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ANNUAL REPORT 2018
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About Janus Henderson
Janus Henderson Investors is a leading global active
asset manager. We exist to help clients achieve their
long-term financial goals by providing access to a broad
range of investment solutions, including equities,
fixed income, quantitative equities, multi-asset and
alternative asset class strategies.
What is Knowledge. Shared?
Timely and relevant expert insight
Shared internally and externally,
for well-informed 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 2018
Business highlights
2018 represented a year of further transformation
for Janus Henderson, against a backdrop of
challenging markets and ongoing change in the
asset management sector. The Group substantially
completed its merger integration and realised
targeted cost synergies well ahead of plan.
Despite our progress, we faced the same global
market challenges and headwinds as the wider
industry, with an aggregate US$18 billion of
net outflows.
This report and additional information about the Group can be found
online at janushenderson.com/ir
11
Contents
Business review
2 Group at a glance
4 Chairman and
Deputy Chairman’s statement
6 Chief Executive Officer’s statement
12
Investments by capability
Governance
14 Board of Directors
16 Governance overview
19
Independent auditors' report to the
members of Janus Henderson Group plc
Form 10-K
20 Form 10-K
Other information
178 Shareholder information
180 Two-year financial summary (unaudited)
Investment outperformance1 (%)
Net new money growth2 (%)
61%of AUM beating benchmark over three years
(5%)
2017
2018
66
(3)
61
(5)
2017
2018
Assets under management (US$bn)
Adjusted operating margin (%)
328.5bn
39.0%
2017
2018
370.8
2017
328.5
2018
39.6
39.0
Adjusted diluted earnings per share (US$)
Dividend per share3 (US$)
2.74
2017
2018
1.40
2.48
2017
2.74
2018
1.20
1.40
Notes
Data for 2017 presents the results of Janus
Henderson Group 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 40 and 41 for additional information.
In accordance with the Australian Securities and
Investment Commission Corporations Instrument
2016/191, amounts in this Annual Report have
been rounded to the nearest US$0.1 million,
unless otherwise stated.
1. Investment performance data represents
percentage of AUM outperforming the relevant
benchmark. Full performance disclosures detailed
on page 180.
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$20.3 million and for legacy Henderson that
was US$26.9 million), divided by the number
of shares outstanding as at 30 May 2017
(approximately 200.4 million). USD/GBP 1.3017.
Janus Henderson Group plc Annual Report 2018
2
2
BUSINESS REVIEW
Group at a glance
Janus Henderson is an independent global asset manager, specialising
in active management. We offer a broad range of investment solutions
across major asset classes to a client base around the world.
Our purpose
At Janus Henderson
We aim to
We exist to
help our clients
achieve their
long-term financial
goals
We put
our clients
first
We
succeed as
a team
We act
like an
owner
Be a partner our clients can trust working to deliver
excellence in both investment returns and service
Partner with each other on our responsibilities
to our clients and create an environment where all
our colleagues can thrive and successfully achieve
their personal and professional goals
Be a responsible steward for our owners, pursuing
efficiency and delivering stable and consistent
financial returns
Total assets under management (AUM)
(US$)
328.5bn
2017: 370.8bn
Equities
(US$)
167.6bn
2017: 189.7bn
Fixed Income
(US$)
72.4bn
2017: 80.1bn
Diverse business encompassing
a wide range of geographic and
investment styles.
Coverage across the asset
class, applying a wide range
of differentiated techniques.
Investment performance by capability
Percentage of AUM outperforming benchmark
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total
AUM
(US$bn) 1 year
3 years 5 years
167.6
67%
55%
71%
72.4
44.3
30.2
14.0
36%
88%
93%
20%
11%
15%
81%
90%
91%
35%
94%
100%
328.5
55%
61%
72%
Multi-Asset
(US$)
30.2bn
2017: 31.6bn
A diversity of strategies, including
US and global asset allocation,
traditional multi-manager and
alternative asset class specialists.
Note: Investment performance data represents percentage of AUM outperforming the relevant
benchmark. Full performance disclosures detailed on page 180.
Client relationships and brand
Our individual, intermediary, and institutional clients span the globe. Our
conviction in the value of active management means building partnerships
on openness and trust, channelling expertise from across the business,
and communicating the views of our experts in a timely and relevant way.
For more information go to page 9
Investments by capability
We offer expertise across major asset classes, with investment teams
situated around the world.
For more information go to page 12
Note: All data as at 31 December 2018, unless stated otherwise.
Quantitative Equities
(US$)
44.3bn
2017: 49.9bn
Our quantitative equity manager,
Intech, applies advanced
mathematical and systematic
portfolio rebalancing intended
to harness the volatility of stock
price movements.
Alternatives
(US$)
14.0bn
2017: 19.5bn
A cross-asset class combination
of alpha generation, risk
management and efficient beta
replication strategies.
Janus Henderson Group plc Annual Report 2018
BUSINESS REVIEW 33
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
Self-directed
Intermediary
Institutional
17
44
14
22
4
9
16
51
53
31
US$56.4bn
US$143.1bn
US$129.0bn
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
US$167.6bn
US$72.4bn
US$44.3bn
US$30.2bn
US$14.0bn
North America
EMEA & Latin America
Asia Pacific
US$172.4bn
US$102.7bn
US$53.4bn
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 11
North America
Total AUM
EMEA & Latin America
Asia Pacific
US$172.4bn
Total AUM
US$102.7bn
Total AUM
US$53.4bn
Investment professionals
Distribution professionals
163
321
Investment professionals
Distribution professionals
148
236
Investment professionals
Distribution professionals
50
78
Established North American distribution
network serving a diverse set of clients
across financial intermediaries, institutions
and self-directed channels.
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.
The organic build-out of our Latin America
business is gathering momentum.
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.
Our focus for 2019
Our five strategic priorities:
Produce dependable
investment outcomes
Focus on quality and
stability of investment
performance.
Excel in client
experience
Drive consistent and
continuous improvement.
Increase focus and
operational efficiency
Focus on profitability
and processes.
Enhance proactive risk
and control environment
Demand reliability,
scalability, and simplicity.
Develop new
growth initiatives
Build the businesses
of tomorrow.
Janus Henderson Group plc Annual Report 2018
4
BUSINESS REVIEW
Chairman and
Deputy Chairman’s statement
This has been a year of transformation for Janus Henderson.
We are now a truly global active asset manager and ready to seize
the opportunities that the current volatile markets present to us.
Richard Gillingwater
Chairman
Glenn Schafer
Deputy Chairman
As a result of the Board’s decision, Andrew
Formica left the firm at the end of the year,
after leading the Henderson business and
co-leading the Janus Henderson business for
the past 10 years. We, along with the rest of
the Janus Henderson Board, wanted to thank
Andrew for all that he accomplished through
the 25 years he was with the organisation,
especially his significant efforts in completing
the merger of Janus Capital and Henderson
to create the firm we have today. We wish
Andrew success in all of his future endeavours.
Uncertain markets, Brexit
and regulation
2018 turned out to be a much more eventful
year than many had expected, marked by
political events having a major impact on
financial markets. Trade conflicts and interest
rate concerns following the end of quantitative
easing have dominated the year and brought
about a volatile environment.
Completing the merger integration
2018 marked a year of transition and
tremendous activity for the Group, as the teams
have continued to work tirelessly on delivering
exceptional service to our clients and on the
merger integration. While we projected a
three-year timetable to derive the expected
cost synergies and complete the integration
of our companies into one global asset
management company, we’re pleased to report
that we have substantially completed the
integration of the companies during the year
and exceeded our stated synergy targets –
nearly 18 months ahead of schedule.
As we wrote last year, establishing a common
culture for Janus Henderson was one of the
overarching aims of the Board and Management.
We have made good progress on developing
this common culture and these efforts remain
a priority for the Board going forward. We are
particularly encouraged by the stability of our
investment platform during this period of
transition. Our dedicated and talented investment
teams have come together well and have been
working in a truly collaborative way. This effort
has been supported by a shared focus on active
asset management and client service and has
embodied our ethos of Knowledge. Shared.
Appointment of Richard Weil
as CEO
During the year, we made the decision to appoint
Richard Weil as sole CEO. While not an easy
decision, due to having two highly qualified
candidates, the CEO decision was based on
a very rigorous process over several months,
supported by expert advice from external
consultants. The co-CEO structure was designed
to be temporary to facilitate integration and,
based on the exceptional merger integration
progress, the Board believed it was the
appropriate time for the Company to be led
once again by a sole CEO, with the co-CEO
structure having achieved its goals. This
decision was made with the full support of the
Board, and the Board believes Richard is
the most appropriate individual to take Janus
Henderson to the next level.
Richard brings a breadth of skills and experience
from prior roles in his career where he
successfully led organisations through challenge
and change. His priorities for the business will
continue to be to lead our colleagues and clients
through this period of transition and ensure
Janus Henderson is well-positioned for the
long term.
Janus Henderson Group plc Annual Report 2018
At Janus Henderson,
we believe that our
approach to active asset
management is key
to helping our clients
navigate these uncertain
markets and achieve their
long-term financial goals.”
5
As we write, markets continue to be volatile and
the UK is facing an uncertain outcome with Brexit
looming. Our own Brexit preparations have been
well underway for quite some time, looking at all
possible Brexit impacts in our own distribution
activities. Against this backdrop, the Board
recognises that the asset management industry
continues to face pressure from an ever-present
increase in regulatory change. One of the key
objectives of the Board is to strive to engage and
build very strong relationships with the regulators
in all of the global regions where we operate.
