Governance Committee.
Experience
Mr Yamamoto is currently Managing Executive Officer, Corporate Planning Unit, of The Dai-ichi Life
Holdings, Inc. (Dai-ichi Life) and has worked in many different capacities for Dai-ichi Life over his
29 year career with the firm. Prior to his current role, Mr Yamamoto served as Executive Officer at
the Asset Management Business Unit of Dai-ichi Life and the Investment Planning Department of
Dai-ichi Life Insurance Company, Limited. Mr Yamamoto was appointed to the Janus Capital Group
Board after being designated by Dai-ichi Life as its representative for appointment to the Board. This
right was granted to Dai-ichi Life as a result of the Investment and Strategic Cooperation Agreement
(the Agreement) between Dai-ichi Life and Janus Capital Group. In connection with the Agreement,
Mr Yamamoto has previously worked with the Janus management as a member of the strategic
alliance coordination committee, which sought to further the goals of the strategic alliance and
enhance product distribution opportunities. Mr Yamamoto has a Bachelor of Arts in Economics from
WASEDA University.
Mr Yamamoto’s qualifications to serve on the Board include his extensive experience in the financial
services industry outside of the U.S. and his roles in management in the investment planning, asset
management and international business management departments of The Dai-ichi Life Insurance
Company, Limited (‘‘Dai-ichi Life Insurance’’) including as Deputy CEO of Dai-ichi Life Insurance
Vietnam and Managing Director of Dai-ichi Life Insurance (Asia Pacific). The Board also considered
his experience and familiarity with the Company’s management team.
Executive Officers
The current executive officers of the Company are as follows:
Name
Andrew Formica
Richard Weil
Roger Thompson
Enrique Chang
Phil Wagstaff
Title
Age (1)
Co-Chief Executive Officer
Co-Chief Executive Officer
Chief Financial Officer
Chief Investment Officer
Global Head of Distribution
46
54
50
55
54
(1) Ages shown are as of February 22, 2018.
The principal occupation of the current executive officers of the Company is shown in the table
above supplemented by the following information, except with respect to Messrs. Formica and Weil,
whose previous experience is described above regarding the Company’s directors.
132
Roger Thompson is Chief Financial Officer at Janus Henderson, a position he has held, as part of
the Henderson team, since 2013. He is a member of the executive committee. Mr. Thompson joined
Henderson from J.P. Morgan Asset Management where most recently he was global chief operating
officer and was previously head of UK and prior to that, international CFO. Mr. Thompson held a
broad range of roles at J.P. Morgan and worked internationally, spending time in Tokyo, Singapore
and Hong Kong. He trained as an accountant with PricewaterhouseCoopers. Mr. Thompson
graduated with a BA (Hons) in accountancy and economics from Exeter University. He is also a
chartered accountant and has 26 years of financial industry experience.
Enrique Chang is Global Chief Investment Officer at Janus Henderson, a position he has held since
the merger of Janus and Henderson in 2017. Prior to the merger, Mr. Chang was President, Head of
Investments at JCG. In his current role, he leads Janus Henderson’s global investment team.
Mr. Chang is also a Portfolio Manager on the Janus Henderson Global Allocation strategies and a
member of the Janus Henderson executive committee. He previously served as chief investment
officer and executive vice president for American Century Investments. Mr. Chang joined American
Century in 2006 and was named CIO in January 2007. Additionally, he was a director of the
corporate board. Mr. Chang was also a member of the firm’s asset allocation committee and
investment management senior leadership team. He previously was the CIO responsible for global
and non-U.S. equity. Before American Century, Mr. Chang was president and chief investment
officer for Munder Capital Management. Earlier in his career, he held a number of senior investment
management positions at Vantage Global Advisor, J&W Seligman and Co., and General
Reinsurance Corp. Mr. Chang earned a bachelor of arts degree in mathematics from Fairleigh
Dickinson University, and an MBA in finance/quantitative analysis, and an MS in statistics and
operations research, from New York University. He has 30 years of financial industry experience.
Phil Wagstaff is Global Head of Distribution at Janus Henderson Investors, a position he has held
since the merger of Janus and Henderson in 2017. Mr. Wagstaff has been member of the executive
committee, as part of the Henderson team, since 2012. He joined Henderson in 2012 as global head
of distribution, responsible for all distribution businesses including retail, institutional and hedge
funds. Prior to Henderson he was global head of distribution at Gartmore Investment Management
and prior to that was managing director of UK retail at both New Star Asset Management and M&G
Investments. Mr. Wagstaff graduated with a BA (Hons) accounting from the University of Central
Lancashire and has 31 years of financial industry experience.
Officer Code of Ethics
Our Officer Code of Ethics for the Co-CEOs and Senior Financial Officers (including our Co-CEOs,
Chief Financial Officer, and Chief Accounting Officer (the ‘‘Officer Code’’) is available on our website
at http://www.janushenderson.com/group under Governance policies and statements. Any
amendments to or waivers of the Officer Code will be disclosed on our website in the same location.
Director Nomination Process and Diversity
We believe that in order for the Board to effectively guide JHG to sustained, long-term success, it
must be composed of individuals with sophistication and experience in the many disciplines that
strengthen our business. We sell our products to intermediary, institutional, and self-directed clients.
To best serve these clients and our shareholders, we seek to ensure that the Board consists of
directors who are highly sophisticated in, among other disciplines, domestic and international
investment and asset management, finance, economic policy, and the legal and accounting
regulations that impact our business. We also believe that the Board should include directors with
experience managing, overseeing or advising comparable companies in our industry at the chief
executive officer and/or the director level.
133
The Nominating and Corporate Governance Committee (‘‘Nominating Committee’’) does not have a
formal ongoing process for identifying and evaluating director nominees; however, when vacancies
on the Board are expected, or a need for a particular expertise has been identified, it is expected the
Nominating Committee may engage appropriate search firms to assist in identifying director
candidates. The Nominating Committee ensures that each director nominee satisfies at least the
criteria set forth in the Governance Guidelines and considers and evaluates the individual
background and qualifications of each director nominee and the extent to which such background
and qualifications might benefit the Company based on the size and composition of the Board of
Directors at the time. In identifying director nominees, the Nominating Committee will seek talented
and experienced candidates with professional backgrounds who support a balance of knowledge,
experience, skills, expertise, and diversity appropriate for the Board as a whole.
The Board believes that it currently constituted by members that collectively possess diverse
knowledge and experience in the disciplines that strengthen JHG’s business. Prior to nominating a
new director candidate, the Nominating Committee will consider the collective experience of the
existing Board members and based on that evaluation, the Nominating Committee is expected to
nominate individuals who it believes will enhance the Board’s ability to serve the Company’s
shareholders as a result of that experience and expertise. Although the Board does not currently
have a policy specifically addressing director diversity, the Nominating Committee, guided by the
Nominating Committee’s charter, is expected to assess and consider the diversity of the Board and
the effectiveness of its diversity prior to nominating any additional Board candidates.
Corporate Governance
The Board has established corporate governance measures substantially in compliance with
requirements of the NYSE. These include Corporate Governance Guidelines, charters for each of
the standing Audit Committee, Compensation Committee and Nominating and Governance
Committee, and a Code of Conduct applying to all directors, officers and employees. Each of these
documents is published on the Company’s corporate website: http://www.janushenderson.com/group.
Because the Company is a foreign private issuer as defined in SEC rules, it is not required to
comply with all NYSE corporate governance requirements as they apply to U.S. domestic companies
listed on the NYSE. The Company’s corporate governance practices, however, do not differ in any
significant way from those requirements, except that whereas the NYSE rules require that
shareholders be given the opportunity to vote on equity compensation plans and material revisions
thereto, with limited exceptions, under relevant ASX rules individual grants under those plans do not
require shareholder approval unless they involve the issue of securities to a related party of the
issuer (such as a director) or a person whose relationship with the company or a related party is
such that ASX considers that approval should be obtained. The Company’s corporate governance
practices comply with applicable requirements of the SEC.
Audit Committee
The members of the Audit Committee are Jeffrey Diermeier, Eugene Flood Jr., Sarah Arkle and
Kalpana Desai, each of whom is independent under the standards established by the Board and the
NYSE. Mr. Diermeier is Chairman of the Audit Committee.
Audit Committee Financial Expert
The Board has determined that each member of the Audit Committee meets the accounting or
related financial management expertise requirements of the NYSE and that Jeffrey Diermeier and
Kalpana Desai qualify as ‘‘audit Committee financial experts’’ under applicable SEC regulations. No
134
member of the Audit Committee serves on an audit committee of more than two public companies in
addition to Janus Henderson.
Item 11. EXECUTIVE COMPENSATION
Because the Company is a foreign private issuer, it is responding to this Item 11 as permitted by
Item 402(a) (1) of SEC Regulation S-K under the Exchange Act.
Compensation Principles
Our compensation policies focus on linking pay with performance and in driving long-term
shareholder returns, while appropriately managing risk. In doing so, the Compensation Committee
and the Board recognize that our compensation policies and practices must enable the Group to
attract, motivate and retain exceptional people, while aligning their interests with those of
shareholders.
The key drivers of our compensation philosophy are:
• Attract and retain individuals critical to the long-term success of the Company by providing total
reward opportunities which, subject to performance, are competitive within our defined markets,
• Maintain an appropriate balance between both fixed and variable pay, and short and long-term
elements of compensation, in order to prudently manage risk taking and to align pay with the
Company’s strategic objectives and time horizons,
• Reinforce a strong performance culture through rewards which are differentiated based on
Company, division, team and individual performance,
• Align management interests with those of the Company’s shareholders and clients by delivering a
significant portion of annual compensation in shares of Janus Henderson stock and units of Janus
Henderson funds,
• Ensure that reward-related processes are compliant with industry regulations and legislation,
consistent with market practice and include effective risk management controls.
135
The Company’s compensation principles are reinforced through an appropriate balance of the
following compensation elements:
Base Pay
Attracts and retains employees with the personal attributes, skills and
experience required to deliver long-term value for shareholders and
clients.
Benefits and Pension Competitive, cost- and tax-effective benefits that are geared toward the
promotion of employee wellbeing, and retirement/pension arrangements
that contribute to recruitment and retention and help employees build
wealth for their retirement years, and do not create an unacceptable
level of financial risk or cost to the Company.
Variable incentive
compensation
Rewards performance on an annual basis, by reference to the
Company’s investment, financial, and strategic performance, as well as
individual contributions. The total annual variable incentive award is
delivered in:
• Short Term Incentive (STI) compensation — unrestricted cash or,
where regulatory requirements dictate, retained shares/fund units
which are immediately vested, but which must be held for a minimum
period (currently 6 months)
• Long Term Incentive (LTI) compensation — a material proportion of
the variable incentive compensation is delivered as long term incentive
compensation. These incentives reinforce superior long-term business
performance and further align the interests of our employees,
shareholders and clients by providing a vehicle for an element of
incentive award to be deferred over a 3-year period and delivered
either in:
• Shares in Janus Henderson Group plc; or
• Subject to satisfaction of specific company share ownership
criteria, or where prescribed by relevant remuneration regulations,
in shares/units of Janus Henderson funds;
Under the co-CEO framework, an element of total variable incentive is
delivered in performance shares, providing a further link to Company
performance over a forward looking three-year period.
2017 Executive Compensation
Janus Henderson is an active investment manager that knows success can only be secured when
passionate, empowered employees relentlessly pursue excellence in investment returns, client
service and financial results. Following the Merger, the Board decided that the combined talents of
both legacy CEOs would be needed to support a smooth integration for our clients and long-term
growth of our people-focused business. While the co-CEO structure is uncommon, Messrs. Formica
and Weil are an effective team. Given the nature of our business and the changing environment
internally and externally, the Board believes the current management structure is both appropriate
and beneficial for Janus Henderson.
As part of its evaluation of the co-CEO structure following the Merger, the Compensation Committee
attempted to balance:
• U.S. and UK market competitive compensation practices, given that these are the Company’s
primary labour markets for talent;
• Formula-based quantitative measurement conventions that are favoured by many of our
shareholders.
136
The Compensation Committee has agreed to use a scorecard approach to drive decisions around
co-CEO compensation decisions and to maintain strong alignment of co-CEO compensation with
Company performance. In addition to implementing the scorecard approach, following the Merger,
the Compensation Committee determined to:
• maintain the current base salaries of Messrs. Formica and Weil;
• align the total compensation opportunities for the co-CEOs; and
• ensure that each co-CEO’s total compensation is competitive and appropriately reflects the size
and complexity of the combined group.
Total Compensation
The following table contains information about the compensation earned during 2017 by
Messrs. Formica and Weil, individually, and the non-CEO Executive Officers as a group, for services
to Janus Henderson during 2017. To reflect the timing of the completion of the Merger,
Mr. Formica’s incentive award for 2017 was prorated, with his award for the first five months prior to
the Merger being determined under arrangements approved under legacy Henderson’s remuneration
policy, and the award opportunity for the subsequent seven-month period being determined in line
with the new scorecard framework outlined below.
For performance year 2018 and beyond, Mr. Formica’s variable compensation will be determined
wholly in line with the new methodology for the combined firm and hence, Mr. Formica and
Mr. Weil’s compensation will be aligned in 2018, subject to equivalent performance and contribution.
Executive Officer (1)
Base
Salary (2)
Variable
Comp (STI) (3)
Funds (5)
Restricted Performance
Shares
Shares
Variable Comp (LTI) (4)
Total 2017
Variable
Comp
Benefits
and
Pension (6)
($)
($)
($)
($)
($)
($)
($)
Other (7)
($)
Andrew Formica, Co-CEO
573,500
3,493,000
1,746,500
0
1,746,500
6,986,000
71,984
0
Richard M. Weil, Co-CEO
575,000
3,976,000
1,988,000
1,988,000
7,952,000
40,836
484,910
Other Executive Officers
1,447,290
5,687,953
3,326,530
2,664,223
0
11,678,705
130,591
249,658
Notes:
All non-USD amounts in this schedule are stated in USD on the basis of the average FX rate for 2017 (GBP 1.28883: $1.0 USD).
(1)
(2)
(3)
(4)
(5)
The Other Executive Officers are Roger Thompson (Chief Financial Officer), Enrique Chang (Global Chief Investment Officer) and Phil
Wagstaff (Global Head of Distribution).
Base pay is disclosed at rate as of 31 December 2017. Mr. Weil was paid $239,584 and Mr. Chang was paid $208,334 in base salary
prior to Merger. Mr. Formica’s base salary of GBP £445,000 is converted to USD $573,500 at the above FX rate.
The amount of variable incentive remuneration awarded in respect of the 2017 performance year and not subject to deferral, including
any amounts delivered in the form of retained units/retained shares to satisfy regulatory requirements.
The amount of variable incentive remuneration awarded in respect of the 2017 performance year which is subject to deferral, either under
company policy or where mandated by regulatory requirements. Such amounts may be delivered in the form of shares/units in Janus
Henderson funds, restricted shares or performance shares. Awards vest and are realised over a 3 year deferral period (restricted share
and restricted funds) or at the end of a 3 year performance period (performance shares).
Under internal policy, provided specified JHG shareholding requirements are satisfied, individuals are able to elect for a proportion of their
deferred remuneration to be delivered in the form of Janus Henderson funds (subject to the same vesting dates and conditions as would
have applied to deferred share awards). In this regard, the following elections were applied:
— Mr Formica — 100% of his RSU award in JHG funds
— Mr Weil — 100% of his RSU awards in JHG funds
— Mr Chang — at least 50% of his RSU award in JHG funds
— Mr Wagstaff — 75% of his RSU in JHG funds
— Mr Thompson — 50% of his RSU in JHG funds.
137
(6)
Pension and Benefits amounts shown include the following;
a.
For Messrs. Formica, Wagstaff and Thompson; contributions into the Company’s defined contribution pension plan, currently 10.5%
of base pay. Per the HMRC pension limits (Lifetime Allowance and Annual Allowance), individuals are entitled to elect to take a
cash alternative which is set at 9% of base pay such that the cost to the Company (taking into account employers’ social security
contributions on cash allowances matches the cost had further contributions been made to the scheme). Messrs. Formica,
Thompson and Wagstaff have elected to take the cash alternative prior to 2017 and the total pension allowances paid to these
individuals during 2017 were £49,736, £32,175 and £33,750 respectively (USD 64,101, USD 41,468 and USD43,498 respectively)
b.
For Messrs Weil and Chang; amount includes 401(k) match contributions up to 5% of eligible compensation (capped at $270,000
per the IRS annual compensation limit) and $924 each for a one-time ESOP award.
(7)
Amounts shown in ‘Other’ include dividends on ESOP and unvested shares. Mr. Weil’s amount includes $172,240 in dividends and
$312,670 in relocation benefits per Company policy as a result of his 2017 move to the U.K from the U.S.
The Scorecard Approach to co-CEO Compensation
The scorecard approach combines the elements that the Compensation Committee believes are the
best components from the legacy Janus and Henderson compensation programs and is designed to
align the co-CEOs’ compensation with Company performance, which the Compensation Committee
believes drives long-term value for shareholders and clients. The scorecard utilized following the
Merger in May 2017 is based upon the same factors used by the Company to evaluate its business.
The performance measures and weighting used are as follows:
• Deliver investment excellence for clients (30% weighting, measured based on 3-year investment
performance relative to benchmark);
• Drive financial results for shareholders (40% weighting, measured based on revenue growth, total
net flows, and growth in net income before taxes); and
• Drive strategic results for long-term success for clients and shareholders (30% weighting,
measured based on execution of strategic initiatives such as; leading integration efforts, delivering
exceptional client service, and achieving operational excellence).
Setting Total Variable Compensation Target
The Compensation Committee determined it was appropriate for the co-CEOs to be paid under the
same structure and with similar total compensation opportunity, given how critical both of these
individuals are to the successful integration and growth of Janus Henderson. To reflect the timing of
the completion of the Merger, Mr. Formica’s incentive award for 2017 was prorated, with his award
for the first five months prior to the Merger being determined under arrangements approved under
legacy Henderson’s remuneration policy, and the award opportunity for the subsequent seven-month
period being determined in line with the new framework outlined in this section.
Under the agreed compensation framework, which was disclosed to the market in August 2017, the
variable incentive compensation for the co-CEOs is determined by multiplying a target incentive
award by a multiplier (between 0% and 200%). This multiplier is determined by reference to the
outcome of a scorecard of pre-determined measures (investment performance, financial results and
strategic results).
To establish the target incentive award, the Compensation Committee considered the merged
Company’s revenue and total assets under management (AUM) compared to the revenue and total
138
AUM of a select peer group of companies, as well as relative performance against the peer group
shown below.
Janus Henderson’s Public Company Peer Group
Affiliated Managers Group, Inc.
Legg Mason, Inc.
AllianceBernstein Holding L.P.
Old Mutual Asset Management
Ameriprise Financial, Inc.
Eaton Vance Corp.
Federated Investors, Inc.
Franklin Resources, Inc.
Invesco Ltd.
T. Rowe Price Group, Inc.
Schroders Investment Management
Standard Life Aberdeen plc
Waddell & Reed Financial, Inc.
This is to ensure that the target incentive opportunity reflects competitive pay practices of other
asset management firms in the principal markets where the Company does business and competes
for executive talent. The Compensation Committee also compared the complexity of the merged
Company’s business to the same peer group. Based on its analysis and guidance from the
Compensation Committee’s Compensation Consultants, the Compensation Committee established a
target annual incentive opportunity for each of Mr. Formica and Mr. Weil of $5.60 million.
Compensation Committee Decisions about co-CEO Pay
Evaluating co-CEO and Business Performance
Having established the total variable compensation target amount for each of Mr. Formica and
Mr. Weil, the Compensation Committee completed a rigorous assessment of co-CEO performance
relative to the specific 2017 investment, financial, and strategic objectives mentioned above and
described in more detail below. The Compensation Committee assigned a weighting to each of the
three categories of objectives to identify for shareholders how their relative importance relates to the
Company’s overall success, and, therefore, to shareholder value. The Compensation Committee
then rated co-CEO performance (as a team, and not individually) against each of these factors to
determine an overall performance multiplier.
The Compensation Committee’s evaluation of co-CEO performance involved:
(i) requesting each co-CEO to complete a comprehensive self-assessment;
(ii) using the table below to identify a performance multiplier for each of the performance
measures in the scorecard; and
(iii) determining an overall performance multiplier for each area of evaluation in consideration of
actual performance and the assigned weights.
139
Performance
Multiplier
Range
0.0 to 0.5
0.6 to 1.0
1.1 to 1.5
1.6 to 2.0
Ranges of the Compensation Committee’s Evaluation of Performance
Significant decline in absolute performance year-over-year
Bottom quartile performance relative to the applicable peer group or benchmarks
Slight decline to flat in absolute performance year-over-year
Slightly below median performance relative to the applicable peer group or benchmarks
Slight to moderate increase in absolute performance year-over-year
Slightly above median performance relative to the applicable peer group or
benchmarks
Significant increase in absolute performance year-over-year
First or high second quartile performance relative to the applicable peer group or
benchmarks
The Compensation Committee’s determination of a performance multiplier range for each of the
weighted objectives was determined by reviewing:
• The Company’s year-over-year absolute results for relevant performance measures;
• The Company’s relative percentile ranking for each such measure as compared with the
Company’s Public Company Peer Group; and
• With respect to the strategic results objectives, other factors that the Compensation Committee
deemed important in evaluating co-CEO performance, including progress in realizing Merger-
related synergies, executing the Company’s multi-year strategic initiatives, financial market
conditions, and the prevailing risk and control environment.
Evaluation of Results
Below are the highlights of the results from each area of evaluation (Investment Excellence,
Financial Results, and Strategic Results) that the Compensation Committee took into account when
determining co-CEO compensation for 2017.
Investment Excellence (30% of Total)
For 2017, 30% of the co-CEO’s variable compensation award was dependent on delivering
investment excellence. The co-CEO’s performance multiplier for this area is 100% formulaic and
calculated using the percentage of AUM performing above benchmarks on a 3-year basis.
On an AUM-weighted basis, over the 3 year investment period (ending 31 December 2017) 66% of
the Company’s total AUM outperformed its respective benchmark, resulting in a performance
multiplier range for the co-CEOs in the range of 1.6 to 2.0.
Financial Results (40% of Total)
The Compensation Committee applied a formulaic approach when determining 50% of the financial
results component of the scorecard, and a subjective approach for the other 50%.
Formulaic (50% of Financial Results; 20% of Total)
The relative rankings with respect to certain objective financial measures that the Compensation
Committee determines to be key indicators of the Company’s financial performance are
evaluated each year. In 2017, the Compensation Committee reviewed the 1-year relative
financial results of the Company as compared to the Public Company Peer Group shown on
page 137 and established a performance multiplier for the co-CEOs of 0.6 to 1.0.
140
Subjective (50% of Financial Results; 20% of Total)
The other half of the financial results performance measure is subjectively evaluated based on the
following three components, weighted evenly:
Profit and loss results
versus prior year
Adjusted operating income in 2017 of $732 million increased 30%
year-over-year, driven by strong revenue growth in management fees and
performance fees, as well as the positive impact of cost synergy
realization from the Merger.
2017 adjusted operating margin of 39.6% increased from 33.9% in 2016.
Merger-related cost
savings versus plan
Executed run rate realised synergies of $85 million comprised primarily of
compensation savings, as well as some non-compensation savings.
Balance sheet quality
Increased cost synergy target to $125 million from the originally stated
$110 million
Balance sheet continues to be strong with $1.5 billion of cash and
marketable securities and $379 million of outstanding debt (Balance Sheet
metrics reflect values as of 31 December, 2017)
In 2017, the firm reduced the principal amount of debt outstanding by
$59 million, as a result of the early conversion of approximately 51% of
the outstanding 2018 Convertible Senior Notes.
The co-CEOs received a performance multiplier of 1.0 to 1.5 on the subjective element of the
financial results. Based on the average of the formulaic and the subjective analyses, the
Compensation Committee assigned the co-CEOs a performance multiplier for the financial results
area of 1.0 to 1.5.
Strategic Results (30% of Total)
For this area, the Compensation Committee considered the co-CEO performance across a broad
range of strategic factors including:
• Lead a successful integration effort following the Merger
• Focus on delivery of investment returns with minimal disruption due to the Merger
• Ensure delivery of excellent client service and maximize distribution opportunities
• Continue to strengthen infrastructure/improve operational excellence
• Ensure we have a strong and stable leadership team
141
In 2017, the Compensation Committee considered the following outcomes when determining the
performance multiplier for the strategic results area:
Merger & Integration
1. Successfully closed the Merger
a. 78 U.S. Mutual funds merged or approved new advisory agreements
b. Rebranded approximately: 10,000 items of literature, 4,000 fund factsheets, 330+
institutional client reports, 70 websites, and 27 offices
2.
Integration is tracking ahead of expectations; during 2017 the cost synergy target was
increased to $125 million from the originally stated $110 million.
3. Extended strategic partnership with BNP Paribas through the outsourcing of the firm’s back
office, middle office and custody functions in the U.S.
Client Relationships
1. Response from clients since the Merger has been extremely supportive
2.
In 2017 the firm gained market share in the U.S. Intermediary Channel among its equity
strategies, as its equity mutual fund business outpaced the industry’s organic growth by 180
basis points.
3. Achieved good global traction in the Institutional channel across a diverse breadth of
strategies — the 10 largest net inflows for the year were sourced from 9 different strategies.
4. Positive early signs of revenue synergies
a. Dai-ichi completed a $500 million incremental investment into legacy-Henderson products
b. Global Equity Income was the top selling U.S. mutual fund, and we are seeing increasing.
opportunities with clients of the respective ‘legacy-firms’ investing in multiple strategies.
c. Consultants and institutional clients across the globe are taking the firm off of ‘watch lists’.
People and Culture
1. The Company continues to invest in people and is particularly focused on building a common
2.
culture that drives success, embodying an ethos of Knowledge. Shared.
Investment teams have come together well, with minimal disruption through the Merger,
demonstrating the resilience of our team.
3. Employees are shifting focus from integration, toward initiatives that position the firm for future
growth.
Based on its analysis of the above factors and using the table below, the Compensation
Committee assigned a performance multiplier for the co-CEOs of 1.6 to 2.0 for the strategic
results area.
Overall Performance Multiplier (applied to the Total Variable Compensation Target)
Based on a thorough evaluation of 2017 investment performance, financial and strategic results,
the Compensation Committee established the cumulative ‘‘Overall Performance Multiplier’’ range
of 1.0 to 1.5 as shown in the table below. The overall performance multiplier is applied to the
Total Variable Compensation Target in order to calculate 2017 incentive compensation for the
co-CEOs.
Scorecard Performance Measures
Investment Excellence (30%)
Financial Results (40%)
Strategic Results (30%)
Overall Performance Multiplier (100%)
142
Performance
Multiplier Range
1.6 to 2.0
1.0 to 1.5
1.6 to 2.0
1.0 to 1.5
Compensation Elements
Below is a summary of the compensation elements of executive compensation as seen in the Total
Compensation table on page 137, which provides the specific detail regarding what the Company’s
executives were paid in 2017.
Base Salary
Base salary represents a relatively small proportion of the co-CEOs’ and other executive officers’
compensation and salary increases are rare, as the Compensation Committee believes management
should receive a significant portion of their compensation as variable compensation as it better
correlates to Company performance.
Variable Compensation
The Compensation Committee emphasizes variable compensation as the primary element of the
co-CEOs’ and other executive officers’ compensation program. Variable compensation is awarded in
the form of cash (short term incentive) and a mix of equity awards (long term incentive). For the
co-CEOs:
• 50% of the variable compensation award delivered as cash (1), and ensures that the Compensation
Committee is able to provide appropriate short-term incentives for the executives, which is an
important retention element of our overall compensation philosophy.
• The remaining 50% of the variable compensation award is delivered in the form of:
• time-based restricted shares in Janus Henderson and/or shares or units in Janus
Henderson funds which vest over a 3-year period;
• performance shares which vest subject to achievement of relevant performance
conditions after a 3-year performance period.
These elements reinforce a longer-term focus and more directly aligns the interests of the
co-CEOs with the shareholders and with clients.
For the non-CEO executive officers, awards are delivered in a mix of cash (1) and restricted shares/
restricted funds. The cash portion of the 2017 variable compensation awards ranged from 45-56%
(1) To satisfy remuneration code requirements, this includes an element of retained units/shares
which are immediately vested but must be held for a minimum period of 6 months.
143
and the restricted shares/restricted funds portion ranged from 44-55%. Further detail on the award
types is set out below:
Restricted Stock
Awards (RSAs) and
Restricted Stock Units
(RSUs)
A substantial portion of variable compensation is deferred into RSAs
and RSUs on an annual basis. These awards are subject to 3- year
vesting schedules. In some instances, dividends are paid on unvested
shares and these are included in the Total Compensation Table on
page 137.
Mutual Fund Awards
Performance Stock
Units (PSUs)
Vesting of restricted stock awards may accelerate under certain
circumstances, such as if the executive dies or becomes disabled or
retires. Certain awards may contain a provision that allows for the
vesting schedule to be accelerated upon a termination following a
change in control.
A substantial portion of variable compensation is also deferred into
Mutual Fund Awards on an annual basis. These awards are typically
subject to 3- or 4-year vesting schedules.
Vesting of mutual fund awards may accelerate under certain
circumstances, such as if the executive dies or becomes disabled or
retires. Certain awards may contain a provision that allows for the
vesting schedule to be accelerated upon a termination following a
change in control.
Performance stock units (PSUs) were granted exclusively to the
co-CEOs in respect of the 2017 performance year. These PSU awards
vest upon the achievement of the Company’s 3-year total shareholder
return being at or above a specific ranking among its peer group as of
the end of the 3-year performance period (December 31, 2020 in the
case of the 2017 PSU awards). Further information about the 2017
PSUs is outlined below.
Performance Stock Units
For each of the co-CEOs, 25% of variable incentive remuneration was awarded in the form of PSUs,
with the number of share units subject to the award being calculated by reference to the NYSE mid
market price on the day immediately preceding the date of grant. The potential payout ranges from
zero to 200% of the number of units initially granted, as follows:
• The Minimum payout is earned if the Company’s 3-Year TSR is at or above the 10th percentile
ranking.
• Target payout of 100% is earned if the Company’s 3-Year TSR is at the 50th percentile.
• Maximum payout is earned if the Company’s 3-Year TSA is at or above the 90th percentile
ranking.
• A payout cannot exceed 400% of the initial grant value.
• Even if the Company’s 3-Year TSR on a relative basis is above the peer group median, if
the Company’s 3-Year TSR on an absolute basis is negative, a payout cannot exceed
100% of the number of units initially granted.
• The 2017 PSU Awards have a one-year holding period following vesting, and dividends are not
paid on unvested PSU awards.
144
• The vesting of these awards may accelerate under certain circumstances, such as if the executive
dies, becomes disabled or retires. Certain awards may contain a provision that allows for the
vesting schedule to be accelerated upon a termination following a change in control.
2.5
2
1.5
1
0.5
0
d
e
t
s
e
V
s
’
U
S
P
f
o
e
g
a
t
n
e
c
r
e
P
0
10
20
40
30
70
50
3-Year Relative TSR Percentile Rank
60
80
100
90
23FEB201805542590
LTI Awards Granted in Consideration of 2017 Performance
In February 2018, the following LTI awards will be granted to the co-CEOs and other executive
officers:
Basis of
award
(% of salary)
Share
price ($) (4)
Number
of units
granted
Face value
of award
($’000)
0
% of
face value
that would
vest at
threshold
performance
Vesting
determined
by
performance
over
305%
305%
346%
346%
184%
230%
35.38
35.38
35.38
35.38
35.38
35.38
49,364
1,746,500
1,746,500
3 years
49,364
1,746,500
1,746,500
56,190
1,988,000
1,988,000
56,190
1,988,000
1,988,000
3 years
75,303
2,664,223
2,664,223
94,023
3,326,530
3,326,530
Type of
award
RSU (1)(3)
PSU (2)
MFU (1)
RSU
PSU (2)
RSU (1)
MFU (3)
Executive Officer
Andrew Formica
Richard M. Weil
Other Executive Officers
Notes:
(1)
For Mr Formica/Other Executives, the split between RSUs and MFUs reflects a combination of:
a.
b.
satisfaction of mandatory regulatory requirements; and
internal policy for allowing individuals to elect for a proportion of deferred awards to be delivered in funds, subject to satisfaction of
minimum JHG shareholding requirements.