Needless to say, we hope that the outcome of
the current debate in the UK Parliament will lead
to an outcome which preserves, as far as possible,
the UK’s strong financial services industry.
The outlook for markets in 2019 looks set
to be as varied and unpredictable as the last
12 months, given the unprecedented nature
of some key aspects of the current
macroeconomic environment and the fact
that both policy and geopolitical uncertainty
continue to remain high. At Janus Henderson,
we believe that our approach to active asset
management is key to helping our clients
navigate these uncertain markets and achieve
their long-term financial goals.
Balance sheet and capital return
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.
As we wrote last year, we would look to return
excess capital to shareholders as integration
efforts bedded down and the short-term need
for cash abated, and when capital generation
outweighed opportunities to organically invest
in the business. This approach has been
demonstrated this year by announcing and
completing the Group’s first on-market share
buyback of US$100 million. We will continue
to look to return excess capital to shareholders
following the Board’s stated approach.
Dai-ichi Life Holdings Inc. and
Janus Henderson: a growing
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 strengthening
their support as shareholders by increasing
their shareholding in Janus Henderson to 16%,
but also for their continued support in growing
our Japanese business; and more recently, in
expanding our business through opportunities
with their wholly-owned subsidiaries. We are
grateful for their partnership and look forward
to continuing to nurture the relationship in the
years to come.
Conclusion
In concluding, as well as thanking our fellow
Board members for their commitment, we wish
to thank retiring Board member, Sarah Arkle,
for the invaluable advice and experience she
has brought to the Group for more than six years.
We express our thanks to all our colleagues at
Janus Henderson for a successful year and
also to our clients and shareholders for their
continuing support.
As Janus Henderson evolves from a period of
transformation, we are now a truly global active
asset manager with a deep and diverse product
range and strong distribution capabilities in the
major global investment markets. We have a
talented leadership team and we are fully ready
to seize the opportunities that the current
volatile markets present to us, with the balance
sheet strength to weather market downturns.
Richard Gillingwater
Chairman
Glenn Schafer
Deputy Chairman
Janus Henderson Group plc Annual Report 2018
6
BUSINESS REVIEW
Chief Executive Officer’s statement
2018 was another integral year for Janus Henderson,
one marked by continued transformation across the firm
and ongoing challenges across the competitive landscape.
Richard Weil
Chief Executive Officer
Throughout the year, our teams have been
focused on delivering results and returns for
our clients, while completing the integration
work that is required to build a truly global asset
management company. When we announced
our merger more than two years ago, we said
the benefits of the combination for clients,
shareholders and employees would be fourfold.
First, it would expand our distribution, enabling
us to better serve our clients. Second, it would
create a world-class global investment team
positioned to deliver more consistent results for
our clients. Third, it would improve our financial
flexibility allowing us to invest in the business
throughout market cycles, which should lead to
stronger returns for our shareholders. Finally, we
believed it would allow us to build a common
culture that grows, attracts and retains the
most talented professionals in our industry.
As we reflect on these tenets, it is clear that
they all still ring true.
• Building stronger long-term partnerships:
during 2018, we served over 20 million
clients around the world who trusted
us with more than US$70 billion of new
business and we are seeing deeper
engagement with our global clients.
• Solid long-term performance: our deep
bench of investment professionals continued
to deliver results for our clients with over 70%
of firm-wide AUM beating its respective
benchmarks over the trailing five years.
• Long-term value creation: full year 2018
adjusted operating margins were 39%
reflecting the firm’s strong financial position,
which will provide the flexibility for us to
invest in the business.
• Synergy realisation: we have substantially
completed the integration, realising
US$125 million of annualised cost synergies
nearly a year and a half ahead of the
original timeline.
• Building a common culture: we continue
to establish the firm’s culture around our
ethos of Knowledge. Shared, which is allowing
us to better serve the needs of our clients and
attract new talent and expertise to the team.
Janus Henderson Group plc Annual Report 2018
Despite all of the progress we have made,
2018 also saw ongoing pressures across the
business as we worked through a number of
areas of underperformance, faced increased
competitive pressures and continued to navigate
the growing swell of regulatory change around
the globe.
All this said, today we are more convinced
of the potential value we can create for our
shareholders in the years to come. Whilst the
path will not be linear, we know long-term
success will be determined by our ability to
deliver exceptional service to our clients,
profitably grow assets under management,
increase our market share across our existing
businesses and develop growth drivers to
build the businesses of tomorrow – we are
committed to these ambitions.
2018 results
Across the global equity markets, 2018
reflected a year of volatility. One well-known
measure of US retail investor sentiment (the
Bull-Bear spread) perfectly illustrated the
degree of volatility that we saw impact the
market throughout the year. In January, this
spread was in the top 97% of all-time readings,
by the end of December, the spread had fallen
below the third percentile of all-time readings,
reflecting the sheer contrast of market sentiment
over the course of the year.
Against this backdrop, our investment
performance during the year was mixed
across our diverse set of capabilities. As at
31 December 2018, over the one-, three- and
five-year time periods, Janus Henderson had
55%, 61% and 72% of assets outperforming
their respective benchmarks. As an active
manager, we believe that during periods of
volatility, like we experienced in 2018, we have
the opportunity to set ourselves apart from the
competition; it is these times when our
investment discipline, collaborative thinking
and innovative ideas can deliver true value
for our clients. Our investment team remains
committed to identifying areas with meaningful
intrinsic value and unlocking that value for
our clients.
7
Janus Henderson finished the year with
US$329 billion of assets under management,
a decline of 11% from a year ago, driven by
US$24 billion of market decline and changes
in currency rates, as well as US$18 billion of
net outflows.
Despite the negative markets in the fourth
quarter, average AUM was up 6% over the prior
year, which drove higher management fees and
led to a 1% increase in adjusted total revenue
compared to 2017. Full year adjusted operating
margin continued to be very healthy at 39%,
and adjusted diluted EPS for the year was
US$2.74, compared to US$2.48 in 2017.
The 10% increase in adjusted EPS was driven
primarily by a reduction in the full year tax rate,
as a result of the tax reform that took place in
the US.
The business continues to generate meaningful
cash flow, and we remain committed to returning
excess cash to shareholders through a mix of
dividends and share buybacks. We initiated and
completed a US$100 million share buyback
programme during the year, in addition to
returning US$275 million through our regular
quarterly dividend. Looking forward, as we
generate excess cash, we will continue to follow
the capital return philosophy we have previously
laid out, evaluating and balancing ongoing
investments in the business with external
opportunities we see, and when excess cash
remains, returning that capital to shareholders.
Completion of integration
I am very pleased that during 2018 we were able
to substantially complete our integration efforts.
This delivery was nearly 18 months ahead of
the original timeline we set out to achieve, and
was made possible by the hard work and
commitment of our employees. Since the
announcement of the merger, we knew our
ability to derive the true benefits for clients,
shareholders and employees were largely
dependent on the success of our integration
efforts. The quality of the work by our team has
been exemplary and I am very pleased that due
to these efforts we have been able to realise
our targeted cost synergies of US$125 million
well ahead of plan.
US retail investor sentiment on stocks – Bull-Bear Index
80
60
40
20
0
-20
-40
-60
-80
January 2018
Bullish
Bearish
Bull-Bear Index
December 2018
88
93
98
03
08
13
18
Source: Bloomberg, as at 31 December 2018. Spread is difference between bullish and bearish
readings of the weekly survey of the American Association of Individual Investors.
Investment management overview
From an investment perspective, it is fair to say
that the year was one of mixed fortunes.
Success in certain areas was diminished by
weakness elsewhere. Our over-riding goal is to
deliver dependable investment outcomes that
meet our clients’ objectives. In that regard, while
our aggregate three- and five-year performance
figures are strong outside of Quantitative
Equities, there is no escaping our disappointment
with our one-year figures. While Equities, our
largest capability, and Multi-Asset did well, we
need to do better in the other areas.
Equities
A key strength of the Equities business at
Janus Henderson is its breadth, from traditional
core domestic equities to more specialised
investing, such as technology, healthcare and
real estate. During 2018, we saw continued
strong performance among many of the
traditional US equity strategies, and several
of our specialised equities portfolios were
among our top performers, delivering both
outperformance for clients and positive fund
flows. They highlight the global nature of the
Company, encompassing teams based in the
US, the UK, Singapore and Australia.
Additionally, we continued to build out our
offering with the launch of a biotechnology fund
in Europe that allows more investors to access
the expertise of our highly regarded life sciences
team in Denver. In Australia, the natural resources
team won a number of large institutional
mandates during the year, while retail investors
continued to be attracted to our global
sustainable equity offering, which captures the
growing trend for investment in companies that
are both profitable and positively impact society.
Overall, our Equity capability had net outflows
of US$10 billion, which was driven by significant
outflows from our European equity strategies
that experienced notable underperformance.
This reflected a combination of softer economic
growth, political tension and the region’s smaller
representation in technology companies. It is
not unusual for money to rotate in and out
of the region and we continued to invest in
our European equities business, recruiting
experienced fund managers and analysts
to ensure that we remain top-of-mind with
investors. The majority of these strategies have
seen improved returns during the year, but the
improvement needs to be sustained for a longer
period of time before it is significant enough to
gain clients’ attention.