(2)
(3)
(4)
PSUs equal to 25% of total variable pay, vesting after a 3 year period, subject to a TSR based multiplier (which can be between 0 and
200%). Only the co-CEOs receive an element of their variable pay in this form.
Executives are able to elect for a certain proportion of their deferred compensation to be delivered in the form of shares/units or in JHG
funds, subject to minimum JHG shareholding requirements.
Represents the Fair Market Value of $35.38 (calculated as the average high $35.61 and low $35.15) on 22 February 2018. The actual
FMV will be determined on the grant date of 28 February 2018 as required by ASC Topic 718.
145
LTI Awards Vested in 2017
The table below shows the details of awards that vested during 2017.
Name
Award type
No of
No of
No of
options options options
granted vesting lapsed price ($)
Vesting
share
Face
value of
vested
award
(S)
Value of
dividends
accrued
on
vested
shares
Number of
share
acquired
on
vesting (#)
Value
realised
on
vesting ($)
Total
vested
value
LTIP Awards
LTI Awards
Andrew Formica
LTIP 2014 (tranche 2) (1) 26,333
790
25,543
34.10
26,939
3,065
30,004
LTIP 2015 (tranche 1) (2) 50,125
17,343
32,782
34.10
591,405
0
591,405
Richard M. Weil
PSU 2014 (3)
RSA 2013
RSA 2014
RSA 2015
RSA 2016
Other Executive Officers
LTIP 2014 (tranche 2) (1) 23,416
702
22,714
34.10
23,955
2,726
26,680
LTIP 2015 (tranche 1) (2) 41,484
14,353
27,131
34.10
489,453
0
489,453
RSA 2013
RSA 2014
RSA 2015
RSA 2016
75,634
2,909,640
11,532
16,184
16,237
15,677
443,636
622,598
624,637
603,094
56,244
1,465,988
11,916
9,279
20,061
310,600
241,855
522,873
Notes:
(1)
LTIP 2014 failed to meet its primary performance condition (relative TSR against the FTSE General Financials Index) which accounted for 95% of
the vesting criteria. Of the remaining 5%, which was measured against Risk and Sustainability metrics, the Committee awarded 3% out of the 5%
available to reflect legacy risk and control issues which were identified and deemed to correspond to performance period. Participants were entitled
to receive dividend equivalents on vested shares under this plan cycle.
(2)
The performance period for the first tranche of LTIP 2015 (2/3 of the original award granted) ended on 31 December 2017 and was determined to
have vested at 34.6%* reflective of:
a.
For the period pre-Merger, both the Investment Performance (15%) and People Strategy (10%) measures were achieved in full with the TSR
(equally vs FTSE and ASX), Operating Margin and Flows Measures falling below minimum vesting threshold, hence an overall outcome of
25% for the pre-merger period (29 months)
b.
For the period post Merger the outcomes were as follows:
i. TSR — ranked 58th percentile against the global peer group — vesting contribution of 73.8% (36.9% out of 50% attributable to this
measure);
ii. Investment Performance — 66% of funds outperforming at the 3 year point — vesting contribution of 80% (20% out of 25%
attributable to this measure);
iii. Relative NIBT growth* — ranked 62nd percentile against the global peer group — vesting contribution of 70.8% (17.7% out of 50%
attributable to this measure);
iv. Aggregate vesting for period post Merger = 74.6%*
c.
Aggregate vesting for plan over pre- and post Merger periods = 34.6% (29 months at 25% and 7 months at 74.6%)
(3)
Mr Weil’s 2014 PSU award vested at a multiplier of 116.84%. This PSU was subject to a 3-year cliff vesting based on the following operating
income margin (OIM) hurdles; if 3-year OIM was 24% or less, 0% of the PSUs vest, if 3-year OIM was 28% then 100% of the PSUs vest, and if
3-year OIM was greater than or equal to 32% then 200% of the PSUs vest. As a result of the Change of Control, the Performance was measured
on 3/31/2017 at 116.84%.
Service Agreements and Change in Control Arrangements with Executive Officers
The Group remains party to service agreements with Mr Formica, Mr Thompson and Mr Wagstaff
that were entered into prior to the Merger which make provision for certain payments in lieu of
*
Ranking subject to confirmation of annual earnings for Eaton Vance and Schroder’s Investment
Management.
146
12 months’ notice upon termination and other benefits. The change in control agreement with
Mr Weil that was entered into prior to the Merger provides for a payment and accelerated vesting
upon termination without cause or for ‘‘good reason’’ (as those terms are defined in the agreement)
within 24 months following a change in control, including the Merger. The foregoing is a summary
only and does not propose to be a complete description of the terms and provisions of these service
agreements and change in control agreements. This description is subject to and qualified in its
entirety by reference to the full text of the service agreements with Mr Formica, Mr Thompson and
Mr Wagstaff, which are incorporated by reference in Item 15 as Exhibits 10.23, 10.29 and 10.30 and
the full text of the change in control agreement with Mr Weil which is incorporated by reference in
Item 15 as Exhibit 10.22 to this Annual Report on Form 10-K. The change in control agreement with
Mr Chang that was entered into prior to the Merger has since been terminated.
Non-Executive Director Compensation
The following chart shows the compensation that each non-executive director was paid for his or her
services in calendar year 2017:
Name
Richard Gillingwater
Glenn S. Schafer
Sarah Arkle
Kalpana Desai
Jeffrey J. Diermeier, Director
Kevin Dolan
Eugene Flood, Jr., Director
Lawrence E. Kochard, Director
Angela Seymour-Jackson
Tatsusaburo Yamamoto, Director
Notes:
Fees
Earned or
Paid in
Cash ($) (1)
258,143
189,583
161,860
109,739
110,000
109,739
88,333
97,500
135,193
0
Stock
Awards
($) (2)
91,667
91,667
91,667
91,667
91,667
91,667
91,667
91,667
91,667
0
All Other
Compensation
($) (3)
0
17,158
0
0
10,790
0
2,435
39,433
0
0
Total ($)
349,810
298,409
253,527
201,406
212,457
201,406
182,435
228,600
226,860
0
(1) Amounts represent the annual cash retainers for serving as members of the Board of Directors,
including non-executive Chairman and committee membership retainers, which, prior to the
Merger, were paid:
a. monthly to legacy Henderson directors; and
b.
paid in a lump sum on May 1 of each year for legacy JCG (except for the Chairman, who
was paid quarterly).
On May 30, all legacy members of the JCG board of directors were paid 1/12 of their retainers
under the legacy JCG board fee retainer structure (including 1/12 of their stock fee retainer
which was paid in cash). Beginning on June 1, 2017, all members of the Janus Henderson
board of directors began earning their retainer fees under a new payment structure which is now
paid in arrears in quarterly increments.
(2) Amounts represent the value of JHG shares awarded for the 2017-2018 annual stock retainer.
147
(3)
‘‘All Other Compensation’’ includes the following:
Name
Richard Gillingwater
Glenn S. Schafer
Sarah Arkle
Kalpana Desai
Jeffrey J. Diermeier
Kevin Dolan
Eugene Flood, Jr
Lawrence E. Kochard
Angela Seymour-Jackson
Tatsusaburo Yamamoto
Dividends on
unvested
restricted
stock
pre-Merger ($)
Dividends on
unvested
restricted
stock units ($) (2)
Other (1)
0
510
0
0
0
0
0
0
0
0
0
858
0
0
2,369
0
2,435
0
0
0
0
15,790
0
0
8,421
0
0
39,433
0
0
Total
0
17,158
0
0
10,790
0
2,435
39,433
0
0
(1) The amount includes the membership fees for identity theft protection services paid by the
Company on behalf of the director.
(2) This amount represents the value of dividend equivalents awarded in the form of Restricted
Stock Units in 2017 on all grants deferred under the Director Deferred Fee Plan. The
restricted stock units held by each independent director as of December 31, 2017, are as
follows: Mr. Diermeier holds 7,682 restricted stock units; Mr. Kochard holds 36,313
restricted stock units; and Mr. Schafer holds 14,495 restricted stock units.
148
Interests in Group Shares
The following table shows the interests in Group shares, both unvested shares held pursuant to
Group share plans and beneficially owned, by Executive Directors and other named executives. The
table also shows the movement in those holdings during 2017.
Interest at
December 31,
2016 (1)(2)
Vested in
previous
Vested
Vested
2017 not 2017 and years and
Awarded exercised exercised exercised Lapsed
Interest at
December 31,
2017
Plan
Type
SAYE
BAYE
LTI
LTIP
Options
Shares
Shares
Options
816
6,632
0
238,187
489
605
39,580
0
420
1,580
119,995
RSA
PSU (3)
ESOP
Shares
Shares
Shares
155,316
229,794
366
0
0
42
59,630
100,697
Options
SAYE
BAYE
Shares
DEP/ESOP Shares
Options
LTIP
Shares
RSP
841
757
8,654
146,995
0
978
296
5,315
0
19,185
841
4,211
745
56,705
Andrew Formica
Total outstanding interests in Janus
Henderson share schemes
Total shares held outright outside Janus
Henderson share schemes
Total interests in Janus Henderson
Dick Weil
Total outstanding interests in Janus
Henderson share schemes
Total shares held outright outside Janus
Henderson share schemes
Total interests in Janus Henderson
Roger Thompson
Total outstanding interests in Janus
Henderson share schemes
Total shares held outright outside Janus
Henderson share schemes
Total interests in Janus Henderson
Enrique Chang
RSA
ESOP
Shares
Shares
188,157
0
62,037
30
97,500
Total outstanding interests in Janus
Henderson share schemes
Total shares held outright outside Janus
Henderson share schemes
Total interests in Janus Henderson
Phil Wagstaff
Total outstanding interests in Janus
Henderson share schemes
Total shares held outright outside Janus
Henderson share schemes
Total interests in Janus Henderson
Options
SAYE
BAYE
Shares
DEP/ESOP Shares
Options
LTIP
Shares
RSP
857
2,317
16,350
87,981
154,547
489
351
15,292
0
18,088
420
7,994
660
62,135
45,327
31,067
885
7,234
39,580
116,610
164,309
367,137
531,446
95,686
129,097
408
225,191
872,972
1,098,163
978
1,053
9,758
90,289
19,185
121,263
23,342
144,605
152,694
30
152,724
193,616
346,340
925
2,666
23,648
41,994
79,432
148,665
17,168
165,833
Notes:
(1)
(2)
(3)
For Messrs Formica, Thompson and Wagstaff, interets as of 31 December 2016 reflect the post consolidation holdings (after 1 for 10 conversion
into Janus Henderson shares) and may reflect small/fractional rounding differences from the figures reported in 2017
For Messrs Weil and Chang, interests as of December 31, 2016 reflect the post merger amounts after applying the conversion rate of 0.4719 per
share.
For Mr Weil, total PSU interest at 31 December 2016 includes the share reduction from 100% of target of (cid:31)21,064 and the share increase from
100% of target of 10,899 related to the 2013 and 2014 awards based on performance calculation, respectively.
149
Compensation Committee Interlocks and Insider Participation
Sarah Arkle, Kevin Dolan and Angela Seymour-Jackson served as members of the legacy
Henderson Group plc Compensation Committee between 1 January 2017 until the Merger, following
which the Compensation Committee of Janus Henderson Group was comprised of Lawrence
Kochard, Richard Gillingwater, Glenn Schafer and Angela Seymour-Jackson. No member of the
Compensation Committee was an officer or employee of the Company or any of its subsidiaries
during fiscal year 2017, and no member of the Compensation Committee was formerly an officer of
the Company or any of its subsidiaries or was a party to any disclosable related person transaction
involving the Company for the same period. During fiscal year 2017, none of the executive officers
of the Company served on the board of directors or on the compensation committee of any other
entity that has or had executive officers serving as a member of the board of directors or
Compensation Committee of the Company.
Information responding to Item 407(e)(5) of SEC Regulation S-K is omitted because the Company is
a ‘‘foreign private issuer’’ as defined in SEC Rule 3b-4 under the Exchange Act.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Stock Ownership of Certain Beneficial Owners and Management
The table below sets forth information regarding beneficial ownership of our outstanding common
stock as of February 22, 2018, by (i) beneficial owners of more than five percent of our outstanding
common stock who have publicly disclosed their ownership; (ii) each executive officer (defined
below) and each member of our Board of Directors; and (iii) all of our executive officers and
directors as a group. The Company has no knowledge of any arrangement that would at a
subsequent date result in a change in control of the Company.
Name
Dai-ichi Life Holdings, Inc. (2)
The Vanguard Group Inc. (3)
BlackRock, Inc (4)
Richard Gillingwater, Chairman of the Board of Directors
Glenn S. Schafer, Deputy Chairman of the Board of Directors (5)
Andrew Formica, Co-CEO and Director
Richard Weil, Co-CEO and Director
Sarah Arkle, Director
Kalpana Desai, Director
Jeffrey Diermeier, Director (5)
Kevin Dolan, Director
Eugene Flood, Jr., Director
Lawrence Kochard, Director (5)
Angela Seymour-Jackson, Director
Tatsusaburo Yamamoto, Director
Roger Thompson, Chief Financial Officer
Enrique Chang, Chief Investment Officer
Phil Wagstaff, Global Head of Distribution
All Directors and Executive Officers as a Group (15 Persons)
*
Less than one percent of the outstanding shares.
150
Shares of Common Stock
Beneficially Owned (1)
Number
Percentage
31,574,756
15,776,124
11,583,878
6,187
31,112
374,386
906,180
3,420
5,729
60,740
1,928
15,181
38,566
2,462
—
29,142
320,397
30,439
1,823,932
15.0
7.87
5.8
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Unless otherwise stated below, the principal address of each person is: c/o Janus Henderson
Group plc, 201 Bishopsgate, London EC2M 3AE.
(1) Ownership, both direct and indirect, is based on the number of shares outstanding as of
February 22, 2018, including unvested restricted stock units and DEP shares that will vest within
60 days of February 22, 2018 and any shares that may be acquired upon the exercise of
options within 60 days of February 22, 2018. The holders have sole voting and dispositive
power over the shares except as otherwise noted in the footnotes below. Amounts shown for
officers include shares of restricted stock, shares held indirectly through Janus Henderson’s
ESOP (over which the person named has no investment power) and restricted shares held
indirectly through Janus Henderson’s BAYE over which the holder has voting power: Mr. Chang
holds 95,928 restricted shares and 30 ESOP Shares and Mr. Weil holds 95,686 restricted
shares and 409 ESOP shares. Mr Formica holds 5,976 restricted BAYE shares, 1,273
unrestricted BAYE shares and zero DEP shares. Mr Thompson holds 526 restricted BAYE
shares, 542 unrestricted BAYE shares and 4,732 DEP shares. Mr Wagstaff holds 1,741
restricted BAYE shares, 937 unrestricted BAYE shares, and 10,593 DEP shares.
Information regarding beneficial ownership of the shares by Dai-ichi Life is included herein
based on a Form 13D/A filed with the SEC on February 8, 2018, relating to such shares
beneficially owned as of February 6, 2018. The address of Dai-ichi Life is 13-1, Yurakucho
1-Chome, Chiyoda-ku, Tokyo, 100-8411 Japan. Represents 21,574,756 shares outstanding and
10,000,000 shares issuable upon the exercise of the conditional options granted pursuant to the
Option Agreement, dated as of October 3, 2016, between Dai-ichi Life Holdings, Inc. and the
Company.
Information regarding beneficial ownership of the shares by The Vanguard Group Inc.
(‘‘Vanguard’’) is based on a Schedule 13G filed with the SEC on February 7, 2018, relating to
such shares beneficially owned as of December 31, 2017. Such report provides that Vanguard
is the beneficial owner of all the shares, and has sole dispositive power with respect to
15,705,790 shares and sole voting power with respect to 61,605 shares. Vanguard’s address is
100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
Information regarding beneficial ownership of the shares by BlackRock, Inc. (‘‘BlackRock’’), is
based on a Schedule 13G filed with the SEC on January 31, 2018, relating to such shares
beneficially owned as of December 31, 2017. Such report provides that BlackRock is beneficial
owner of and has sole dispositive power with respect to all shares and sole voting power with
respect to 11,288,900 shares. BlackRock’s address is 55 East 52nd Street, New York,
NY 10055.