Janus Henderson Group plc Annual Report 2018
8
8
BUSINESS REVIEW
Chief Executive Officer’s
statement continued
Investment performance by capability
Percentage of AUM outperforming benchmark
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total
AUM
(US$bn)
1 year
3 years
5 years
167.6
67%
55%
71%
72.4
44.3
30.2
14.0
36%
88%
93%
20%
11%
15%
81%
90%
91%
35%
94%
100%
328.5
55%
61%
72%
Note: Investment performance data represents percentage of AUM outperforming the relevant benchmark.
Full performance disclosures detailed on page 180.
Fixed Income
Fixed income markets were volatile, with an
initial expectation of rising yields giving way to a
decline as the year progressed. Question marks
over the robustness of corporate earnings and
debt levels caused credit spreads to widen,
weighing on corporate bond returns. There was
some rotation away from core fixed income
towards more defensive or strategic strategies,
which led to inflows for our strategic fixed
income and absolute return strategies as
the year progressed.
Overall, Fixed Income net outflows were
US$4 billion for the year, driven by redemptions
in the US and Europe, offset by continuing
momentum in the Asia Pacific region, particularly
in Australia. Once again, Australia was a key
source of growth capturing positive net flows
across both retail and institutional clients for
the year.
Encouragingly, in 2018, we continued to see
net inflows across a number of our largest US
equity strategies, driven by some very strong
long-term investment returns delivered by the
team, and we are very pleased that we are
continuing to take market share in the active
equity business among US intermediaries.
Many of our strategies appealed to investors,
spurred by strong long-term track records across
platform and capitalisation ranges. Our flagship
portfolios in the mid- and small-cap space
continued their record of strong performance
and inflows, as did several of our large cap
and concentrated growth strategies. With the
continued outperformance of growth stocks,
value strategies were frequently in less demand
and our Perkins range typically experienced
outflows as did some of our international
equity funds as US investors often favoured
a domestic bias.
Our determination to invest for the long term bore
fruit in our emerging market equities business,
which secured several new institutional
mandates from around the world during 2018
to lift strategy assets to US$5 billion. Similarly,
our enhanced index strategies, which add an
active element to a passive approach continued
to attract the attention of global institutions.
Janus Henderson Group plc Annual Report 2018
Our expertise in offering investors access
to secured credit asset classes not typically
found in traditional fixed income portfolios led
to flows into multi-asset credit and multi-sector
fixed income. We continued to build out our
securitised debt offerings through the launch
of a mortgage-backed securities exchange-
traded fund (ETF), which helps fill the white
space between actively managed funds and
passive indices.
A key goal in 2018 was to bring the teams under
a more global structure, the most prominent of
which was the establishment of a Global Bonds
team that linked the US, London and Sydney.
Quantitative Equities
The year-long divergence in capital concentration
between the US and international markets,
along with a sharp reversal from momentum to
defensive stocks in the fourth quarter, led
to mixed 2018 performance for Intech, the
quantitative equity subsidiary. The market
rewarded Intech’s Low Volatility Equity strategies,
while hampering the firm’s traditional Relative
Risk strategies.
In 2018, net outflows of US$2 billion were
US$6 billion better than the prior year, with
inflows from EMEA offset by outflows from
Asia. However, due to underperformance in
2018, the Quantitative Equities business will
likely face headwinds in 2019.
Over the course of the year, we launched Intech
Equity Market Stress MonitorTM, an innovative
web-based resource to help clients monitor
market risk, extended the absolute return
platform with Intech Global Absolute Return,
and introduced Intech Global Minimum Volatility
FactorPlus, which applies Intech’s relative risk
process to a popular factor benchmark.
Additionally, the Intech team published a paper
with the London School of Economics, which
Savvy Investor recognised as one of the Best
Factor Investing Papers in 2018.
Janus Henderson Group plc Annual Report 2018BUSINESS REVIEW 99
Client relationships and brand
A key driver of the Janus Henderson merger
was the benefits it would deliver to clients
through the enhanced distribution of world-
class capabilities and solutions. Greater breadth
of opportunity and depth of insight are, we
believe, key to the future of client relationships.
Global connections
In 2018, we were excited to be able to connect
our investment expertise with new markets.
New systems were introduced, integration
projects completed, client support teams
strengthened and distribution teams came
together to deliver global solutions.
The benefits are already being seen. At an
institutional client level, we are now able to offer
strategies and services befitting the world’s
largest global investors. This was evidenced
by wins with clients who, prior to the merger,
would not have considered our businesses
large enough to partner with.
It has also resulted in investment capabilities
that were previously only offered to investors
in single regions being easier to access globally,
thanks to product development and greater
cross-border collaboration. This included our
Global Life Sciences and Balanced franchises,
run out of the US, garnering client interest in
Europe and Asia, while our UK-based Emerging
Market and Strategic Fixed Income teams saw
demand from North America. Elsewhere our
Absolute Return Income offering is being opened
up to meet widespread demand, while the asset
allocation expertise of our Adaptive Multi-Asset
team is being utilised by clients in Asia.
Establishing a connection between clients’
investments and their tangible impact formed a
key part of our marketing activity. One example
was our global disruption-themed campaign,
whereby our managers shared their thinking
on the power of disruption across industries
and geographies and why they are focused on
companies that are helping investors stay on
the right side of change. Another powerful
example was a video in which one of our client
portfolio managers with diabetes demonstrated
how technology from a company invested in by
our Global Life Sciences team was helping her
to pursue her passion of long-distance running.
Regional picture
On a regional flows basis, 2018 saw our EMEA
and Latin America business experience
challenges with allocations away from some of
our core product areas. We did, however, see
interest and mandate wins in our global bond
capabilities and specialist equity offerings. In the
US, flows were healthy for the first nine months,
before the general ‘risk-off’ move in the fourth
quarter caused these to reverse. The US advisor
channel, however, achieved notable gross sales
growth and market share gains. There were also
wins with our Adaptive Multi-Asset team and
our extensive US research capability. In Asia
Pacific, flows were positive as a result of
strengthening relationships with Dai-ichi Life,
inflows into Intech, our quantitative equities
subsidiary, and strong sales into our Fixed
Income and Balanced franchises. The Asia
ex-Japan distribution team also underwent a
restructuring to better take advantage of the
region’s strong growth tailwinds.
Multi-Asset
Multi-Asset flows during the year were strong
with US$2 billion of net inflows, a 6% organic
growth rate. This result was driven by net inflows
in the Balanced portfolios as a result of the
strategy’s exceptional investment performance
and the global strength of our distribution team.
In uncertain times, its active mix of assets,
experienced team and solid track record was a
winning formula. The strategy generated positive
flows across all three regions of business,
including both intermediary and institutional
clients showing the cross-selling benefits of the
merger. The dynamic and adaptive asset
allocation products managed from Denver also
attracted positive flows globally. Within Europe,
the cautious managed strategy suffered outflows
as Brexit concerns weighed on UK assets,
although the core income proposition began
to see some momentum.
In December, we announced the hiring of
Michael Ho, who will oversee both Multi-Asset
and Alternatives. His role is to help expand these
divisions as well as bringing the two areas
closer together since there is a natural overlap
in terms of portfolio blending and constructing
solutions for investors. His arrival at the Executive
Committee level underscores our commitment
to these capabilities.
Alternatives
Alternatives net outflows for the year were
US$4 billion, compared to slight inflows in the
prior year. Investor nervousness surrounding
Brexit weighed on the UK Property PAIF and
underperformance in our UK Absolute Return
strategy led to considerable withdrawals.
During the year, we merged smaller Alternatives
teams into a single Diversified Alternatives
team; this brings former Janus and Henderson
capabilities together into a single global team,
which better positions our investment capability
and improved institutional credibility. We engaged
in a successful roadshow with the new team on
risk premia products, which paves the way for a
key sales initiative in 2019.
Janus Henderson Group plc Annual Report 2018
Janus Henderson Group plc Annual Report 2018 Overall, I remain optimistic about the outlook for
our business. With the strength of the existing
team, augmented by the talent and leadership
we have recently added, I believe the firm is
positioned well for the future. The Executive
Committee remains focused on building a
balance between business discipline and
appropriate reinvestment in our business
to maximise profits over the medium term.
I believe in our potential, in the progress we are
making and, most of all, in our people. We are
taking the right steps as a firm to deliver on our
promises to our clients, our shareholders and
our employees, and I am confident that if we
continue to successfully execute our initiatives
that we will be a stronger, and more globally
diverse firm.
Richard Weil
Chief Executive Officer
Volatility challenges
The fourth quarter’s equity market volatility and
client ‘de-risking’ proved a timely reminder to many
of the importance of diversification. Against this
challenging backdrop, clients tell us they need
greater support and place even more value on
partnerships and insight that allow them to make
better-informed investment and business
decisions. This has shaped our Knowledge.
Shared approach which seeks to provide timely
and relevant expert insight as part of an ongoing
dialogue with clients. It is an approach that
received external validation through 2018 with
awards won in North America and Europe based
on digitally delivered content. Additionally, our
Knowledge Labs consultancy and training
programmes, and recognition of innovation
within our Knowledge Exchange client events
provide further opportunities for us to partner
with our clients. These will be further enhanced
in 2019 with our new web platform coming
online, a new client relationship management
(CRM) system and technology being utilised,
taking client experience to the next level.
Outlook
In our industry, there are always many factors
which we cannot control – markets, client
behaviour and industry trends – but the important
thing is to continue to make progress in the
areas we do control. As we look forward, we do
not expect the competitive pressures we face
to abate; rather we expect those to become
stronger. We also do not see a slowdown in the
regulatory change our industry is facing, and
we see no reversal in the increased volatility
that the markets demonstrated in 2018. In this
environment, our most important challenge
as a company will be managing our business
effectively with a strong and stable team, process
and philosophy, while maintaining a sound focus
on financial discipline. If we do this, we will be
successful in delivering on the aspirations of
what we hope to be as a firm, and we will deliver
market-leading returns to our shareholders.