Includes restricted stock units held by certain directors. Such restricted stock units do not have
any voting rights, are entitled to dividend equivalents, and will be paid in shares of Company
common stock upon voluntary termination of service as a director, all in accordance with the
Director Deferred Fee Plan and the Company’s long-term incentive (‘‘LTI’’) stock plans. The
restricted stock units represented in the amounts shown are as follows: Mr Diermeier — 7,682
units; Mr Kochard — 36,313 units; and Mr Schafer — 14,495 units.
(2)
(3)
(4)
(5)
151
Equity Compensation Plan Information
The following table presents information, determined as of February 22, 2018, about outstanding
awards and shares remaining available for issuance under the Company’s equity-based LTI plans:
Number of
securities
to be
issued
upon
exercise of
outstanding Weighted-average
exercise price of
outstanding
options, warrants
and rights ($) (b)
options,
warrants
and rights
(a)(#)
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)(#)
Plan Category
Equity comp plans approved by shareholders (1)
Equity comp plans not approved by shareholders (4)
Total (5)
929,970
92,949
1,022,919
— (2)
$18.76
$18.76
— (3)
4,344,169
4,344,169 (6)
(1)
Includes the legacy Henderson Group plc Long Term Incentive Plan (‘‘LTIP’’).
(2) There is no exercise price associated with the outstanding LTIP.
(3) No securities are reserved for issuance under the legacy LTIP as the Company does not intend
to issue any further awards under this compensation plan.
(4)
Includes Janus Capital Group Inc.’s 1998 Long Term Incentive Plan and 2005 Long Term
Incentive Plan that were previously approved by Janus shareholders and were assumed by the
Company as part of the Merger, however the Company does not intend to make any new
awards under these legacy plans. Also consists of the following ongoing plans assumed by the
Company pursuant to the Merger that may result in new awards:
Janus Henderson Group plc 2010 Long Term Incentive Stock Plan
(i) Introduction
The Janus Henderson Group plc Second Amended and Restated 2010 Long Term Incentive
Stock Plan (the 2010 LTI Plan) is intended to allow employees, directors and consultants of the
Company and its subsidiaries to acquire or increase equity ownership in the Company, thereby
strengthening their commitment to the success of the Company and stimulating their efforts on
behalf of the Company, and to assist the Company and its subsidiaries in attracting new
employees, directors and consultants and retaining existing employees, directors and
consultants. The 2010 LTI Plan also is intended to optimize the profitability and growth of the
Company through incentives which are consistent with the Company’s goals; to provide
employees, directors and consultants with an incentive for excellence in individual performance;
and to promote teamwork among employees, directors and consultants.
(ii) Duration
Unless the Board determines to terminate the plan earlier, the 2010 LTI Plan will remain in
effect until the earlier of (a) all ordinary shares subject to the plan have been purchased or
acquired according to the plan’s provisions or (b) April 24, 2025.
(ii) Eligibility
All employees, directors and consultants performing services for the Company or its
subsidiaries.
152
(iii) Types of awards
Restricted Stock
Represents shares of Janus Henderson Group common stock that are issued subject to
restrictions on transfer and vesting requirements. The recipient has the same rights as a Janus
Henderson shareholder and the stock is subject to a minimum vesting period of at least twelve
months.
Restricted Stock Units
Provides the participant the right to receive a payment based on the value of a share of Janus
Henderson common stock. The Compensation Committee determines vesting requirements,
restrictions and conditions to payment and awards are payable in cash, shares of Janus
Henderson common stock or a combination of both and may be granted with related dividend
equivalent rights and subject to a minimum vesting period of at least twelve months.
Performance Share Units
Provides the participant the right to receive a payment based on the value of a share of Janus
common stock. The Compensation Committee determines vesting requirements, restrictions and
conditions to payment, awards are granted with performance hurdles to vest and are payable in
cash, shares of Janus Henderson common stock or a combination of both and subject to a
minimum vesting period of at least twelve months. No dividends are payable on unvested units.
Stock Options
Entitles the participant, upon exercise and payment of the applicable exercise price, to receive
the number of shares of Janus Henderson common stock underlying the portion of the stock
option so exercised. Either non-qualified stock options or incentive stock options can be
awarded and the exercise price of any stock option granted may not be less than the fair market
value of Janus Henderson common stock on the date the option is granted. The exercise price
may be paid in cash, in shares of Janus Henderson common stock, through a cashless exercise
or as otherwise permitted by the Compensation Committee.
The Compensation Committee can determine the terms (including vesting and forfeiture) of each
stock option grant at the time of the grant. Awards are subject to a minimum vesting period of at
least twelve months.
Stock Appreciation Rights (SAR)
Entitles the participant, upon settlement, to receive a payment (in cash or in shares of Janus
Henderson common stock) based on the excess of the fair market value of a share of Janus
Henderson common stock over the strike price of the SAR. The strike price may not be less
than the fair market value of a share of Janus Henderson common stock on the date of grant
and awards are payable in cash, shares of Janus Henderson common stock or a combination of
both.
The Compensation Committee determines vesting requirements, payment and other terms and
awards are subject to a minimum vesting period of at least twelve months (unless purchased for
fair market value or granted to an independent director, subject to a combined 5% cap on such
purchased or director).
Stock Awards
Represents shares of Janus Henderson common stock that are issued free of transfer
restrictions and forfeiture conditions. They may be granted for past services in lieu of bonus or
other cash compensation (together with any director awards, subject to a 5% cap) and the
participant is entitled to all the rights of a Janus Henderson shareholder.
153
(iii) Change of Control
Except as otherwise provided in an individual award agreement or determined by the
Compensation Committee at the time an award is granted, if a Change of Control (as defined in
the 2010 LTIP) occurs, each award will remain outstanding and will continue to vest in
accordance with its terms following the Change of Control (as defined in the 2010 LTIP), subject
to equitable adjustment in connection with the Change of Control. If the participant’s
employment is terminated by the Company without Cause or by the participant for Good Reason
(each as defined in the 2010 LTI Plan or the award agreement) during the 24-month period
following such Change of Control, then on the date of such termination (i) any outstanding
award will become fully vested and exercisable, (ii) the restrictions, payment conditions, and
forfeiture conditions applicable to any such award will lapse, and (iii) any performance conditions
imposed with respect to such awards will be deemed to be fully achieved at target levels.
Janus Henderson Group plc 2012 Employment Inducement Award Plan
(i) Introduction
The Janus Henderson Group plc Second Amended and Restated 2012 Employment Inducement
Award Plan (the 2012 EIA) is intended to assist the Company and its subsidiaries in attracting
new employees, and to allow new employees of the Company and its subsidiaries to acquire
equity ownership in the Company, thereby strengthening their commitment to the success of the
Company and stimulating their efforts on behalf of the Company. The 2012 EIA also is intended
to optimize the profitability and growth of the Company through incentives which are consistent
with the Company’s goals; to provide new employees with an incentive for excellence in
individual performance and to promote teamwork among employees.
(ii) Duration
Unless the Board determines to terminate the plan earlier, the 2012 EIA will remain in effect
until all ordinary shares subject to the plan have been purchased or acquired according to the
plan’s provisions.
(iii) Eligibility
In accordance with the NYSE rules, the 2012 EIA only permits awards to newly hired employees
of the Company or its subsidiaries to induce them to become employed by a Janus Henderson
entity. Any award granted under the 2012 EIA Plan requires the issuance of a press release
and NYSE notification of the additional shares being issued. The 2012 EIA is not frequently
used for long-term incentive awards.
(iii) Types of awards
Under the 2012 EIA, the Company may award Restricted Stock, Restricted Stock Units,
Performance Share Units, Stock Options and Stock Appreciation Rights on substantially the
same terms as summarized above for the 2010 LTIP, except there is no minimum vesting
period applicable to the 2012 EIA.
(iv) Change of Control
Except as otherwise provided in an individual award agreement or determined by the
Compensation Committee at the time an award is granted, if a Change of Control (as defined in
the 2012 EIA) occurs, each award will remain outstanding and will continue to vest in
accordance with its terms following the Change of Control (as defined in the 2012 EIA), subject
to equitable adjustment in connection with the Change of Control. If the participant’s
employment is terminated by the Company without Cause or by the participant for Good Reason
(each as defined in the 2012 EIA or the award agreement) during the 24-month period following
such Change of Control, then on the date of such termination (i) any outstanding award will
become fully vested and exercisable, (ii) the restrictions, payment conditions, and forfeiture
conditions applicable to any such award will lapse, and (iii) any performance conditions imposed
with respect to such awards will be deemed to be fully achieved at target levels.
154
(5) Weighted average remaining term for outstanding stock options as of February 22, 2018 was
1.17 years.
(6) As of February 22, 2018, approximately 1,577,256 stock options and 1,128 shares of restricted
stock were available for future issuance under the 2005 LTI Plan, and zero (0) shares of
common stock were available for future issuance under the 1998 Plan. As of February 22, 2018,
approximately 2,393,440 shares were available for future issuance under the 2010 LTIP
(including 258,194 reserved shares representing 200% of Dick Weil’s 2015 and 2016 PSU
awards). Also, the Company had 2,709,512 shares of unvested restricted stock and restricted
stock unit awards outstanding as of February 22, 2018 (including 129,097 unvested shares
representing 100% of Dick Weil’s 2015 and 2016 PSU awards).
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Related Party Transaction Policy
Our related party transaction approval policy provides that related party transactions must be
pre-approved by the Audit Committee. Related party transactions include any financial transaction,
arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or any
series of similar transactions, arrangements, or relationships in which the Company was or is to be a
participant and the amount involved exceeds $120,000, and in which any related person had or will
have a direct or indirect material interest. Our related party transaction approval policy is part of our
Corporate Code of Business Conduct available on our website at
http://www.janushenderson.com/group under ‘‘About Janus Henderson’’ link, ‘‘Board Committees’’.
Related Party Transactions
Certain of the directors and executive officers, as well as their immediate family members, from time
to time may invest their personal funds in JHG mutual funds on substantially the same terms and
conditions as other similarly situated investors in these mutual funds who are neither directors nor
employees of Janus.
Other than as disclosed below, no JHG director or member of senior management has or has had
(i) any material interest in any transaction with JHG or any of its subsidiaries or (ii) any interest in
any transaction which is or was unusual in its nature or conditions or is or was significant to the
business of JHG and which was effected by JHG or any of its subsidiaries in the preceding three
financial years. There are no outstanding loans or guarantees provided by JHG or any of its
subsidiaries for the benefit of JHG directors or senior management during this period.
In April 2012, a subsidiary of JHG entered into an agreement with Marketing in Partnership Limited,
a company in which Dorothy Helen Wagstaff, the spouse of Phil Wagstaff, JHG’s Global Head of
Distribution, is a significant shareholder and a director. Under the terms of the agreement, Marketing
in Partnership Limited provides event management, promotion and marketing services to JHG.
Under the agreement, JHG paid Marketing in Partnership Limited aggregate consideration of
£632,000 in 2015, £465,000 in 2016 and £660,000 in 2017.
Amended and Restated Investment and Strategic Cooperation Agreement
On October 3, 2016 Henderson, JCG and Dai-ichi entered into an Amended and Restated
Investment and Strategic Cooperation Agreement (the ‘‘Amended Investment and Cooperation
Agreement’’). Following the effective time of the Merger, JHG succeeded to the rights and
obligations of JCG under the Amended Investment and Cooperation Agreement.
155
Ownership Limit
Dai-ichi has agreed not to acquire more than 20% of the issued and outstanding shares of JHG,
(‘‘the ownership limit’’), and to reduce its percentage ownership to the ownership limit should its
percentage ownership exceed the ownership limit at any time.
Invested Assets; Distribution
Under the terms of the Amended Investment and Cooperation Agreement, subject to certain
conditions, Dai-ichi has agreed to maintain investments in investment products of JHG and its
affiliates of not less than $2 billion and, no later than 12 months following the effective time of the
Merger, cause additional cash in the amount of up to $500 million to be invested in new investment
products of JHG and its affiliates, which will be determined based on good faith discussions between
JHG and Dai-ichi. A certain proportion of Dai-ichi’s investments will continue to be held in seed
capital investments. In addition, JHG and Dai-ichi have agreed to cooperate in good faith and use
commercially reasonable efforts to sell investment products through each other’s distribution
channels.
Board Designation Right
Dai-ichi has the right to designate a Dai-ichi Representative for appointment to JHG’s board of
directors until such right is terminated in accordance with the terms of the Amended Investment and
Cooperation Agreement. Dai-ichi’s right to designate a Dai-ichi Representative may be terminated
under certain circumstances set forth in the Amended Investment and Cooperation Agreement, and
in particular is dependent on Dai-ichi maintaining a shareholding in JHG above the applicable
percentage (as described below).
Standstill Restrictions
Dai-ichi is subject to certain standstill restrictions and, subject to certain exceptions, cannot, in each
case without the consent of JHG’s board of directors, among other things, initiate tender or
exchange offers for securities of JHG or its subsidiaries, seek the nomination or election of any
individual as a director of JHG (other than Dai-ichi’s right to designate the Dai-ichi Representative as
described above), participate in any recapitalization, restructuring, liquidation, dissolution or other
similar extraordinary transaction with respect to JHG or its subsidiaries, acquire or obtain any
economic interest in securities of JHG (other than the acquisition of up to 20% of the issued and
outstanding shares of JHG as permitted by the Amended Investment and Cooperation Agreement)
or dispose any shares of JHG in an unsolicited tender offer (other than under certain circumstances
as permitted by the Amended Investment and Cooperation Agreement). In addition, the standstill
restrictions are suspended if Dai-ichi owns less than 3% of the issued and outstanding shares of
JHG and, with certain exceptions, terminated upon change of control of JHG.
Transfer Restrictions
Dai-ichi is subject to certain limitations on its ability to transfer its JHG shares and cannot, without
JHG’s consent, transfer its shares within three years of the date of the Amended Investment and
Cooperation Agreement, except that it may transfer its shares to the extent necessary to comply with
applicable law, effectively binding written or oral administrative guidance from a governmental
authority in Japan or an order by such a governmental authority, upon an insolvency event with
respect to either JHG or Dai-ichi, upon certain events of financial distress with respect to Dai-ichi or
JHG, or where certain conditions in relation to the nature of the proposed transfer set forth in the
Amended Investment and Cooperation Agreement are met. JHG is generally entitled to a right of first
156
offer or a right of first refusal, depending on the nature of the proposed transfer, with respect to
Dai-ichi’s proposed transfer of its JHG shares.
Preemptive Rights
In the event that JHG proposes to issue new JHG shares, for so long as Dai-ichi maintains its
shareholding in JHG at the level immediately after the effective time of the Merger (subject to
dilution in certain circumstance) (the ‘‘applicable percentage’’), Dai-ichi has the right to purchase up
to such number of JHG shares that would allow Dai-ichi to maintain a percentage ownership of the
issued and outstanding JHG shares that is, after giving effect to the issuance of the new securities,
no less than the percentage ownership Dai-ichi had prior to such issuance. Dai-ichi is entitled to
exercise its preemptive rights in respect of JHG’s issuance of new securities to provide equity
compensation for employment for its directors, officers or employees only if such issuance would
cause Dai-ichi’s percentage ownership to decrease to less than the applicable percentage. In each
case, Dai-ichi does not have preemptive rights to the extent that an issuance of the additional JHG
shares to Dai-ichi would require approval of the shareholders of JHG pursuant to Rule 312 of the
New York Stock Exchange Listed Company Manual or any successor rule thereof or ASX Listing
Rule 7.1 or any successor rule thereof, unless such approval has been obtained.
Registration Rights
At any time following the effective time of the Merger, and without limiting the restrictions on
transfers described above, Dai-ichi will be entitled to customary registration rights, including the right
to require JHG to file up to two registration statements to register JHG shares owned by Dai-ichi (the
‘‘Registrable Shares’’), and unlimited prospectus supplements in connection with any take-down from
an effective shelf registration statement. In addition, Dai-ichi has certain ‘‘piggyback’’ registration
rights with respect to the Registrable Shares to participate in certain securities offerings by JHG.