10
10
BUSINESS REVIEW
Chief Executive Officer’s
statement continued
Four key themes impacting
the distribution landscape
Solutions-based outcomes
Inputs and outputs matter to an ever-greater
extent. Large clients are increasingly interested
in specific outcomes and how best we might
be able to blend capabilities in seeking to
deliver on these. This can be linked to
Environmental, Social and Governance
criteria or combining investment styles and
techniques as part of a multi-asset solution.
Institutionalised selection
Manager selection and monitoring is becoming
increasingly sophisticated. The ever-greater
use of gatekeepers to shape buy lists means
selection decisions rest with fewer individuals.
Equally, the analysis and monitoring of
managers is ever more advanced. That is
why we continue to invest in the systems
and global connectivity to deliver reporting
and insights at pace, along with client
support teams able to add value through
timely updates.
Increased transparency
Clients and regulators are expecting
ever-greater levels of information and
transparency of approaches across global
markets. Clients are rightly analysing when
the potential added-value from exposure to
a particular investment style or process makes
it worthwhile to pay higher fees. They are
also looking for expertise in the most
cost-effective and appropriate share class,
wrapper or vehicle. We are proud to have
the flexibility to deliver a range of options
and the product development capabilities
to stay at the forefront of this change.
Return of volatility
Many clients this year have been reassessing
whether their focus and allocations are
right for the environment ahead. It is in
these conditions that the value of active
management can prove its worth with the
blending of strategies and risk overlays
opening up paths to investment returns less
correlated to broader equity market moves.
For this reason we continue to innovate
with new solutions, risk management and
enhanced portfolio construction techniques.
Janus Henderson Group plc Annual Report 2018
Janus Henderson Group plc Annual Report 2018BUSINESS REVIEW 1111
Global distribution footprint1
Global distribution professionals
Total Group AUM (US$)
635
North America
328.5bn
EMEA & Latin America
Asia Pacific
Distribution professionals
Distribution professionals
Distribution professionals
321
Total AUM (US$)
236
Total AUM (US$)
172.4bn
102.7bn
78
Total AUM (US$)
53.4bn
Growth opportunities
• Leverage strong long-term track records
• Leverage increased distribution footprint,
• Maximise strategic partnership with
in flagship portfolios
driving cross-selling opportunities
Dai-ichi Life and its partners
• Continue to expand institutional business
through depth and breadth of investment
strategy offering
• Maintain UK market share and capitalise
on retail opportunities in Europe
• Institutional opportunities in Europe
• Build brand presence, with Knowledge.
and Middle East
Shared ethos
• Develop relationships with global
financial institutions
• Capitalise on opportunities within
Latin America
• Build on strong brand presence to
leverage enhanced product suite
• Leverage the strong capabilities of our
fixed income and natural resources
teams in Australia
• Continue to build on cross-selling
momentum in broader Asia
Pacific region
1. Location of client assets of US$20m or more as at 31 December 2018.
Janus Henderson Group plc Annual Report 2018 12
12
BUSINESS REVIEW
Investments by capability
We offer expertise across
major asset classes, with
investment teams situated
around the world.
Equities
We offer a wide range of equity strategies
encompassing different geographic focuses
and investment styles. The equity teams
include those with a global perspective,
those with a regional focus – US, Europe
and Asia – and those invested in specialist
sectors. These teams generally apply
processes based on fundamental
research and bottom-up stock picking.
Fixed Income
Our Fixed Income teams provide coverage
across the asset class, applying a wide range
of differentiated techniques. These teams
include those adopting global unconstrained
approaches through to those with more
focused mandates. The capabilities of these
teams can be accessed through individual
strategies and are combined where appropriate
to form multi-strategy offerings.
Equities AUM (US$)
Fixed Income AUM (US$)
167.6bn
72.4bn
Investment outperformance
Investment outperformance
1 year 3 years 5 years
1 year 3 years 5 years
Equities
67% 55% 71%
Fixed Income
36% 88% 93%
Largest pooled funds
Largest pooled funds
Funds
JnsHnd Enterprise
JnsHnd Research
JnsHnd Forty
JnsHnd Triton
JnsHnd Growth and Income
AUM
31 Dec 2018
(US$bn)
16.4
12.1
11.0
9.7
5.1
Funds
JnsHnd Flexible Bond
JnsHnd Absolute Return
JnsHnd Strategic Bond
JnsHnd Tactical Income
JnsHnd Euro Corporate Bond
AUM
31 Dec 2018
(US$bn)
6.3
4.3
2.6
2.3
1.4
Janus Henderson Group plc Annual Report 201
Note: Investment performance data represents percentage of AUM outperforming the relevant benchmark. Full performance
disclosures detailed on page 180.
Janus Henderson Group plc Annual Report 2018BUSINESS REVIEWPage Title L1Introduction Line L1 Red Introduction Line L1 Red Introduction Line L1 Red Introduction Line L1 Red Introduction Line L1 Red Introduction Line L1 Red Introduction Line L1 Red
1313
Quantitative Equities
Our Quantitative Equities business, known under
the brand Intech, applies advanced mathematics
and systematic portfolio rebalancing intended
to harness the volatility of movements in stock
prices – a reliable source of excess returns and
risk control. With over 30 years of volatility
expertise, the Intech team employs a distinctive
quantitative approach based on observations
of actual price movements, not on subjective
forecasts of companies’ future performance.
Multi-Asset
Janus Henderson Multi-Asset includes teams
in the US and UK. In the US, our teams manage
US and global asset allocation strategies. In the
UK, we have asset allocation specialists,
traditional multi-manager investors and those
focused on alternative asset classes.
Alternatives
The Janus Henderson Alternatives grouping
includes teams with different areas of focus
and approach. The Diversified Alternatives team
brings together a cross-asset class combination
of alpha generation, risk management and
efficient beta replication strategies. These include
multi-strategy, liquid alternatives, absolute return,
agriculture and global commodities/managed
futures. Finally, the investment management of
our direct UK commercial property offering is
sub-advised to Nuveen Real Estate.
Quantitative Equities AUM (US$)
Multi-Asset AUM (US$)
Alternatives AUM (US$)
44.3bn
30.2bn
14.0bn
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
20% 11% 15%
Multi-Asset
81% 90% 91%
Alternatives
35% 94% 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.
Enhanced Equity
Active Core Equity
Adaptive Volatility Equity
Low Volatility Equity
Absolute Return
Low Tracking
Error Relative
Return
Objective
Low Standard
Deviation
Absolute
Return
Objective
Funds
JnsHnd Balanced
(US Mutual Funds)
JnsHnd Cautious Managed
JnsHnd Balanced (OEIC)
JnsHnd Multi-Manager
Managed
AUM
31 Dec 2018
(US$bn)
19.5
2.0
1.7
0.4
Funds
JnsHnd UK Absolute
Return (SICAV)
JnsHnd UK Property
PAIF/PAIF Feeder
JnsHnd UK Absolute
Return (OEIC)
JnsHnd Horizon Pan
European Alpha
Alphagen Euro Best Ideas
AUM
31 Dec 2018
(US$bn)
4.0
3.6
2.9
0.8
0.3
Janus Henderson Group plc Annual Report 2018
Janus Henderson Group plc Annual Report 2018 14
GOVERNANCE
Board of Directors
The Board comprises a Non-Executive Chairman,
one Executive Director and eight other
Non-Executive Directors.
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.
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 currently a member of the
Compensation Committee and the Nominating
and Governance Committee.
Richard Weil
Chief Executive Officer
and Executive Director
Richard Weil is 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.
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.
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 Audit Committee and a member of the
Nominating and Governance Committee
and the Risk Committee.
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
the Risk Committee.
Janus Henderson Group plc Annual Report 2018
15
For full Director biographies go to pages 111
to 116, item 10 on Form 10-K – Directors,
Executive Officers and Corporate Governance
Janus Henderson Group plc Annual Report 2018
Eugene Flood Jr.
Independent Non-Executive Director;
Risk Committee Chair
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 the Chair of the Risk Committee
and a member of the Audit Committee and the
Nominating and Governance Committee.
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.
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).
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.
16
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,
one Executive Director and seven 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
year. An overview of the topics addressed by
the Board during the year 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.
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
Janus Henderson Group plc Annual Report 2018
Governance structure
Janus
Henderson
Group plc
Board
Audit
Committee
Compensation
Committee
Nominating
and Corporate
Governance
Committee
Risk
Committee
CEO:
Richard Weil
Executive
Committee
Other
operating
committees
Ethics and
Conflicts
Committee
reporting and other public reports, declarations
and statements remains with the Board. The
Committee is chaired by Jeffrey Diermeier.
Compensation
The Compensation Committee is responsible
for determining the remuneration of the CEO,
certain other executive officers, and the
Group’s independent directors. The Committee
is chaired by Lawrence Kochard.
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 Eugene Flood Jr. who
took over as chair following the resignation of
Sarah Arkle effective 26 February 2019.
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
2018, all Janus Henderson Directors received
presentations on Strategy, Client Experience,
Conflicts of Interest, Side-by-Side Conflict
and Governance.
Relations with shareholders
Janus Henderson conducts an active Investor
Relations (IR) programme, engaging with
shareholders across the Group’s two listings.
In 2018, management and IR conducted over
230 individual meetings with existing and
potential shareholders in London, Sydney,
Melbourne, New York, Boston, Chicago
and Denver.
GOVERNANCE 17
An overview of the topics addressed by
the Board in 2018
February
• Review of Group strategy
• 4Q17 and FY17 results & 4Q17 dividend
• Review of capital plan
• Risk appetite
• Effectiveness of the Group’s system of risk
management and internal controls
May
• 1Q18 results & dividend
• Review of financial plan
• Update on merger integration
• Update on Brexit impact, strategy and
programme
• Update on GDPR compliance and other
regulatory matters
July
• Appointment of sole CEO
• Appointment of General Counsel and
Company Secretary
Risk
n/a
n/a
n/a
n/a
5/5
n/a
5/5
5/5
5/5
n/a
n/a
2018 Director attendance at Board and Committee meetings
Eight meetings were held by the Janus Henderson Group plc Board during 2018,
on: 5 and 27 February, 4 and 8 May, 31 July, 16 and 31 October, and 11 December.
Board and Committee meetings attended
Board and Committee meetings attended
Date
appointed
Board
Audit Compensation
Nominating
and
Governance
Richard Gillingwater
30 May ’17
Glenn Schafer
30 May ’17
Andrew Formica1
30 May ’17
Richard Weil
Sarah Arkle2
30 May ’17
30 May ’17
Kalpana Desai
30 May ’17
Jeffrey Diermeier
30 May ’17
Kevin Dolan
30 May ’17
Eugene Flood Jr.
30 May ’17
Lawrence Kochard
30 May ’17
Angela
Seymour-Jackson
30 May ’17
8/8
8/8
5/5
8/8
8/8
8/8
8/8
8/8
8/8
6/8
8/8
n/a
n/a
n/a
n/a
8/8
8/8
8/8
n/a
8/8
n/a
n/a
6/6
6/6
n/a
n/a
n/a
n/a
n/a
n/a
n/a
6/6
6/6
3/3
3/3
n/a
n/a
3/3
3/3
3/3
3/3
3/3
3/3
3/3
Tatsusaburo
Yamamoto
30 May ’17
8/8
n/a
n/a
3/3
n/a
• 2Q18 results & dividend
Notes
Mr Kochard missed two Board meetings due to scheduling conflicts.
1. Andrew Formica resigned as a Director on 31 July 2018.
2. Sarah Arkle resigned as a Director on 26 February 2019.
This included two roadshows to Australia and
three roadshows to the US to engage with
shareholders following results announcements,
as well as attendance at two investor
conferences in London and one investor
conference in New York. The Chairman also
held calls with shareholders following the sole
CEO announcement.
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 receives
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 IR team
and management have frequent contact
with the 17 sell-side analysts who follow
Janus Henderson.
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.
• Approval of on-market share
buyback programme
• Review of updated capital plan
October
• 3Q18 results & dividend
• Update on Brexit impact, strategy
and programme
• Annual review of Board Committees’
Charters and Governance documents
• Board and Committees self-evaluation
December
• Review of FY18 forecast & 2019 budget
• Review of various Corporate
Governance arrangements
• Update on Brexit impact, strategy
and programme
• Update on FCA matters
Janus Henderson Group plc Annual Report 2018
18
Governance overview
continued
Board skills
Janus Henderson share register (%)
Asset
Management
International
Finance
Risk
Client Focus
Acquisitions
Richard Gillingwater
Glenn Schafer
Richard Weil
Kalpana Desai
Jeffrey Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence Kochard
Angela
Seymour-Jackson
Tatsusaburo
Yamamoto
NYSE listing
Dai-ichi Life Holdings, Inc.
UK Depositary Interests
ASX listing
69
16
2
31
Corporate social responsibility
We believe that a comprehensive Corporate
Social Responsibility (CSR) strategy is critical
for our long-term, sustainable success. We
understand that the best way to deliver value
to our clients is by looking beyond the numbers
and evaluating how our decisions impact our
world. We accomplish this by focusing on
five key CSR pillars: our people; our clients;
the environment; the community; and
responsible investing.
Responsible investment
We believe that the best way to protect and
enhance value is through Environmental, Social
and Governance (ESG) integration and to
empower our investment teams to develop
their own distinct approach for their asset class
and client base. Janus Henderson supports ESG
integration through a framework that includes
a wide range of tools and shared resources
as well as appropriate risk management and
controls. These measures are designed to
ensure investment teams are aware of ESG
risks and opportunities and are meeting client
requirements. Our approach reinforces our
belief that ESG factors are critical ingredients
for long-term business success.
Janus Henderson Group plc Annual Report 2018
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:
The Directors confirm that to the best of
their knowledge:
• the financial records of the Group and
Company have been properly maintained;
• pages 29 to 49, Item 7 on Form
10-K – Management’s Discussion
and Analysis;
• pages 111 to 118, Item 10 on Form
10-K – Directors, Executive Officers
and Corporate Governance; and
• pages 118 to 132, Item 11 on Form
10-K – Executive Compensation.
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 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.
Signed in accordance with a resolution
of the Directors:
Richard Weil
Chief Executive Officer
26 February 2019
Roger Thompson
Chief Financial Officer
26 February 2019
GOVERNANCE
Independent auditors’ report to the members
of Janus Henderson Group plc
19
Report on the audit of the
financial statements
Opinion on the financial statements
We have audited the accompanying consolidated
balance sheets of Janus Henderson Group plc
and its subsidiaries (the “Group”) as of
31 December 2018 and 2017, and the related
consolidated statements of comprehensive
income, consolidated statements of cash flow,
and consolidated statements of changes in
equity for each of the three years in the period
ended 31 December 2018, 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 Group as of 31 December 2018 and 2017,
and the results of its operations and its cash
flows for each of the three years in the period
ended 31 December 2018 in conformity with
accounting principles generally accepted in the
United States of America and have been properly
prepared in accordance with the requirement of
the Companies (Jersey) Law 1991.
Basis for opinion
These consolidated financial statements are
the responsibility of the Group’s management.
Our responsibility is to express an opinion on
the Group’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 Group 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.
Report on other legal and
regulatory requirements
Under the Companies (Jersey) Law 1991 we
are required to report to you if, in our opinion:
• we have not received all the information
and explanations we require for our audit;
• proper accounting records have not been
kept; or
• the consolidated financial statements are not
in agreement with the accounting records.
We have no exceptions to report arising from
this responsibility.
This report, including the opinion, has been
prepared for and only for the members as a
body in accordance with Article 113A of the
Companies (Jersey) Law 1991 and for no other
purpose. We do not, in giving this opinion,
accept or assume responsibility for any other
purpose or to any other person to whom this
report is shown or into whose hands it may
come save where expressly agreed by our prior
consent in writing.
Parwinder Purewal
for and on behalf of
PricewaterhouseCoopers LLP
London, UK
26 February 2019
Janus Henderson Group plc Annual Report 2018
20
FORM 10-K
Form 10-K
Janus Henderson Group plc Annual Report 2018
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, 2018
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
Common Stock, $1.50 Per Share Par Value
Name of Each Exchange on Which Registered
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 every Interactive Data File required to be submitted 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
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
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, 2018, the aggregate market value of common equity held by non-affiliates was $6,342,860,620.74. As of February 22, 2019, there
were 196,412,764 shares of the Company’s common stock, $1.50 par value per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
JANUS HENDERSON GROUP PLC
2018 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
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.
Selected Financial Data
Item 7.
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
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
PART III
Page
3
10
25
25
25
25
26
28
29
49
52
110
110
111
111
118
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 132
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
135
138
139
144
145
2
JANUS HENDERSON GROUP PLC
2018 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
Securities
Item 6.
Selected Financial Data
Henderson Group plc
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Janus
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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 132
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 I
PART II
PART III
PART IV
Page
3
10
25
25
25
25
26
28
29
49
52
110
110
111
111
118
135
138
139
144
145
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. 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.
JHG is a client-focused global business with approximately 2,300 employees worldwide, and assets under management
(“AUM”) of $328.5 billion as of December 31, 2018. 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.
2
3
Clients entrust money to JHG — either their own or money they manage or advise on 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, on investment performance, and as a
function of 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 as 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.
The level of assets subject to such fees can positively or negatively affect JHG’s revenue. As of December 31, 2018,
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 — United States (“U.S.”), Europe
and Asia — and those invested in specific 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 in support of a variety of investment objectives and risk criteria. These teams include those
adopting global unconstrained approaches through to those with more focused mandates — based in the 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.
Multi-Asset
JHG Multi-Asset includes teams in the U.S. and UK. Included are balanced, multi-asset income and strategic asset
allocation, as well as multiple adaptive asset allocation strategies.
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 Diversified Alternatives, including Global Multi-Strategy, Managed Futures, Risk Premia and Global
Commodities; Agriculture; and Long/Short Equity. Additionally, the management of the Group’s direct UK commercial
property offering is sub advised by Nuveen Real Estate.
4
Clients entrust money to JHG — either their own or money they manage or advise on 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, on investment performance, and as a
function of 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 as 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.
The level of assets subject to such fees can positively or negatively affect JHG’s revenue. As of December 31, 2018,
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.
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 — United States (“U.S.”), Europe
and Asia — and those invested in specific sectors. These teams generally apply processes based on fundamental research
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.