Termination
The Amended Investment and Cooperation Agreement may be terminated by either JHG or Dai-ichi
under specified circumstances, including if (i) there is an insolvency event with respect to the other
party, (ii) if such termination is necessary to comply with applicable law, effectively binding written or
oral administrative guidance from a governmental authority or an order by a governmental authority,
(iii) there is a material uncured breach of the Amended Investment and Cooperation Agreement by
the other party, (iv) during any consecutive five business day period, Dai-ichi owns less than the
applicable percentage of the issued and outstanding shares of JHG (subject to certain exceptions),
or (v) JHG terminates Dai-ichi’s right to designate a Dai-ichi Representative to JHG’s board of
directors. In addition, each of JHG and Dai-ichi may terminate the Amended Investment and
Cooperation Agreement following the third anniversary of the date of the Merger, upon 90-days
written notice to the other party (which notice may not be given prior to the third anniversary of the
date of the Merger).
The Amended Investment and Cooperation Agreement may be terminated by JHG if there is a
change in Japanese generally accepted accounting principles or other applicable accounting
principles that would significantly increase the burden to JHG in complying with its obligations to
furnish certain financial and operating information to Dai-ichi, or if JHG or any of its affiliates
becomes subject to direct regulation by, or sanctions from, any Japanese governmental authority
that it would not be subject to in the absence of the strategic alliance.
The Amended Investment and Cooperation Agreement may also be terminated by Dai-ichi if JHG
informs Dai-ichi that it is unable to comply with its obligations to furnish certain financial and
operating information or there is a change in applicable law in Japan that requires Dai-ichi to receive
157
information that it is not already receiving from JHG, such inability to comply or change in applicable
law would or would reasonably be expected to result in Dai-ichi being in violation of applicable law,
and the parties following good faith discussions are unable to agree on appropriate changes to
JHG’s obligations to furnish certain information that would avoid Dai-ichi being in violation of
applicable law. Dai-ichi may also terminate the Amended Investment and Cooperation Agreement if
(i) its percentage ownership has been diluted to less than the applicable percentage of the issued
and outstanding JHG shares due to JHG’s issuance of new securities and Dai-ichi was unable to
prevent such dilution by exercising its preemptive rights, using commercially reasonable efforts to
purchase shares on the open market or, following the effective time of the Merger, exercising its
remaining options under the Option Agreement or (ii) Dai-ichi or any of its affiliates becomes subject
to direct regulation by, or sanctions from, any governmental authority (other than a Japanese,
Jersey, U.K., Australian or U.S. governmental authority) that it would not be subject to in the
absence of the strategic alliance.
Option Agreement
On October 3, 2016, Henderson and Dai-ichi entered into an option agreement (the ‘‘Option
Agreement’’), pursuant to which, upon closing of the Merger, JHG granted Dai-ichi: (i) 11 tranches of
conditional options with each tranche allowing Dai-ichi to subscribe for or purchase 500,000 JHG
shares at a strike price of 2,997.2 pence per share (the terms of such options having been adjusted
in accordance with the terms of the Option Agreement to take account of the effect of the share
consolidation), and (ii) nine tranches of conditional options with each tranche allowing Dai-ichi to
subscribe for or purchase 500,000 JHG shares at a strike price of 2,997.2 pence per share (the
terms of such options having been adjusted in accordance with the terms of the Option Agreement
to take account of the effect of the share consolidation). The options are exercisable by Dai-ichi for a
period measured as the two-year period ending on the 24-month anniversary of the date of the
Option Agreement. Dai-ichi paid £19,778,800.00 for the options. The Option Agreement will
terminate if, among other things, the Amended Investment and Cooperation Agreement is
terminated.
Voting and Support Agreement
On October 3, 2016, Henderson, JCG and Dai-ichi entered into a voting and support agreement (the
‘‘Voting and Support Agreement’’), pursuant to which, among other things, Dai-ichi agreed to vote
the shares of JCG common stock held by it in support of the Merger. The Voting and Support
Agreement terminated on its terms at the effective time of the Merger
As of February 22, 2018, Dai-ichi beneficially owned, in the aggregate, 31,574,756 shares of JHG
common stock, which represented approximately 15.0% of the issued and outstanding shares of
JHG common stock on such date.
For a discussion of related party transactions as defined in U.S. GAAP, see Note 19 to the Financial
Statements (Item 8) above.
Board of Directors Independence Determination
The Board of Directors has established criteria for determining if a director is independent from
management. These criteria follow the director independence criteria contained in the NYSE Listing
Standards and are identified in our Corporate Governance Guidelines (‘‘Governance Guidelines’’)
available on the Company’s website at http://www.janushenderson.com/group under ‘‘About Janus
Henderson’’ link, ‘‘Board Committees’’. In determining the independence of the directors, the Board
reviewed and considered all relationships between each director (and any member of his or her
immediate family) and the Company. Based on that review and the Company’s independence
158
criteria, the Board affirmatively determined that all directors are independent directors except for
Messrs. Weil and Formica, our Co-CEOs. In addition, all members of the Audit, Compensation,
Nominating and Corporate Governance, and Risk Committees are independent.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Fees Incurred by Janus Henderson for PricewaterhouseCoopers
The following table shows the fees paid or accrued by the Group and its consolidated funds for audit
and other services provided by PricewaterhouseCoopers for fiscal years ending December 31, 2017
and 2016, respectively:
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total
2017 ($)
2016 ($)
2,748,000
696,200
198,800
1,642,310
5,285,310
976,943
54,870
—
2,342,173
3,373,986
(1) Audit services consisted of the audit of the Company’s consolidated financial statements
included in its Annual Report on Form 10-K, reviews of the condensed consolidated financial
statements included in its quarterly reports on Form 10-Q and other audit services that are
normally provided in connection with statutory or regulatory filings.
(2) Audit-related fees consisted of financial accounting and SEC reporting consultations, issuance of
consent letters, audit of the Company’s benefit plans, and other audit services not required by
statute or regulation.
(3) Tax compliance fees consisted of tax return filings for certain foreign jurisdictions, assistance
with tax audits and miscellaneous state and federal income tax-related issues.
(4) Primarily consists of services provided in relation to the Merger
The Audit Committee has determined that the provision of the services described above is
compatible with maintaining the independence of PricewaterhouseCoopers.
Audit Committee Approval Policies and Procedures
All services performed by PricewaterhouseCoopers were approved in accordance with the approval
policy and procedures adopted by the Audit Committee. This policy describes the permitted audit,
audit-related, tax, and other services (collectively, the ‘‘Disclosure Categories’’) that our independent
auditor may perform. The policy requires that a description of the services expected to be performed
by our independent auditor in each of the Disclosure Categories be presented to the Audit
Committee for approval and cannot commence until such approval has been granted. Normally,
approval is provided at regularly scheduled meetings. However, as previously mentioned the
authority to grant specific preapproval between meetings, as necessary, has been delegated to the
Chairman of the Audit Committee. The Chairman must update the Audit Committee at the next
regularly scheduled meeting of any services that were granted specific approval.
In addition, although not required by the rules and regulations of the SEC, the Audit Committee
generally approves a narrow range of fees associated with each proposed service. Providing a range
of fees for a service incorporates appropriate oversight and control of the independent auditor
relationship, while permitting the Company to receive immediate assistance from the independent
auditor when time is of the essence.
At each meeting, the Audit Committee reviews the status of services and fees incurred year-to-date
against the original approved services and the forecast of remaining services and fees for the fiscal
year
159
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of Documents Filed as Part of This Report
(1) Financial Statements
The financial statements and related notes, together with the report of PricewaterhouseCoopers LLP
dated February 27, 2018, appear in Part II, Item 8, Financial Statements and Supplementary Data.
(2) Financial Statement Schedules
No financial statement schedules are required.
(3) List of Exhibits
(b) Exhibits
The Company has incorporated by reference herein certain exhibits as specified below pursuant to
Rule 12b-32 under the Exchange Act.
2.1
3.1.1
3.1.2
4.1
4.1.1
4.1.2
4.1.3
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession
Agreement and Plan of Merger, dated October 3, 2016, by and among Janus Capital
Group Inc., Henderson Group plc and Horizon Orbit Corp, is hereby incorporated by
reference from Exhibit 2.1 to JCG’s Current Report on Form 8-K, dated October 3, 2016
(File No. 001-15253)
(3) Articles of Incorporation and Bylaws
Memorandum of Association of Janus Henderson Group plc, is hereby incorporated by
reference from Exhibit 3.1 to JHG’s Current Report on Form 8-K, dated May 30, 2017
Articles of Association of Janus Henderson Group plc, is hereby incorporated by reference
from Exhibit 3.2 to JHG’s Current Report on Form 8-K, dated May 30, 2017
(4) Instruments Defining the Rights of Security Holders, Including Indentures
Indenture dated as of November 6, 2001 (the ‘‘Base Indenture’’), between Janus Capital
Group Inc. and The Bank of New York Trust Company N.A. (as successor to The Chase
Manhattan Bank), is hereby incorporated by reference from Exhibit 4.1 to JCG’s Current
Report on Form 8-K, dated November 6, 2001 (File No. 001-15253)
Third Supplemental Indenture to the Base Indenture, dated as of June 19, 2013, between
Janus Capital Group Inc. and The Bank of New York Mellon Trust Company N.A., is
hereby incorporated by reference from Exhibit 4.5.4 to JCG’s Annual Report on Form 10-K
for the year ended December 31, 2013 (File No. 001-15253)
Fourth Supplemental Indenture to the Base Indenture, dated as of May 30, 2017, among
Janus Capital Group Inc., Henderson Group plc and The Bank of New York Mellon Trust
Company N.A., is hereby incorporated by reference from Exhibit 4.3 to JHG’s Current
Report on Form 8-K, dated May 30, 2017
Officers’ Certificate pursuant to the Base Indenture establishing the terms of the 2018
Convertible Notes, is hereby incorporated by reference from Exhibit 4.10.1 to JCG’s
Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-15253)
160
4.1.4
4.1.5
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Fifth Supplemental Indenture to the Base Indenture, dated as of May 30, 2017, among
Janus Capital Group Inc., Henderson Group plc and The Bank of New York Mellon Trust
Company N.A., is hereby incorporated by reference from Exhibit 4.5 to JHG’s Current
Report on Form 8-K, dated May 30, 2017
Sixth Supplemental Indenture to the Base Indenture, dated as of February 27, 2018,
among Janus Capital Group Inc., Janus Henderson Group plc and The Bank of New York
Mellon Trust Company N.A. is attached to this Form-10-K as Exhibit 4.1.5.
Form of 2018 Convertible Notes, is hereby incorporated by reference from Exhibit 4.10.1
to JCG’s Annual Report on Form 10-K for the year ended December 31, 2013 (File
No. 001-15253)
Form of Global Notes for the 2025 Senior Notes, is hereby incorporated by reference from
Exhibit 4.2 to JCG’s Current Report on Form 8-K, dated July 31, 2015 (File
No. 001-15253)
(10) Material Contracts
Facility Agreement, dated 16 February 2017, for US$200,000,000 Revolving Credit Facility
for Henderson Group plc arranged by Bank of America Merrill Lynch International Limited
as Coordinator, Bookrunner and Mandated Lead Arranger with Bank of America Merrill
Lynch International Limited as Facility Agent, is hereby incorporated by reference from
Exhibit 1.1 to JHG’s Current Report on Form 8-K, dated May 30, 2017
Form of Instrument of Indemnity, is hereby incorporated by reference from Exhibit 10.16 to
JHG’s Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)
Second Amended and Restated 2010 Long-Term Incentive Stock Plan, effective May 30,
2017, is hereby incorporated by reference from Exhibit 4.12 to JHG’s Registration
Statement on Form S-8, filed on May 31, 2017 (File No. 333-218365)*
Second Amended and Restated 2005 Long Term Incentive Stock Plan, effective May 30,
2017, is hereby incorporated by reference from Exhibit 4.11 to JHG’s Registration
Statement on Form S-8, filed on May 31, 2017 (File No. 333-218365)*
Second Amended and Restated 2012 Employment Inducement Award Plan, effective
May 30, 2017, is hereby incorporated by reference from Exhibit 4.9 to JHG’s Registration
Statement on Form S-8, filed on May 31, 2017 (File No. 333-218365)*
Second Amended and Restated Employee Stock Purchase Plan, effective May 30, 2017,
is hereby incorporated by reference from Exhibit 4.13 to JHG’s Registration Statement on
Form S-8, filed on May 31, 2017 (File No. 333-218365)
Janus Henderson Group plc Fourth Amended and Restated Mutual Fund Share
Investment Plan, effective May 30, 2017, is hereby incorporated by reference from
Exhibit 10.7 to JHG’s Form 10-Q, filed on August 8, 2017 (File No. 001-38103)*
Janus Henderson Group plc Amended and Restated 2013 Management Incentive
Compensation Plan, effective January 1, 2013, is hereby incorporated by reference from
Exhibit 10.8 to JHG’s Form 10-Q, filed on August 8, 2017 (File No. 001-38103)*
Janus Henderson Group plc Second Amended and Restated Income Deferral Program,
effective May 30, 2017, is hereby incorporated by reference from Exhibit 10.9 to JHG’s
Form 10-Q, filed on August 8, 2017 (File No. 001-38103)*
161
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Janus Henderson Group plc Fourth Amended and Restated Director Deferred Fee Plan,
effective May 30, 2017, is hereby incorporated by reference from Exhibit 10.10 to JHG’s
Form 10-Q, filed on August 8, 2017 (File No. 001-38103)*
Henderson Group plc Long Term Incentive Plan (LTIP), is hereby incorporated by
reference from Exhibit 10.7 to JHG’s Registration Statement on Form F-4 filed on
March, 20, 2017 (File No. 333-216824)*
Henderson Group Sharesave Scheme, is hereby incorporated by reference from
Exhibit 10.8 to JHG’s Registration Statement on Form F-4 filed on March, 20, 2017 (File
No. 333-216824)*
The Henderson Executive Shared Ownership Plan (ExSOP), is hereby incorporated by
reference from Exhibit 10.9 to JHG’s Registration Statement on Form F-4 filed on March,
20, 2017 (File No. 333-216824)*
Rules of the Henderson Group plc Deferred Equity Plan (DEP), is hereby incorporated by
reference from Exhibit 10.10 to Registrant’s Registration Statement on Form F-4 filed on
March, 20, 2017 (File No. 333-216824)*
Trust Deed of the Henderson Buy-As-You-Earn Plan (BAYE), is hereby incorporated by
reference from Exhibit 10.11 to JHG’s Registration Statement on Form F-4 filed on
March, 20, 2017 (File No. 333-216824)*
The Henderson Group plc Company Share Option Plan, is hereby incorporated by
reference from Exhibit 10.12 to JHG’s Registration Statement on Form F-4 filed on
March, 20, 2017 (File No. 333-216824)*
Rules of the Henderson Group plc International Buy as Your Earn Plan (International
BAYE), is hereby incorporated by reference from Exhibit 10.13 to JHG’s Registration
Statement on Form F-4 filed on March, 20, 2017 (File No. 333-216824)*
Henderson Group plc Restricted Share Plan, is hereby incorporated by reference from
Exhibit 10.14 to JHG’s Registration Statement on Form F-4 filed on March, 20, 2017 (File
No. 333-216824)*
Janus Capital Group Inc. 401(k) and Employee Stock Ownership Plan, as amended and
restated, effective January 1, 2014, is hereby incorporated by reference from Exhibit 10.8
to JCG’s Annual Report on Form 10-K for the year ended December 31, 2014 (File
No. 001-15253)
10.19.1 Amendment No. 1 to Janus 401(k) Plan, effective January 1, 2014, is hereby incorporated
by reference from Exhibit 10.9 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2014 (File No. 001-15253)
10.19.2 Amendment No. 2 to Janus 401(k) Plan, effective January 1, 2015, is hereby incorporated
by reference from Exhibit 10.9.2 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2015 (File No. 001-15253)
10.19.3 Amendment No. 3 to Janus 401(k) Plan, effective January 1, 2016, is hereby incorporated
by reference from Exhibit 10.9.3 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2015 (File No. 001-15253)
10.19.4 Amendment No. 4 to Janus 401(k) Plan, effective September 1 2016, is hereby
incorporated by reference from Exhibit 10.9.4 to JCG’s Annual Report on Form 10-K for
the year ended December 31, 2016 (File No. 001-15253)
162
10.19.5 Amendment No. 5 to Janus 401(k) Plan, effective September 1, 2016, is hereby
incorporated by reference from Exhibit 10.9.5 to JCG’s Annual Report on Form 10-K for
the year ended December 31, 2016 (File No. 001-15253)
10.19.6 Amendment No. 6 to Janus 401(k) Plan, effective August 31, 2016, is hereby incorporated
by reference from Exhibit 10.9.6 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2016 (File No. 001-15253)
10.19.7 Amendment No. 7 to Janus 401(k) Plan, effective July 1, 2017, is attached to this Annual
Report on Form 10-K as Exhibit 10.19.7
10.19.8 Amendment No. 8 to Janus 401(k) Plan, effective December 28, 2017, is attached to this
Annual Report on Form 10-K as Exhibit 10.19.8
10.20.1
10.20.2
10.20.3
10.20.4
10.20.5
10.20.6
10.20.7
10.20.8
Form of Long-Term Incentive Acceptance Form with Appendix A (Restricted Stock),
effective for awards granted to executive officers in 2009, is hereby incorporated by
reference from Exhibit 10.17.2 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 001-15253)*
Form of Long-Term Incentive Acceptance Form with Appendix A (Restricted Stock),
effective for awards granted to executive officers in 2010, is hereby incorporated by
reference from Exhibit 10.17.3 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2009 (File No. 001-15253)*
Form of Long-Term Incentive Acceptance Form for Restricted Stock, effective for awards
granted to executive officers in 2011, is hereby incorporated by reference from
Exhibit 10.17.5 to JCG’s Annual Report on Form 10-K for the year ended December 31,
2010 (File No. 001-15253)*
Form of Long-Term Incentive Acceptance Form for Restricted Stock, effective for awards
granted to executive officers in 2012, is hereby incorporated by reference from
Exhibit 10.16.4 to JCG’s Annual Report on Form 10-K for the year ended December 31,
2011 (File No. 001-15253)*
Form of Long-Term Incentive Acceptance Form for Restricted Stock, effective for awards
granted to executive officers in 2013, is hereby incorporated by reference from
Exhibit 10.16.5 to JCG’s Annual Report on Form 10-K for the year ended December 31,
2012 (File No. 001-15253)*
Form of Performance Share Unit Award, effective for awards granted to Richard M. Weil
in 2014, is hereby incorporated by reference from Exhibit 10.13.7 to JCG’s Annual Report
on Form 10-K for the year ended December 31, 2014 (File No. 001-15253)*
Form of Performance Share Unit Award, effective for awards granted to Richard M. Weil
in 2015, is hereby incorporated by reference from Exhibit 10.13.8 to JCG’s Annual Report
on Form 10-K for the year ended December 31, 2015 (File No. 001-15253)*
Form of Performance Share Unit Award, effective for awards granted to the Company’s
Chief Executive Officer Richard M. Weil in 2016 , is hereby incorporated by reference from
Exhibit 10.13.9 to JCG’s Annual Report on Form 10-K for the year ended December 31,
2016 (File No. 001-15253)*
10.21
Offer letter for Richard M. Weil dated January 6, 2010, is hereby incorporated by
reference from Exhibit 10.30 to JCG’s Annual Report on Form 10-K for the year ended
December 31, 2009 (File No. 001-15253)*
163
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
Change in Control Agreement by and between Janus Capital Group Inc. and Richard M.