JHG’s Fixed Income teams provide coverage across the asset class, applying a wide range of innovative and
differentiated techniques in support of a variety of investment objectives and risk criteria. These teams include those
adopting global unconstrained approaches through to those with more focused mandates — based in the 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.
Investment Offerings
Equities
and bottom-up stock picking.
Quantitative Equities
Fixed Income
Multi-Asset
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 Diversified Alternatives, including Global Multi-Strategy, Managed Futures, Risk Premia and Global
Commodities; Agriculture; and Long/Short Equity. Additionally, the management of the Group’s direct UK commercial
property offering is sub advised by Nuveen Real Estate.
Distribution
Distribution Channels
JHG distributes its products through three primary channels: intermediary, institutional and self-directed. Each channel
is discussed below.
Intermediary Channel
The intermediary channel distributes mutual funds, separately managed accounts (“SMAs”), exchange-traded funds
(“ETFs”), UK Open Ended Investment Companies (“OEICs”), Société d’Investissement À Capital Variable (“SICAV”)
and Undertakings for Collective Investments in Transferable Securities (“UCITS”), through financial intermediaries
including banks, broker-dealers, financial advisors, 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, 2018, AUM in the intermediary channel totaled $143.1 billion,
or 44% of total Group AUM.
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,
2018, AUM in the institutional channel totaled $129.0 billion, or 39% of total Group AUM.
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 the VelocityShares brand are also
part of the self-directed channel, although they are targeted at sophisticated institutional and other investors. At
December 31, 2018, AUM in the self-directed channel totaled $56.4 billion, or 17% of total Group AUM.
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.
JHG’s brand proposition centers on the value that the firm offers through active management and the concept 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.
JHG Multi-Asset includes teams in the U.S. and UK. Included are balanced, multi-asset income and strategic asset
Products and Services
allocation, as well as multiple adaptive asset allocation strategies.
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,
4
5
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 generally 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 from 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.
Regulation
The investment management industry is subject to extensive federal, state and international laws and regulations
intended to benefit and protect investment advisory clients and investors in pooled investment vehicles, such as those
managed, advised or subadvised by 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 asset manager. 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 self-
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 Advisory Laws and Regulations
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,
6
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 generally 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 from 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.
The investment management industry is subject to extensive federal, state and international laws and regulations
intended to benefit and protect investment advisory clients and investors in pooled investment vehicles, such as those
managed, advised or subadvised by 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 asset manager. 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.
Regulation
U.S. Regulation
Certain of JHG’s U.S. subsidiaries are subject to laws and regulations from a number of government agencies and self-
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 Advisory Laws and Regulations
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, custodial obligations, operational procedures, registration and reporting requirements, and
disclosure obligations. Certain employees of JHG are also registered with regulatory authorities in various states, and
thus are subject to the oversight and regulation by such states’ regulatory agencies.
Investment Company Laws and Regulations
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 pooled investment vehicles that operate under exemptions to 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 subsidiary Janus Distributors LLC dba Janus Henderson Distributors (“JHD”) is registered with the SEC under
the Exchange Act and is a member of FINRA, the U.S. securities industry’s self-regulatory organization. JHD is a
limited-purpose broker-dealer, which acts as the general distributor and agent for the sale and distribution of shares of
U.S. mutual funds that are sponsored by certain of JHG’s subsidiaries, as well as the distribution of certain
exchange-traded products (“ETPs”) and other pooled investment vehicles. The SEC imposes various requirements on
JHD’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.
JHD 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 investment advisory 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
Certain JHG subsidiaries are registered with the CFTC as commodity pool operators (“CPOs”) and/or commodity
trading advisers (“CTAs”), and become a member of the National Futures Association (“NFA”) in connection with the
operation of certain of the Group’s products. The Commodity Exchange Act and related regulations generally impose
certain registration, reporting and disclosure requirements on CPOs, CTAs and products that utilize the 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.
6
7
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 financial institutions (“SIFI”) by the Financial Stability Oversight Council (“FSOC”). 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, potentially including large asset managers, as SIFI. Since that time, the FSOC has considered and
invited comments on the circumstances under which asset managers might present risks to financial stability. While the
FSOC still retains discretion to designate asset managers as SIFI, it has not named any non-bank asset managers as SIFI
to date. 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.
International Regulation
UK
The Financial Conduct Authority (“FCA”) regulates certain JHG subsidiaries, products and services offered and
managed in the UK. FCA authorization is required to conduct any investment management business in the UK under the
Financial Services and Markets Act 2000 (the “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 largely by adoption of European fund directives 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 entities 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”) has and will have a substantial impact on the EU financial services sector, including on 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
8
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 financial institutions (“SIFI”) by the Financial Stability Oversight Council (“FSOC”). 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, potentially including large asset managers, as SIFI. Since that time, the FSOC has considered and
invited comments on the circumstances under which asset managers might present risks to financial stability. While the
FSOC still retains discretion to designate asset managers as SIFI, it has not named any non-bank asset managers as SIFI
to date. 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.
International Regulation
UK
The Financial Conduct Authority (“FCA”) regulates certain JHG subsidiaries, products and services offered and
managed in the UK. FCA authorization is required to conduct any investment management business in the UK under the
Financial Services and Markets Act 2000 (the “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 largely by adoption of European fund directives 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 entities 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”) has and will have a substantial impact on the EU financial services sector, including on 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 a
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 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”), JHG 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.
8
9
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, 2018, JHG had 2,301 full-time equivalent employees. None of JHG’s employees are represented by
a labor union.
Available Information
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://janushenderson.com/ir). The
contents of JHG’s website are not incorporated herein for any purpose. 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’s Officer Code of Ethics for Chief Executive Officer and Senior Financial Officers (including its Chief Executive
Officer, 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, Risk 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.
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.
10
Other
Employees
a labor union.
Available Information
As of December 31, 2018, JHG had 2,301 full-time equivalent employees. None of JHG’s employees are represented by
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://janushenderson.com/ir). The
contents of JHG’s website are not incorporated herein for any purpose. 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’s Officer Code of Ethics for Chief Executive Officer and Senior Financial Officers (including its Chief Executive
Officer, 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, Risk 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
+44 (0)20 7818 1818.
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
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.
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.
The Group’s operations in Taiwan and Ireland are regulated by the Financial Supervisory Commission of Taiwan and
the Central Bank of Ireland, respectively.
JHG’s results of operations and financial condition are primarily dependent on the value, composition and relative
investment performance of its investment products.
Market and Investment Performance Risks
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, 2018, approximately 21% 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,
2018, 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 AUM 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 or investors reallocating
investments to lower-fee strategies; 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 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
10
11
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 ETN and ETF 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 ETP’s shares fluctuates continuously throughout trading hours. While an ETP’s
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 ETF’s net asset value (“NAV”), exchange prices may deviate significantly from
the ETP’s 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 ETP’s arbitrage mechanism to function effectively, or significant
market volatility. If market events lead to instances where an ETP trades at prices that deviate significantly from the
ETP’s 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.
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, 2017, the UK
Pension Scheme had a surplus of £12.0 million on a technical provisions basis. 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;
12
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 ETN and ETF 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 ETP’s shares fluctuates continuously throughout trading hours. While an ETP’s
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 ETF’s net asset value (“NAV”), exchange prices may deviate significantly from
the ETP’s 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 ETP’s arbitrage mechanism to function effectively, or significant
market volatility. If market events lead to instances where an ETP trades at prices that deviate significantly from the
ETP’s 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.
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, 2017, the UK
Pension Scheme had a surplus of £12.0 million on a technical provisions basis. 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 that 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 U.S. dollar (“USD”), JHG’s financial reporting currency,
through its non-U.S. operations. Fluctuations in the exchange rates to the USD 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.
The Group’s expenses are subject to fluctuations that could materially affect its operating results.
The Group’s results of operations are dependent on its level of expenses, which can vary significantly from period to
period. The Group’s expenses may fluctuate as a result of, among other things, changes in the level and scope of its
operating expenses in response to market conditions or regulations, variations in the level of total compensation expense
due to, among other things, bonuses, merit increases and severance costs, changes in its employee count and mix, and
competitive factors, expenses incurred to support distribution of its investment strategies and services, expenses incurred
to develop new strategies and services, expenses incurred to enhance JHG’s technology, compliance and other
infrastructure, impairments of intangible assets or goodwill, and the impact of inflation. Increases in the level of
expenses of the Group, or its inability to reduce the level of expenses when necessary, could materially affect its
operating results.
JHG could be adversely impacted by changes in assumptions used in calculating pension assets and liabilities.
Business and Strategic Risks
JHG may fail to successfully implement a strategy for the combined business, which could negatively impact the
Group’s AUM, results of operations and financial condition.
Through the combination of JCG and Henderson, the Group intended 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 quantitative funds. Fees for actively managed investment products may continue
12
13
to 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 competes with investment management companies on the basis of investment performance, fees,
diversity of products, distribution capability, scope and quality of services, 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 AUM, 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. In order to retain certain key personnel, the
Group may be required to increase compensation to such individuals, resulting in additional expense. Laws and
regulations could impose restrictions on compensation paid by financial institutions, which could restrict the Group’s
ability to compete effectively for qualified professionals. 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 number of third
parties distributing JHG’s investment products or increased competition to access third-party distribution channels.