Weil, dated February 1, 2010, is hereby incorporated by reference from Exhibit 10.2 to
JCG’s Form 8-K, dated February 4, 2010 (File No. 001-15253)*
Service Agreement between [Henderson Group plc] and Andrew Formica, effective from
November 5, 2008, is hereby incorporated by reference from Exhibit 10.4 to JHG’s
Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)*
Summary of Janus Henderson Group plc Non-Executive Director Compensation Program
effective May 30, 2017, is attached to this Form 10-K as Exhibit 10.24
Janus Henderson Group Global Remuneration Policy Statement, is attached to this Annual
Report on Form 10-K as Exhibit 10.25*
Amended and Restated Investment and Strategic Cooperation Agreement, dated
October 3, 2016, by and among Henderson Group plc, Janus Capital Group Inc. and
Dai-ichi Life Holdings, Inc., is hereby incorporated by reference from Exhibit 10.1 to JHG’s
Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)
Voting and Support Agreement, dated October 3, 2016, by and among Henderson
Group plc, Janus Capital Group Inc. and Dai-ichi Life Holdings, Inc., is hereby
incorporated by reference from Exhibit 10.2 to JHG’s Registration Statement on Form F-4,
filed on March 20, 2017 (File No. 333-216824)
Option Agreement, dated as of October 3, 2016, by and between Henderson Group plc
and Dai-ichi Life Holdings, Inc., is hereby incorporated by reference from Exhibit 10.3 to
JHG’s Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)
Service Agreement between Henderson Group plc and Roger Thompson, effective from
June 26, 2013, is hereby incorporated by reference from Exhibit 10.5 to JHG’s
Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)*
Service Agreement between Henderson Group plc and Philip Wagstaff, effective from
February 22, 2017, is hereby incorporated by reference from Exhibit 10.6 to JHG’s
Registration Statement on Form F-4, filed on March 20, 2017 (File No. 333-216824)*
Change in Control Agreement by and between Enrique Chang and Janus Management
Holdings Corporation, dated October 24, 2016, is hereby incorporated by reference from
Exhibit 10.22 to JCG’s Form 10-K/A, dated March 10, 2017 (File No. 001-15253)*
Long-Term Incentive Award Acceptance Form with Appendix A (Terms of Restricted Stock
Unit Award), Appendix B (Additional Terms of Restricted Stock Unit Award) and
Appendix C (Forfeiture and Clawback) effective August 11, 2017 is attached to this Annual
Report on Form 10-K as Exhibit 10.32*
*Compensatory plan or agreement.
(12) Statements Re: Computation of Ratios
12.1
The Computation of Ratio of Earnings to Fixed Charges prepared pursuant to Item
601(b)(12) of Regulation S-K is attached to this Annual Report on Form 10-K as
Exhibit 12.1
(21) Subsidiaries of the Company
21.1
The List of the Subsidiaries of the Company prepared pursuant to Item 601(b)(21) of
Regulation S-K is attached to this Annual Report on Form 10-K as Exhibit 21.1
164
(23) Consents of Experts and Counsel
23.1
The Consent of Independent Registered Public Accounting Firm prepared pursuant to Item
601(b)(23) of Regulation S-K is attached to this Annual Report on Form 10-K as
Exhibit 23.1
24.1
Power of Attorney (included as a part of the Signature pages to this report).
(24) Power of Attorney
31.1
31.2
31.3
32.1
32.2
32.3
(31) Rule 13a-14(a)/15d-14(a) Certifications
Certification of Richard M. Weil, Co-Chief Executive Officer of Registrant
Certification of Andrew J. Formica, Co-Chief Executive Officer of Registrant
Certification of Roger Thompson, Executive Vice President and Chief Financial Officer of
Registrant
(32) Section 1350 Certificates
Certification of Richard M. Weil, Co-Chief Executive Officer of Registrant, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Certification of Andrew J. Formica, Co-Chief Executive Officer of Registrant, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley
Act of 2002
Certification of Roger Thompson, Executive Vice President and Chief Financial Officer of
Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes Oxley Act of 2002
(100) XBRL Exhibits
101.INS XBRL Insurance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
165
(c) Exhibits
Exhibit No.
4.1.5
10.19.7
10.19.8
10.24
10.25
10.32
12.1
21.1
23.1
24.1
31.1
31.2
31.3
32.1
32.2
JANUS HENDERSON GROUP
2017 FORM 10-K ANNUAL REPORT
INDEX TO EXHIBITS
Document
Regulation S-K
Item 601(b)
Exhibit No.
Sixth Supplemental Indenture to the Base Indenture, dated as of
February 27, 2018, among Janus Capital Group Inc., Janus Henderson
Group plc and The Bank of New York Mellon Trust Company N.A. is
attached to this Form-10-K as Exhibit 4.1.5.
Amendment No. 7 to Janus 401(k) Plan, effective July 1, 2017, is
attached to this Annual Report on Form 10-K as Exhibit 10.19.7
Amendment No. 8 to Janus 401(k) Plan, effective December 28, 2017,
is attached to this Annual Report on Form 10-K as Exhibit 10.19.8
Summary of Janus Henderson Group plc Non-Executive Director
Compensation Program effective May 30, 2017
Janus Henderson Group Global Remuneration Policy Statement
Long-Term Incentive Award Acceptance Form with Appendix A (Terms
of Restricted Stock Unit Award), Appendix B (Additional Terms of
Restricted Stock Unit Award) and Appendix C (Forfeiture and
Clawback) effective August 11, 2017 is attached to this Annual Report
on Form 10-K as Exhibit 10.32*
The Computation of Ratio of Earnings to Fixed Charges prepared
pursuant to Item 601(b)(12) of Regulation S-K
The List of the Subsidiaries of the Company prepared pursuant to
Item 601(b)(21) of Regulation S-K
The Consent of Independent Registered Public Accounting Firm —
PricewaterhouseCoopers LLP
Power of Attorney (included as a part of the Signature pages to this
report).
Certification of Richard M. Weil, Co-Chief Executive Officer of
Registrant
Certification of Andrew J. Formica, Co-Chief Executive Officer of
Registrant
Certification of Roger Thompson, Chief Financial Officer of Registrant
Certification of Richard M. Weil, Co-Chief Executive Officer of
Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Andrew J. Formica, Co-Chief Executive Officer of
Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
166
4
10
10
10
10
10
12
21
23
24
31
31
31
32
32
Exhibit No.
32.3
Document
Certification of Roger Thompson, Executive Vice President and Chief
Financial Officer of Registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Insurance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Regulation S-K
Item 601(b)
Exhibit No.
32
101
101
101
101
101
101
ITEM 16. FORM 10-K SUMMARY
None.
167
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Signatures
Janus Henderson Group plc
By:
/s/ RICHARD WEIL
Richard Weil
Co-Chief Executive Officer
February 27, 2018
Known all persons by these presents, that each person whose signatures appear below, hereby
constitute and appoint Andrew Formica, Richard Weil and Jacqui Irvine, and each of them
individually (with full power to act alone), as their true and lawful attorneys-in-fact and agents to sign
and execute and file with the Securities Exchange Commission on behalf of the undersigned, any
amendments to Janus Henderson Group plc’s Annual Report on Form 10-K for the year ended
December 31, 2017, and any instrument or document filed as part of, as an exhibit to, or in
connection with any amendment, and each of the undersigned does hereby ratify and confirm as his
or her own act and deed all that said attorneys shall lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities indicated on
February 27, 2018.
Signature/Name
Title
/s/ RICHARD GILLINGWATER
Richard Gillingwater
Chairman of the Board
/s/ GLENN SCHAFER
Glenn Schafer
/s/ RICHARD WEIL
Richard Weil
/s/ ANDREW FORMICA
Andrew Formica
/s/ ROGER THOMPSON
Roger Thompson
Deputy Chairman of the Board
Director and Co-Chief Executive Officer
(Co-Principal Executive Officer)
Director and Co-Chief Executive Officer
(Co-Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
168
Signature/Name
Title
/s/ BRENNAN HUGHES
Brennan Hughes
Senior Vice President, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
/s/ SARAH ARKLE
Sarah Arkle
/s/ KALPANA DESAI
Kalpana Desai
/s/ JEFFREY DIERMEIER
Jeffrey Diermeier
/s/ KEVIN DOLAN
Kevin Dolan
/s/ EUGENE FLOOD JR
Eugene Flood Jr
/s/ LAWRENCE KOCHARD
Lawrence Kochard
/s/ ANGELA SEYMOUR-JACKSON
Angela Seymour-Jackson
/s/ TATSUSABURO YAMAMOTO
Tatsusaburo Yamamoto
Director
Director
Director
Director
Director
Director
Director
Director
169
Exhibit 10.25
Global Remuneration Policy Statement (GRPS)
Summary of Janus Henderson Group Plc Remuneration Policy
Janus Henderson (‘the Group’) operates a single Remuneration Policy which applies in its entirety to all Group entities and
employees including the executive and international populations, unless local laws or regulations set more rigorous
requirements for any aspect, in which case the higher standards apply.
The Group considers that a successful remuneration policy should be sufficiently flexible to take account of future changes in
the Group’s business environment and remuneration practice and therefore the Group’s policy is subject to change from time
to time. The policy is reviewed on an annual basis to ensure that it remains aligned with evolving business strategy and
changes in the markets in which we operate, is consistent with best practice, promotes sound and effective risk management
and is compliant with applicable regulations.
The policy is implemented through the following components of remuneration and contractual arrangements, each having a
specific role in achieving the Group’s remuneration objectives:
•
•
•
•
•
Basic Salary
Benefits
Short-term incentives including annual bonuses
Long-term incentives
Employee share plans
Reward Philosophy, Strategy & Policy
Reward Policy
The Group has an established remuneration framework which, within the boundaries set by the Board’s Risk Appetite
Statement, is designed to be market competitive, motivate employees to improve individual and corporate performance, retain
key employees and align employee actions with the interests of clients and shareholders. This framework and associated
policy is overseen by the Compensation Committee (‘the Committee’), taking into account the guidelines set down by the
Financial Conduct Authority (FCA), the UK regulatory body, on executive pay and remuneration practices, together with
other remuneration legislation or regulations applicable to other territories in which the Group operates.
Reward Philosophy & Strategy
Our remuneration philosophy and strategy is designed to:
• provide total reward opportunities which, subject to performance, are competitive within our defined markets both in
terms of quantum and structure, and reflect individual contribution to business performance and sound risk management;
attract and retain individuals critical to the long term success of the Group;
•
• maintain an appropriate balance between both fixed and variable pay, and short and long term elements of remuneration,
in order to minimise the prudently manage risk taking and to align with the Group’s strategic objectives and time
horizons;
reinforce a strong performance culture through rewards which are differentiated based on Group, division, team and
individual performance;
align management interests with those of the Group’s shareholders and clients by delivering a significant portion of
annual remuneration in shares of Janus Henderson stock and units of Janus Henderson funds;
encourage wider employee share ownership to reinforce the alignment between the interests of employees, shareholders
and clients and enable employees to share in the wealth creation of the business;
ensure that reward related processes are compliant with industry regulations and legislation, consistent with market
practice and include effective risk management controls.
•
•
•
•
Pay Mix
The Committee takes into account, when determining remuneration awards, the need to ensure an appropriate ratio between
fixed and variable components to ensure that Janus Henderson can operate a fully flexible incentive policy. This includes the
payment of no bonuses should performance of the firm and/or the individual require this. Within this policy, base salary
levels are designed to be both market competitive and sufficient so that employees do not become totally dependent on their
variable compensation, so we are not bound to pay a bonus if it is inappropriate to do so.
The Group does not operate specific ratios (maxima or minima) but is guided by external pay comparisons, managing fixed
and variable compensation in line with market and by reference to individual performance.
Annual incentive arrangements
For the vast majority of employees the Group operates short term incentive plans, to reward performance and align
participant and shareholder interests, which are discretionary in nature, but are typically underpinned by funding frameworks
which:
• guide management and the Committee in terms of funding quantum;
• provide directional guidance to employees in terms of the required performance metrics and standards; and
• provide the relevant performance benchmarks to further the alignment of performance (as measured against these metrics
and standards) with the individual’s variable reward.
All variable incentive funding decisions are determined by the Committee, (and are reviewed by the Board of HGHAML as
governing body for the Group’s regulated businesses), taking into account:
•
•
recommendations of Management;
an independent risk assessment provided by the Chief Risk Officer (CRO) which takes into account a range of risk and
compliance related factors including items reported to the Board Risk Committee (BRC) in the Strategic Risk Report.
Recommendations from this risk assessment may lead to a downward adjustment on variable incentive funding;
• progress against business financial and strategic goals;
• other financial and non-financial factors which the Committee believe are relevant in assessing the underlying financial
and overall performance of the Group; and
the impact of the proposed funding decisions against an overall compensation ratio framework.
•
The funding frameworks are largely discretionary in nature under which annual incentive awards are delivered to
participating staff. The frameworks take the form of indicative, but non-contractual, funding formulae based on relevant
financial and non-financial metrics which are typically set as part of annual business planning and budgeting cycles. The
primary short term incentive arrangement is called the Partnership Profit Pool (covering 96% of staff within the Group) and is
constructed as a ‘profit share’ arrangement with the pool being initially set as a (discretionary) share of Pre-Incentive
Operating Income (PIOI) between shareholders and employees. Further general features of the funding frameworks are as
follows:
•
•
•
•
the quantum derived under the relevant funding framework may be adjusted at the discretion of Management/the
Committee;
the co-CEOs, CRO and co-Heads of HR review and sign-off both proposed allocations to divisions within Janus
Henderson and, on an exceptions basis, allocations to individuals;
a separate sub-committee (the ‘Code Staff Compensation Committee’ — ‘CSCC’) also reviews, on behalf of the
Committee, all remuneration proposals relating to individuals classified as Code and/or Identified Staff under the FCA,
AIFMD and UCITS Remuneration Codes. The CSCC, which comprises of representatives from the Investment
Management, Assurance and Human Resources divisions, provides a regular report to the Committee in relation to any
remuneration recommendations for this cadre for approval by the Committee;
the CSCC also reviews, on behalf of the Janus Henderson Executive Committee, all remuneration proposals from the
context of operational errors and/or breaches to internal risk and control polices. The CSCC, reviews a range of data
indicative of errors and breaches, highlighting relevant case details to management
Pay Mix
The Committee takes into account, when determining remuneration awards, the need to ensure an appropriate ratio between
fixed and variable components to ensure that Janus Henderson can operate a fully flexible incentive policy. This includes the
payment of no bonuses should performance of the firm and/or the individual require this. Within this policy, base salary
levels are designed to be both market competitive and sufficient so that employees do not become totally dependent on their
variable compensation, so we are not bound to pay a bonus if it is inappropriate to do so.
The Group does not operate specific ratios (maxima or minima) but is guided by external pay comparisons, managing fixed
and variable compensation in line with market and by reference to individual performance.
Annual incentive arrangements
For the vast majority of employees the Group operates short term incentive plans, to reward performance and align
participant and shareholder interests, which are discretionary in nature, but are typically underpinned by funding frameworks
which:
• guide management and the Committee in terms of funding quantum;
• provide directional guidance to employees in terms of the required performance metrics and standards; and
• provide the relevant performance benchmarks to further the alignment of performance (as measured against these metrics
and standards) with the individual’s variable reward.
All variable incentive funding decisions are determined by the Committee, (and are reviewed by the Board of HGHAML as
governing body for the Group’s regulated businesses), taking into account:
recommendations of Management;
an independent risk assessment provided by the Chief Risk Officer (CRO) which takes into account a range of risk and
compliance related factors including items reported to the Board Risk Committee (BRC) in the Strategic Risk Report.
Recommendations from this risk assessment may lead to a downward adjustment on variable incentive funding;
• progress against business financial and strategic goals;
• other financial and non-financial factors which the Committee believe are relevant in assessing the underlying financial
and overall performance of the Group; and
the impact of the proposed funding decisions against an overall compensation ratio framework.
The funding frameworks are largely discretionary in nature under which annual incentive awards are delivered to
participating staff. The frameworks take the form of indicative, but non-contractual, funding formulae based on relevant
financial and non-financial metrics which are typically set as part of annual business planning and budgeting cycles. The
primary short term incentive arrangement is called the Partnership Profit Pool (covering 96% of staff within the Group) and is
constructed as a ‘profit share’ arrangement with the pool being initially set as a (discretionary) share of Pre-Incentive
Operating Income (PIOI) between shareholders and employees. Further general features of the funding frameworks are as
follows:
Committee;
the quantum derived under the relevant funding framework may be adjusted at the discretion of Management/the
the co-CEOs, CRO and co-Heads of HR review and sign-off both proposed allocations to divisions within Janus
Henderson and, on an exceptions basis, allocations to individuals;
a separate sub-committee (the ‘Code Staff Compensation Committee’ — ‘CSCC’) also reviews, on behalf of the
Committee, all remuneration proposals relating to individuals classified as Code and/or Identified Staff under the FCA,
AIFMD and UCITS Remuneration Codes. The CSCC, which comprises of representatives from the Investment
Management, Assurance and Human Resources divisions, provides a regular report to the Committee in relation to any
remuneration recommendations for this cadre for approval by the Committee;
the CSCC also reviews, on behalf of the Janus Henderson Executive Committee, all remuneration proposals from the
context of operational errors and/or breaches to internal risk and control polices. The CSCC, reviews a range of data
indicative of errors and breaches, highlighting relevant case details to management
•
•
•
•
•
•
•
•
for consideration during the annual performance rating and remuneration allocation processes and may recommend
relevant adjustments to both performance rating and/or incentive awards to reflect the nature of issues identified from a
materiality (both quantitative and qualitative) and culpability perspective;
allocations to individuals are made on a discretionary basis by relevant line managers and business heads, by reference to
overall individual performance as determined in line with our performance management processes, and are subject to
internal consistency check processes.
• outcomes under the plans (both at the individual level and in aggregate) are subject to risk adjustment processes (as
•
outlined below).
all awards are subject to the Group’s standard deferral arrangements (see below), with the non-deferred portion being
delivered in cash and, where appropriate, restricted units, in the first quarter after the end of the relevant Performance
Year.
The Group operates a small number of legacy contractual and formulaic arrangements which predominantly relate back to
contractual arrangements carried over following historic acquisitions. These arrangements are subject to risk adjustment
processes and standard Group deferral mechanisms (and where appropriate, deferral arrangements mandated by relevant
regulation).
A market standard sales commission arrangement is operated for distribution staff in the US.
Performance fee incentives
The Group receives performance fees in relation to certain funds depending on outperformance of the fund against
pre-determined benchmarks and shares these performance fees, on a discretionary basis, with fund managers of the relevant
funds — such awards may be made in addition to allocations under the annual incentive frameworks set out above.
Performance Fee bonus awards form part of the aggregate funding of the Investment Management Profit Pool and direct
allocation of these bonuses will be phased out by the end of 2019 with incentive awards for performance fee generation being
included within the aggregate discretionary bonus funding.
Performance Fee incentives are subject to the same risk adjustment, review and deferral principles that apply to the
discretionary funding frameworks. They are allocated on a discretionary, individual by individual basis, by the relevant lead
fund manager, to individuals working on the relevant fund or to individuals who provide additional material input or support
to the operation of the fund, with proposed allocations being subject to approval by senior management and control function
heads.
Co-CEO framework
A framework for the co-CEOs utilizes a scorecard which the Committee believes incorporates the best components from the
legacy Janus and Henderson compensation programs and is designed to align the co-CEOs’ compensation with Company
performance, which the Committee believes drives long-term value for shareholders and clients. The scorecard utilized
following the Merger in May 2017 is based upon the same factors used by the Company to evaluate its business. The
performance measures and weighting used are as follows:
•
•
•
30% - Deliver investment excellence for clients (measured based on 3-year investment performance relative to
benchmark);
40% - Drive financial results for shareholders (measured based on revenue growth, total net flows, and growth in
net income before taxes); and
30% - Drive strategic results for long-term success for clients and shareholders (measured based on execution of
strategic initiatives such as; leading integration efforts, delivering exceptional client service, and achieving
operational excellence).
Under the agreed compensation framework, the variable incentive compensation for the co-CEOs is determined by
multiplying a target incentive award by a multiplier (between 0% and 200%). This multiplier is determined by reference to
the outcome of a scorecard of pre-determined measures as described above.
To establish the target incentive award, the Committee considered the merged Company’s revenue and total assets under
management (AUM) compared to the revenue and total AUM of a select peer group of companies to ensure that the target
incentive opportunity reflects competitive pay practices of other asset management firms in the principal markets in which we
do business and compete for executive talent.
Other Long term and employee Share Ownership Awards
The Group operates other incentive remuneration plans designed to incentivise long term performance and behaviours and
align employees with shareholders via exposure to Group shares including:
Restricted Share Plan
-
used for 2 separate purposes:
•
a mechanism to provide Buyout Awards for new hires to compensate them for the
forfeiture of deferred awards from their previous employer arising from
commencement of their employment with the Group;
incentive awards to existing staff in certain circumstances, with such awards
vesting subject to achievement of material performance conditions.
•
Long Term Incentive
(LTI)
-
A plan designed to encourage acquisition of/increase in equity ownership in the Group,
thereby strengthening commitment, effort and reward for excellence in individual
performance; attraction and retention of new hires, with a view to optimizing Group
profitability and growth.
Awards are time vested (typically 2-4 years) and are not subject to performance
conditions
The Group also operates voluntary all employee shares plans including Buy As You Earn (BAYE) and Sharesave (SAYE) in
which staff can participate within approved contribution guidelines to encourage employees to become shareholders in the
Group.
Deferral arrangements
All staff at Janus Henderson are subject to mandatory deferral arrangements which apply to all variable incentive
remuneration (excluding the sales commission arrangement for distribution staff in the US), in excess of specified thresholds
(or as appropriate as mandated by regulation e.g. AIFMD/UCITS). Deferred awards are delivered under the Deferred Equity
Plan (DEP), Long Term Incentive (LTI) or Mutual Fund Award (MFA) plan in the form of Group shares or interests in Janus
Henderson funds, vesting in three equal tranches over a 3 year period. Forfeiture provisions apply to employees who cease
employment with the Group, other than in prescribed circumstances, during the vesting period. Furthermore, malus and/or
clawback provisions apply under the majority of these plans at the discretion of the Committee under which the Committee
have the power to vary or lapse individual unvested awards, or clawback vested awards, in specified circumstances.
Where required by regulation, a proportion of both deferred and non-deferred incentive remuneration is delivered, where
practicable, in relevant shares/units of underlying funds.
The Deferral Policy is reviewed annually by the Committee to ensure that it remains aligned with:
•
•
•
Janus Henderson’s business strategy, associated time horizons and risk appetite;
competitive practice in the sectors and jurisdictions in which the Group operates;
emerging regulatory practice.
Risk adjustment
The Risk and Compliance teams provide regulatory compliance and risk management advice/input into the design of the
Group incentive plans, the Group Remuneration Policy, the determination of short-term incentives (including, annual
incentive pools and allocations, performance fee incentive allocations) and, on an exceptions basis, the annual appraisal
process and the vesting of deferred and long term incentive plans.
Remuneration decisions are made in the context of the Group’s Risk Appetite Statement which sets out the risk envelope
within which activities may be undertaken (a separate RAS is also maintained by the Board of HGHAML). Control function
input includes:
•
•
•
regular review of Remuneration Policy to ensure that it is aligned with the Risk Appetite Statement, complies with the
spirit of relevant regulatory requirements and has sufficient references to the Group’s ability and intention to apply risk
adjustments as appropriate;
independent advice and risk/compliance metrics to the Board Risk Committee (BRC) which in turn provides assurance to
the Committee in relation to the appropriateness of plan design and metrics from a risk management perspective;
capture of all risk related incidents and Compliance breaches and provision of relevant data to inform relevant oversight
and governing bodies, (including the Executive Committee, the BRC, the Investment Performance and Risk Committee,
the Operational Risk and Performance Committee, the Errors and Breaches Forum and the Compensation Committee);
• production of an annual report to the BRC/Remuneration Committee providing an overall assessment of risk management
relative to the Risk Appetite Statement(s), and making recommendations in relation to the impact on proposed incentive
pool funding and LTIP vesting;
the approval of bonus funding at the divisional level, taking into account the incidence, patterns, size of risk events during
the relevant Performance Year and the attitude and culture of risk management;
a specific annual review is also undertaken to consider proposed incentive allocations at the individual level against the
inventory of risk, compliance and disciplinary related events with risk adjustments being applied where appropriate.
Similar processes also apply to performance fee incentives which may be awarded throughout the year.
•
•
The Group also operates voluntary all employee shares plans including Buy As You Earn (BAYE) and Sharesave (SAYE) in
which staff can participate within approved contribution guidelines to encourage employees to become shareholders in the
A rigorous 6 monthly review is conducted by the CSCC, to ensure that the list of Code/Identified Staff remains current. The
Code/Identified staff list is approved annually by the Committee.
Identification of Code/Identified Staff
The following categories of employee/Executive have been identified as Code/Identified Staff:
Executive and Non-Executive Directors of JHG
Executive and Non-Executive Directors of HGHAML
Other members of the Janus Henderson Executive Committee
Significant Influence Functions (SIFs), including Heads of APAC and North
America, and the Heads of Risk, Compliance, Internal Audit, Information
Technology, Human Resources, Tax and Group Finance
Control Functions – senior staff responsible for risk management, compliance
and internal audit for the AIFMs/UCITS.
Other individuals as satisfying the qualitative and quantitative criteria for the
identification of Material Risk Takers (MRTs) asset out in the EBA
Regulatory Technical Standard (RTS)
Members of other key governing bodies and committees, including:
AIFMD
UCITS
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
FCA
Yes
Yes
Yes
Yes
Yes
Under the agreed compensation framework, the variable incentive compensation for the co-CEOs is determined by
multiplying a target incentive award by a multiplier (between 0% and 200%). This multiplier is determined by reference to
the outcome of a scorecard of pre-determined measures as described above.
To establish the target incentive award, the Committee considered the merged Company’s revenue and total assets under
management (AUM) compared to the revenue and total AUM of a select peer group of companies to ensure that the target
incentive opportunity reflects competitive pay practices of other asset management firms in the principal markets in which we
do business and compete for executive talent.
Other Long term and employee Share Ownership Awards
The Group operates other incentive remuneration plans designed to incentivise long term performance and behaviours and
align employees with shareholders via exposure to Group shares including:
Restricted Share Plan
-
used for 2 separate purposes:
•
•
a mechanism to provide Buyout Awards for new hires to compensate them for the
forfeiture of deferred awards from their previous employer arising from
commencement of their employment with the Group;
incentive awards to existing staff in certain circumstances, with such awards
vesting subject to achievement of material performance conditions.
Long Term Incentive
-
A plan designed to encourage acquisition of/increase in equity ownership in the Group,
(LTI)
thereby strengthening commitment, effort and reward for excellence in individual
performance; attraction and retention of new hires, with a view to optimizing Group
profitability and growth.
conditions
Awards are time vested (typically 2-4 years) and are not subject to performance
Group.
Deferral arrangements
All staff at Janus Henderson are subject to mandatory deferral arrangements which apply to all variable incentive
remuneration (excluding the sales commission arrangement for distribution staff in the US), in excess of specified thresholds
(or as appropriate as mandated by regulation e.g. AIFMD/UCITS). Deferred awards are delivered under the Deferred Equity
Plan (DEP), Long Term Incentive (LTI) or Mutual Fund Award (MFA) plan in the form of Group shares or interests in Janus
Henderson funds, vesting in three equal tranches over a 3 year period. Forfeiture provisions apply to employees who cease
employment with the Group, other than in prescribed circumstances, during the vesting period. Furthermore, malus and/or
clawback provisions apply under the majority of these plans at the discretion of the Committee under which the Committee
have the power to vary or lapse individual unvested awards, or clawback vested awards, in specified circumstances.
Where required by regulation, a proportion of both deferred and non-deferred incentive remuneration is delivered, where
practicable, in relevant shares/units of underlying funds.
The Deferral Policy is reviewed annually by the Committee to ensure that it remains aligned with:
•
•
•
Janus Henderson’s business strategy, associated time horizons and risk appetite;
competitive practice in the sectors and jurisdictions in which the Group operates;
emerging regulatory practice.