Moreover, fiduciary regulations have led to significant shifts in distributors’ business models and more limited product
offerings, and additional regulations could lead to further changes, potentially resulting in reduced distribution of certain
of the Group’s products. The inability of JHG 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; regulation and enforcement; expropriation; nationalization; asset confiscation; and changes in
legislation related to non-U.S. ownership. Individual financial, equity, debt and commodity markets may be adversely
affected by financial, economic, political, electoral, diplomatic or other instabilities that are particular to the country or
region in which a market is located, including without limitation local acts of terrorism, economic crises, political
protests, insurrection or other business, social or political crises. Global economic conditions, exacerbated by war,
terrorism, natural disasters or financial crises, changes in the equity, debt or commodity marketplaces; changes in
currency exchange rates, interest rates, inflation rates and the yield curve; defaults by trading counterparties; bond
defaults; revaluation and bond market liquidity risks; geopolitical risks; the imposition of economic sanctions; and other
factors that are difficult to predict, affect the mix, market values and levels of JHG’s AUM. 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 Group. 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. Local regulatory environments may vary widely in terms of scope, adequacy and
14
to 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 competes with investment management companies on the basis of investment performance, fees,
diversity of products, distribution capability, scope and quality of services, 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 AUM, 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. In order to retain certain key personnel, the
Group may be required to increase compensation to such individuals, resulting in additional expense. Laws and
regulations could impose restrictions on compensation paid by financial institutions, which could restrict the Group’s
ability to compete effectively for qualified professionals. 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 number of third
parties distributing JHG’s investment products or increased competition to access third-party distribution channels.
Moreover, fiduciary regulations have led to significant shifts in distributors’ business models and more limited product
offerings, and additional regulations could lead to further changes, potentially resulting in reduced distribution of certain
of the Group’s products. The inability of JHG to access clients through third-party distribution channels could adversely
affect the Group’s business prospects, AUM, results of operations and financial condition.
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; regulation and enforcement; expropriation; nationalization; asset confiscation; and changes in
legislation related to non-U.S. ownership. Individual financial, equity, debt and commodity markets may be adversely
affected by financial, economic, political, electoral, diplomatic or other instabilities that are particular to the country or
region in which a market is located, including without limitation local acts of terrorism, economic crises, political
protests, insurrection or other business, social or political crises. Global economic conditions, exacerbated by war,
terrorism, natural disasters or financial crises, changes in the equity, debt or commodity marketplaces; changes in
currency exchange rates, interest rates, inflation rates and the yield curve; defaults by trading counterparties; bond
defaults; revaluation and bond market liquidity risks; geopolitical risks; the imposition of economic sanctions; and other
factors that are difficult to predict, affect the mix, market values and levels of JHG’s AUM. 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 Group. 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. Local regulatory environments may vary widely in terms of scope, adequacy and
sophistication. Moreover, regulators in non-U.S. jurisdictions could change their policies or laws in a manner that might
restrict or otherwise impede the Group’s ability to distribute or authorize products or maintain its authorizations in their
respective markets. Similarly, local distributors, and their policies and practices as well as financial viability, may also
vary widely, or be inconsistent or less developed or mature than other more internationally focused distributors. 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, 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 AUM 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 is 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 implementation of new or rationalization of existing systems and processes); the
mismanagement, theft, loss or misuse 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 in repairing any existing harm to its
reputation or performance, and the Group’s future business prospects would likely be affected.
The global scope of JHG’s business subjects the Group to market-specific political, economic and other risks that
JHG has significant goodwill and intangible assets that are subject to impairment.
may adversely impact the Group’s revenue and income generated overseas.
At December 31, 2018, JHG’s goodwill and intangible assets totaled $4,601.3 million. 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 (“U.S. 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 investors 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),
14
15
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, investment funds or other investors may choose to exercise
such termination rights at any time. In addition, the annual review of U.S. mutual funds investment management
agreements, as required by law, could result in a reduction in the Group’s advisory fee revenues. 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.
Failure to properly address conflicts of interest could harm JHG’s reputation, business and results of operations.
JHG’s business requires 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 or its employees. 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, failure to
appropriately manage potential or perceived conflicts or the crystallization of a conflict of interest could give rise to
litigation or regulatory enforcement actions.
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 is 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. The Group’s
use of mobile and cloud technologies could heighten these and other operational risks, and any failure by mobile
technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt the
Group’s operations and result in misappropriation, corruption or loss of confidential or proprietary information.
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
16
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, investment funds or other investors may choose to exercise
such termination rights at any time. In addition, the annual review of U.S. mutual funds investment management
agreements, as required by law, could result in a reduction in the Group’s advisory fee revenues. 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.
Failure to properly address conflicts of interest could harm JHG’s reputation, business and results of operations.
JHG’s business requires 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 or its employees. 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, failure to
appropriately manage potential or perceived conflicts or the crystallization of a conflict of interest could give rise to
litigation or regulatory enforcement actions.
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 is 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. The Group’s
use of mobile and cloud technologies could heighten these and other operational risks, and any failure by mobile
technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt the
Group’s operations and result in misappropriation, corruption or loss of confidential or proprietary information.
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.
Due to the Group’s interconnectivity with third-party vendors, advisors, central agents, exchanges, clearing
organizations and other financial institutions, the Group may be adversely affected if any of them are subject to a
successful cyberattack or other information security event, including those arising due to the use of mobile technology or
a third-party cloud environment. Software applications that JHG uses in its business are licensed from, and supported,
upgraded and maintained by, third-party vendors. A suspension or termination of certain of these licenses or the related
support, upgrades and maintenance could cause temporary system delays or interruption that could adversely impact
JHG’s business. Also, such third-party applications may include confidential and proprietary data provided by vendors
and by JHG. The Group may be subject to indemnification costs and liability to third parties if it breaches any
confidentiality obligations regarding vendor data, for losses related to the data, or if data it provides is deemed to
infringe upon the rights of others.
Finally, cybersecurity and data privacy have become high priorities for regulators, and many jurisdictions are enacting
laws and regulations in these areas. For example, effective from May 2018, the EU significantly increased the potential
penalties for noncompliance with requirements for the handling and maintenance of personal and sensitive data
concerning customers and employees. The Group’s failure to comply with these requirements could result in penalties of
up to 4% of its global revenues, regulatory action and reputational risk. While JHG strives to comply with the relevant
laws and regulations, any failure to comply could result in regulatory investigations and penalties as well as negative
publicity, which could materially adversely affect its business, results of operations and financial condition.
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, 2018) 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 are 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 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 maintain 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 AUM, 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
interest, 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
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17
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, is vital to the operations and
competitiveness of its business. 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, 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.
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 are 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, cease providing their services on short notice 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 are 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 and 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,
18
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, is vital to the operations and
competitiveness of its business. 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, 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.
vendors.
JHG’s business may be vulnerable to failures of support systems and client service functions provided by third-party
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 are 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, cease providing their services on short notice 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.
products.
Failure to maintain adequate business continuity plans could have a material adverse impact on JHG and its
Significant portions of JHG’s business operations and those of its critical third-party service providers are 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 and 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.
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 business, 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 other international markets,
including regulation by the SEC, FINRA, the CFTC, the NFA, ASIC in Australia, the CSSF in Luxembourg 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, and regulations, which are directly applicable without further implementation. 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, to conduct examinations, risk assessments, investigations
and capital adequacy reviews, and to impose remedial programs to address perceived deficiencies. As a result of
regulatory oversight, JHG could face requirements that negatively impact the way in which it conducts business,
increase compliance costs, impose additional capital requirements and/or involve enforcement actions that 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, business, results of operations or financial condition.
18
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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 in recent years, and various other proposals remain under consideration by legislators, regulators
and other government officials and 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,
results of operations or financial condition. JHG 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, results of operations or financial condition. The Trump administration has indicated a desire to repeal, revise or
replace aspects of the Dodd-Frank Act, but the timing and details on specific proposals are uncertain.
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 (Investment
Company Reporting Modernization Reforms) and liquidity risk management (Investment Company Liquidity Risk
Management Rules). The SEC has proposed a new rule that would materially restrict the manner in which many
investment companies use derivatives transactions (swaps, futures and forwards) and financial commitment transactions
(reverse repurchase agreements, but not repurchase agreements), short sale borrowings or any other firm or standby
financial commitment. 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 FSOC has the authority under the Dodd-Frank Act to review the activities of non-bank financial companies
predominantly engaged in financial activities and designate those companies determined to be “systemically important”
for supervision by the Federal Reserve. To date, FSOC has not designated any asset management firms or funds as a
systemically important financial institution. In the unlikely event that such designation were to occur, JHG would be
subject to significantly increased levels of regulation, which includes, without limitation, a requirement to adopt
heightened standards relating to capital, leverage, liquidity, risk management, credit exposure reporting and
concentration limits, restrictions on acquisitions and being subject to annual stress tests by the Federal Reserve.
The full extent of the impact on JHG of the Dodd-Frank Act or any other new laws, regulations or initiatives that may be
proposed, including by the Trump administration, which has expressed support for potential modifications to the
Dodd-Frank Act and other deregulatory measures, and regulatory reform initiatives and enforcement agendas pursued by
regulators such as the SEC and the DOL (which have separately expressed support for investor protection initiatives that
may impact how and to whom certain investment products can be distributed in the U.S.), is impossible to determine.
Such changes have imposed, and may continue to impose, new compliance costs and/or capital requirements or impact
JHG in other ways that could have a material adverse impact on JHG’s business, results of operations or financial
condition. Moreover, certain legal or regulatory changes could require JHG to modify its strategies, businesses or
operations, and these changes may result in the incurrence of 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.
20
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 in recent years, and various other proposals remain under consideration by legislators, regulators
and other government officials and 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,
results of operations or financial condition. JHG 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, results of operations or financial condition. The Trump administration has indicated a desire to repeal, revise or
replace aspects of the Dodd-Frank Act, but the timing and details on specific proposals are uncertain.