• Boards of the AIFMs;
• Boards of UCITs
• Global Strategic Product Committee;
• Investment Performance and Risk Committee;
• Investment Strategy Group
Staff responsible for heading portfolio management, administration and
marketing for the AIFMs/UCITs
Lead Fund Managers and other investment management professionals who
are deemed to have a material impact on the risk profile of the AIF or UCITS
funds that they manage
Staff in the same remuneration bracket as risk takers and senior management
whose activities have a material impact on the risk profile of an AIF or
UCITS fund
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Other key Remuneration Code principles
Risk management and risk tolerance
The following features of remuneration policy/practices promote sound and effective risk management and discourage
risk-taking in excess of the firm’s levels of tolerated risk:
•
•
•
•
•
•
the CRO and BRC maintain and regularly update the Risk Appetite Statement(s), monitoring incidents, performance and
behaviours in line with the RAS, making recommendations to the Committee in respect of any issues or incidents that
require adjustment at the aggregate funding or individual allocation level;
the Remuneration Policy is reviewed by the CRO to ensure it complies with regulatory and other requirements,
particularly with regard to sound risk management and the ability to apply risk adjustments;
Investment Performance and fund construction is monitored by the independent Investment Risk team to ensure that the
latter is aligned, at all times, with investors’ reasonable expectations based on the investment objectives for the relevant
fund and any other material (including marketing material) presented to investors;
the Operational Risk team monitor any operational risk related losses;
the CRO is also involved in the review and design of remuneration plans;
in the case of fund managers, deferrals of performance fee and other incentive awards are typically made into the funds
they manage, thereby aligning their interests explicitly with those of the investors in the funds.
Supporting business strategy, objectives, values and long-term interests
The following factors are relevant in ensuring remuneration policy is aligned with business strategy, objectives, values, sound
risk management and long-term interests:
• base salary is targeted at market competitive rates and is set at a quantum which is deemed sufficient to minimise reliance
•
on variable incentive award, thereby mitigating excessive risk taking;
the Group operates discretionary short term incentive arrangements under which:
•
•
allocations at the individual level are aligned with overall individual performance assessments;
aggregate allocations also reflect the performance of the Group and the divisions and teams in which an individual
works;
the individual’s own performance is assessed both against achievement of personal objectives (the ‘what’) and
performance against the Group’s core values (the ‘how’);
the short term incentive funding arrangements are largely driven by sharing profits between shareholders and
employees, creating direct alignment with the success and profitability of the Group;
•
•
•
•
•
• Senior Management/the Committee exercise their discretion in determining incentive funding levels, by reference to
their view of the underlying performance of the business.
the Group shares performance fees (on a discretionary basis) with its fund managers, providing a direct link with the
performance of the funds they manage and the returns that investors receive, thereby increasing the alignment between
employees and investors;
• The Group operates material deferral mechanisms (up to 60% of variable remuneration) under which deferred awards are
primarily delivered in the form of Group shares and or interests in Janus Henderson funds/products, reinforcing the
alignment between the employee, the Group and shareholder/investor interests;
in addition to deferral arrangements, the Group encourages share ownership throughout the employee base via all
employee share ownership mechanisms (e.g. BAYE and SAYE);
all material variable remuneration plans contain malus and clawback provisions to ensure that awards can be adjusted or
reversed over the long term to reflect detrimental issues or circumstances that arise beyond the date of award or vesting;
• Mandatory shareholding requirements apply under which Executive Directors (Non-Executive Directors) are required to
acquire and hold shares with a value at least equal to 300% of base salary (for NEDs, minimum of shares with a face
value at date of acquisition of $300k).
• Boards of the AIFMs;
• Boards of UCITs
• Global Strategic Product Committee;
• Investment Performance and Risk Committee;
• Investment Strategy Group
Staff responsible for heading portfolio management, administration and
marketing for the AIFMs/UCITs
Lead Fund Managers and other investment management professionals who
are deemed to have a material impact on the risk profile of the AIF or UCITS
funds that they manage
Staff in the same remuneration bracket as risk takers and senior management
whose activities have a material impact on the risk profile of an AIF or
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
UCITS fund
Other key Remuneration Code principles
Risk management and risk tolerance
The following features of remuneration policy/practices promote sound and effective risk management and discourage
risk-taking in excess of the firm’s levels of tolerated risk:
the CRO and BRC maintain and regularly update the Risk Appetite Statement(s), monitoring incidents, performance and
behaviours in line with the RAS, making recommendations to the Committee in respect of any issues or incidents that
require adjustment at the aggregate funding or individual allocation level;
the Remuneration Policy is reviewed by the CRO to ensure it complies with regulatory and other requirements,
particularly with regard to sound risk management and the ability to apply risk adjustments;
Investment Performance and fund construction is monitored by the independent Investment Risk team to ensure that the
latter is aligned, at all times, with investors’ reasonable expectations based on the investment objectives for the relevant
fund and any other material (including marketing material) presented to investors;
the Operational Risk team monitor any operational risk related losses;
the CRO is also involved in the review and design of remuneration plans;
Supporting business strategy, objectives, values and long-term interests
The following factors are relevant in ensuring remuneration policy is aligned with business strategy, objectives, values, sound
risk management and long-term interests:
• base salary is targeted at market competitive rates and is set at a quantum which is deemed sufficient to minimise reliance
on variable incentive award, thereby mitigating excessive risk taking;
the Group operates discretionary short term incentive arrangements under which:
allocations at the individual level are aligned with overall individual performance assessments;
aggregate allocations also reflect the performance of the Group and the divisions and teams in which an individual
the individual’s own performance is assessed both against achievement of personal objectives (the ‘what’) and
performance against the Group’s core values (the ‘how’);
the short term incentive funding arrangements are largely driven by sharing profits between shareholders and
employees, creating direct alignment with the success and profitability of the Group;
works;
•
•
•
•
•
•
•
•
•
•
•
in the case of fund managers, deferrals of performance fee and other incentive awards are typically made into the funds
they manage, thereby aligning their interests explicitly with those of the investors in the funds.
Governance
Conflicts of interest
Oversight of reward, management of conflicts of interest and the link between risk and reward is achieved through a
combination of:
•
•
effective remuneration design;
the oversight of the Remuneration Committee and the ExCo in ensuring appropriate and, where necessary, independent
oversight of both remuneration policy and outcomes.
The Group also operates an Ethics and Conflicts Committee, chaired by the co-CEO to identify conflicts of interest wherever
they arise within the business, and to ensure that such risks are removed, or mitigated by management by virtue of
complementary internal processes and supervisory activities. The Ethics and Conflicts Committee reviews reward
mechanisms and issues on at least an annual basis.
Our governance processes ensure robust oversight of reward, effective management of any potential conflict of interests and
reflect the need to link remuneration decisions with our risk appetite. The governance of Janus Henderson’s remuneration is
managed through various bodies:
• Human Resources and the ExCo oversee remuneration policies and procedures approved by the Committee;
•
the BRC looks at the risk appetite, tolerance and risk management for Janus Henderson and feeds its views into the
remuneration decision making process, including the submission of a risk report to the Committee for consideration;
• Human Resources are responsible for supporting and sending any information to the Committee, which is the highest
level decision making body for remuneration.
The Committee is responsible for ensuring they take into consideration financial and non-financial criteria, risk and
compliance reports, and any other relevant information in making decisions around remuneration, and sets an overall
framework within which overall compensation costs are managed.
In addition, the Committee has significant powers to vary or lapse individual unvested awards in cases of poor risk
management, where results have been misstated, where there has been a material downturn in financial performance, or
where there has been serious misconduct.
Remuneration and capital
The firm’s variable remuneration is directly linked to profits generated in the current year, reflecting the firm’s ability to pay.
Variable funding arrangements are largely discretionary such that management have the ability to
reduce levels appropriately should a downside scenario occur. Schemes will only deliver value in the context of the firm
generating sufficient profits thereby strengthening its capital base.
Funding metrics for the incentive schemes are proposed by Management and reviewed approved by the Committee on an
annual basis. The key financial metrics and primary and individual performance metrics taken into account are:
Key Funding metrics:
• Pre-Incentive Operating Income (PIOI)
• 1-, 3-, and 5-year investment performance track record
• gross performance fees
• gross and net sales
revenue growth,
total net flows,
and additionally, for the co-CEO frameworks
•
•
• growth in net income before taxes, and
•
strategic results
Key individual performance metrics:
• Profitability - contribution to overall profitability of the firm;
• Performance – investment performance and risk adjusted returns delivered on behalf of clients;
• Partnership – wider contribution to overall Group performance including alignment with the Group’s purpose and aims
and core values (putting clients first, acting like an owner, succeeding as a team).
• Personal contribution against individual objectives in line with the Group’s purpose and aims.
The discretionary nature of the majority of the funding frameworks means that the Committee is able to determine pool
funding within agreed compensation frameworks and compensation ratios and has the power to adjust the pools (even to zero)
if it determines to reflect its view of the underlying financial position of the firm.
Performance assessment
The Group operates an annual appraisal process on a global basis, under which staff set (jointly with management), and are
measured against:
• both financial and non- financial objectives and metrics,
•
specific behavioural competencies including compliance, risk management and TCF provisions and confirmation that the
appraisee demonstrates an appropriate level of risk and compliance management in accordance with the Group’s policies
and procedures.
• achievement of both personal objectives (the ‘what’) and performance against the Group’s core values and guiding
principles (the ‘how’).
Line Managers are required to undertake reviews of performance at least annually. In conjunction with Business Unit and
Function Heads, the Human Resources department analyse and calibrate performance ratings across the Group to ensure that
ratings have been applied consistently and performance has been effectively differentiated. For all staff, discretionary
variable remuneration decisions take into account the individual’s performance appraisal rating. This is a ‘guidance based’
approach with no specific rules which constrain individual line manager discretion, although this is reviewed as part of the
HR and CE allocation review mechanisms.
The CRO provides oversight and commentary during this process on how risks have been managed and, as appropriate, may
make recommendations for adjusting performance ratings.
reduce levels appropriately should a downside scenario occur. Schemes will only deliver value in the context of the firm
Anti-avoidance and anti-hedging
generating sufficient profits thereby strengthening its capital base.
All Code/Identified Staff in receipt of performance based awards are required to certify that they will not use personal
hedging strategies, or take out insurance contracts, that undermine the risk alignment that is intended by the award of deferred
remuneration. This is monitored through Janus Henderson’s rules with regard to personal share dealing/financial contracts
and is monitored by Compliance.
Guaranteed bonus and buy out awards
The Group complies with the principles of the FCA Remuneration Code in relation to Guaranteed Bonuses in that guaranteed
variable remuneration is only awarded in cases where:
•
•
•
•
it is exceptional;
it occurs in the context of hiring new staff;
the firm has a sound and strong capital base; and
it is limited to the first year of service.
Buying out deferred bonuses is permitted subject to, as far as possible, the timing, delivery mechanism (i.e. shares or cash)
and amounts paid out being set to match the former arrangements (quantum and vesting schedule) including, where relevant,
applicable performance conditions associated with the forfeited awards.
Funding metrics for the incentive schemes are proposed by Management and reviewed approved by the Committee on an
annual basis. The key financial metrics and primary and individual performance metrics taken into account are:
Key Funding metrics:
• Pre-Incentive Operating Income (PIOI)
• 1-, 3-, and 5-year investment performance track record
• gross performance fees
• gross and net sales
and additionally, for the co-CEO frameworks
•
•
•
revenue growth,
total net flows,
strategic results
• growth in net income before taxes, and
Key individual performance metrics:
• Profitability - contribution to overall profitability of the firm;
• Performance – investment performance and risk adjusted returns delivered on behalf of clients;
• Partnership – wider contribution to overall Group performance including alignment with the Group’s purpose and aims
and core values (putting clients first, acting like an owner, succeeding as a team).
• Personal contribution against individual objectives in line with the Group’s purpose and aims.
The discretionary nature of the majority of the funding frameworks means that the Committee is able to determine pool
funding within agreed compensation frameworks and compensation ratios and has the power to adjust the pools (even to zero)
if it determines to reflect its view of the underlying financial position of the firm.
Performance assessment
measured against:
and procedures.
principles (the ‘how’).
The Group operates an annual appraisal process on a global basis, under which staff set (jointly with management), and are
• both financial and non- financial objectives and metrics,
•
specific behavioural competencies including compliance, risk management and TCF provisions and confirmation that the
appraisee demonstrates an appropriate level of risk and compliance management in accordance with the Group’s policies
• achievement of both personal objectives (the ‘what’) and performance against the Group’s core values and guiding
Line Managers are required to undertake reviews of performance at least annually. In conjunction with Business Unit and
Function Heads, the Human Resources department analyse and calibrate performance ratings across the Group to ensure that
ratings have been applied consistently and performance has been effectively differentiated. For all staff, discretionary
variable remuneration decisions take into account the individual’s performance appraisal rating. This is a ‘guidance based’
approach with no specific rules which constrain individual line manager discretion, although this is reviewed as part of the
HR and CE allocation review mechanisms.
The CRO provides oversight and commentary during this process on how risks have been managed and, as appropriate, may
make recommendations for adjusting performance ratings.
Exhibit 31.1
I, Richard M. Weil, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of Janus Henderson Group plc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
/s/ RICHARD M. WEIL
Richard M. Weil
Co-Chief Executive Officer
Date: February 27, 2018
A signed original of this written statement required by Section 302 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 31.2
I, Andrew J. Formica, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of Janus Henderson Group plc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
/s/ ANDREW J. FORMICA
Andrew J. Formica
Co-Chief Executive Officer
Date: February 27, 2018
A signed original of this written statement required by Section 302 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 31.3
I, Roger Thompson, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of Janus Henderson Group plc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
Date: February 27, 2018
A signed original of this written statement required by Section 302 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Janus Henderson Group plc on Form 10-K for the year
ended December 31, 2017, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Richard M. Weil, Co-Chief Executive Officer of Janus Henderson Group plc,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1. The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. The information contained in the report fairly presents, in all material respects, the financial
condition and results of operations of Janus Henderson Group plc.
/s/ RICHARD M. WEIL
Richard M. Weil
Co-Chief Executive Officer
Date: February 27, 2018
A signed original of this written statement required by Section 906 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Janus Henderson Group plc on Form 10-K for the year
ended December 31, 2017, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Andrew J. Formica, Co-Chief Executive Officer of Janus Henderson
Group plc, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. The information contained in the report fairly presents, in all material respects, the financial
condition and results of operations of Janus Henderson Group plc.
/s/ ANDREW J. FORMICA
Andrew J. Formica
Co-Chief Executive Officer
Date: February 27, 2018
A signed original of this written statement required by Section 906 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 32.3
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Janus Henderson Group plc on Form 10-K for the year
ended December 31, 2017, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Roger Thompson, Chief Financial Officer of Janus Henderson Group plc,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1. The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. The information contained in the report fairly presents, in all material respects, the financial
condition and results of operations of Janus Henderson Group plc.
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
Date: February 27, 2018
A signed original of this written statement required by Section 906 has been provided to Janus
Henderson Group plc and will be retained by Janus Henderson Group plc and furnished to the
Securities and Exchange Commission or its staff upon request.
[Intentionally Left Blank]
[Intentionally Left Blank]
214
OTHER INFORMATION
Shareholder
information
As at 23 February 2018
Total number of holders of shares, CDIs, UK DIs and their voting rights
The issued share capital of Janus Henderson Group plc consisted of 200,406,138 shares held by 48,702 security holders. This included: 87,930,892
shares, held by CHESS Depositary Nominees Pty Limited (CDN), quoted on the ASX in the form of CHESS Depositary Interests (CDIs) and held by
43,805 CDI holders; and, 4,651,088 UK depositary interests (UK DIs), each representing an entitlement to one underlying Janus Henderson ordinary
share and held by 3,928 UK DI holders either through CREST or via the Janus Henderson Corporate Sponsored Nominee Facility. Each registered
holder of shares present in person (or by proxy, attorney or representative) at a meeting of shareholders has one vote on a vote taken by a show of
hands, and one vote for each fully paid share held on a vote taken on a poll. CDI holders can instruct CDN to appoint a proxy on their behalf and can
direct the proxy how to vote on the basis of one vote per person taken by a show of hands, and one vote per CDI on a vote taken on a poll.
Securities subject to voluntary escrow
21,574,756 ordinary shares are currently held by Dai-ichi Life Holdings, Inc. (Dai-ichi). Under the Amended and Restated Investment and Strategic
Cooperation Agreement between Dai-ichi and the Company, subject to certain limited exceptions, Dai-ichi may not transfer these shares without
Janus Henderson’s written consent during the period up to and including 3 October 2019.
Twenty largest share/CDI/UK DI holders
1 CEDE & Co
2 HSBC Custody Nominees (Australia) Limited
J.P. Morgan Nominees Australia Limited
3
4 National Nominees Limited
5 Citicorp Nominees Pty Limited
6 BNP Paribas Nominees Pty Limited
Continue reading text version or see original annual report in PDF format above