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 (Investment
Company Reporting Modernization Reforms) and liquidity risk management (Investment Company Liquidity Risk
Management Rules). The SEC has proposed a new rule that would materially restrict the manner in which many
investment companies use derivatives transactions (swaps, futures and forwards) and financial commitment transactions
(reverse repurchase agreements, but not repurchase agreements), short sale borrowings or any other firm or standby
financial commitment. 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 FSOC has the authority under the Dodd-Frank Act to review the activities of non-bank financial companies
predominantly engaged in financial activities and designate those companies determined to be “systemically important”
for supervision by the Federal Reserve. To date, FSOC has not designated any asset management firms or funds as a
systemically important financial institution. In the unlikely event that such designation were to occur, JHG would be
subject to significantly increased levels of regulation, which includes, without limitation, a requirement to adopt
heightened standards relating to capital, leverage, liquidity, risk management, credit exposure reporting and
concentration limits, restrictions on acquisitions and being subject to annual stress tests by the Federal Reserve.
The full extent of the impact on JHG of the Dodd-Frank Act or any other new laws, regulations or initiatives that may be
proposed, including by the Trump administration, which has expressed support for potential modifications to the
Dodd-Frank Act and other deregulatory measures, and regulatory reform initiatives and enforcement agendas pursued by
regulators such as the SEC and the DOL (which have separately expressed support for investor protection initiatives that
may impact how and to whom certain investment products can be distributed in the U.S.), is impossible to determine.
Such changes have imposed, and may continue to impose, new compliance costs and/or capital requirements or impact
JHG in other ways that could have a material adverse impact on JHG’s business, results of operations or financial
condition. Moreover, certain legal or regulatory changes could require JHG to modify its strategies, businesses or
operations, and these changes may result in the incurrence of 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.
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 investor protection
measures include changes to the extent to which retrocessions may be paid and the use of trading commissions to fund
research. Further such regulatory changes may have a direct impact on the revenue of JHG’s asset management business
should they result in operational changes and increased operational or compliance costs.
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.
There are EU proposals which, if introduced, would mean a revised prudential regime would be applicable to JHG’s EU
subsidiaries that are investment firms for the purposes of MiFID II. The European Commission intends to establish a
new prudential framework for these firms. In summary, the current proposals mean that certain systemically important
firms will be reclassified as credit institutions and will be subject to prudential requirements set out in Capital
Requirements Directive IV (“CRD IV”). All other investment firms will be subject to a new prudential framework,
replacing the requirements set out in CRD IV. Small and non-interconnected investment firms will be subject to limited
prudential requirements. “K-factors” will be used in the classification of investment firms and in the new capital
requirements methodology for investment firms. K-factors are quantitative indicators intended to represent the risks that
an investment firm can pose to customers, to market access or liquidity, and to the firm itself. Investment firms could be
subject to revised regulatory capital, remuneration and governance standards. The European Commission also intends to
use the new regime to tighten requirements relating to the supervision of firms with parent undertakings in third
countries. The aim of the framework is to simplify the prudential classification of investment firms and establish a single
harmonized approach to their prudential requirements. It also seeks to increase proportionality and risk-sensitivity and
reduce the complexity of the existing system.
In April 2018, the FCA published a policy statement outlining its feedback and final rules relating to its Asset
Management Market Study. The final rules and guidance cover a number of areas, including a requirement for managers
of UK funds to make an annual assessment of value (as part of their duty to act in the best interests of the investors in
their funds) and a requirement for managers to appoint a minimum of two independent directors to the boards of
companies managing UK domiciled funds. The final rules and guidance will have staged implementation commencing in
2019.
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, including by placing further downward
pressure on fees. Similarly, regulatory enforcement actions that impose significant penalties or compliance obligations or
that 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
20
21
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 affect the sale of and fees charged by JHG in respect of its products and
services or investment strategies may 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. For example, there are EU proposals which, if introduced, would
mean a revised prudential regime would be applicable to JHG’s EU subsidiaries that are investment firms for the
purposes of MiFID II. For further details, see “―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 business, results of operations or financial condition―Proposed Changes in the European Union Regulatory
Framework.” 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.
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 specify
investment guidelines or requirements that the Group is required to observe in the provision of its services. Laws and
regulations 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 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 terms of the UK’s exit from the EU, expected to take
place on March 29, 2019, are not yet finalized and it is not clear whether there will be a transitional period (currently
expected to be until December 31, 2020, if agreed) during which key elements of the UK’s relationship with the EU
would remain in place, including the ability for UK firms to “passport” services into the EU and vice versa. 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 final terms of Brexit, and despite steps
already undertaken by JHG in preparation for Brexit, JHG will 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. Should UK-based asset management firms lose their
current level of access to the single EU market as a result of Brexit, JHG may incur additional costs due to having to
relocate additional activities to within the EU. For example, should EU investors no longer wish or be able for their own
internal reasons to hold UK domiciled funds as a result of Brexit, this may result in European investors withdrawing
from UK UCITS products managed by JHG, which could negatively impact the results of JHG’s operations and
financial condition.
22
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 affect the sale of and fees charged by JHG in respect of its products and
services or investment strategies may 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. For example, there are EU proposals which, if introduced, would
mean a revised prudential regime would be applicable to JHG’s EU subsidiaries that are investment firms for the
purposes of MiFID II. For further details, see “―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 business, results of operations or financial condition―Proposed Changes in the European Union Regulatory
Framework.” 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.
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 specify
investment guidelines or requirements that the Group is required to observe in the provision of its services. Laws and
regulations 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 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 terms of the UK’s exit from the EU, expected to take
place on March 29, 2019, are not yet finalized and it is not clear whether there will be a transitional period (currently
expected to be until December 31, 2020, if agreed) during which key elements of the UK’s relationship with the EU
would remain in place, including the ability for UK firms to “passport” services into the EU and vice versa. 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 final terms of Brexit, and despite steps
already undertaken by JHG in preparation for Brexit, JHG will 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. Should UK-based asset management firms lose their
current level of access to the single EU market as a result of Brexit, JHG may incur additional costs due to having to
relocate additional activities to within the EU. For example, should EU investors no longer wish or be able for their own
internal reasons to hold UK domiciled funds as a result of Brexit, this may result in European investors withdrawing
from UK UCITS products managed by JHG, which could negatively impact the results of JHG’s operations and
financial condition.
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 not manage risks associated with the replacement of benchmark indices effectively
The withdrawal and replacement of widely used benchmark indices such as the London Interbank Offered Rate
(“LIBOR”) with alternative benchmark rates introduces a number of risks for the Group, its clients and the financial
services industry more widely. These includes legal implementation risks, as extensive changes to documentation for
new and existing clients and transactions may be required; financial risks, arising from any changes in the valuation of
financial instruments linked to benchmark indices; pricing risks, as changes to benchmark indices could impact pricing
mechanisms on some instruments; operational risks, due to the potential requirement to adapt information technology
systems, trade reporting infrastructure and operational processes; and conduct risks, relating to communication with
potential impact on customers and engagement during the transition away from benchmark indices such as LIBOR.
It is expected that a transition away from the widespread use of LIBOR to alternative benchmark rates will occur over
the course of the next few years. The FCA, which regulates LIBOR, has announced that it has commitments from panel
banks to continue to contribute to LIBOR through the end of 2021, but that the FCA will not use its powers to compel
contributions beyond such date. Accordingly, there is considerable uncertainty regarding the publication of LIBOR
beyond 2021. Accordingly, it is not currently possible to determine precisely whether, or to what extent, the withdrawal
and replacement of LIBOR would affect JHG; however, the implementation of alternative benchmark rates to LIBOR
may 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.
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 are 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.
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Risks Related to Taxes
Changes to tax laws could adversely affect JHG.
The determination of the company’s provision for income taxes requires judgment, the use of estimates and the
interpretation and application of complex tax laws. The company’s provision for income taxes reflects a combination of
income earned and taxed in the various U.S. federal and state, UK as well as other international jurisdictions.
Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or
adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of
earnings from these taxing jurisdictions all affect the overall effective tax rate and the amount of tax payable by the
Group.
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.
As a result of the Merger, 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 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 referred to as 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
24
Risks Related to Taxes
Changes to tax laws could adversely affect JHG.
The determination of the company’s provision for income taxes requires judgment, the use of estimates and the
interpretation and application of complex tax laws. The company’s provision for income taxes reflects a combination of
income earned and taxed in the various U.S. federal and state, UK as well as other international jurisdictions.
Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or
adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of
earnings from these taxing jurisdictions all affect the overall effective tax rate and the amount of tax payable by the
Group.
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.
As a result of the Merger, 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 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 referred to as 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.
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 29 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 that expires in 2028. JHG also has
significant operations in Denver, Colorado occupying approximately 160,000 square feet of office space in two separate
locations. The primary office building in Denver accounts for 91% of the total square feet of office space in Denver, and
its lease expires in 2025. The remaining 26 offices total approximately 129,000 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
The information set forth in response to Item 103 of Regulation S-K under “Legal Proceedings” is incorporated by
reference from Part II, Item 8, Financial Statements and Supplementary Data, Note 18 – Commitments and
Contingencies-Litigation and Other Regulatory Matters.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
24
25
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
JHG Common Stock
JHG’s common stock is traded on the New York Stock Exchange (the “NYSE”) (symbol: JHG). On December 31, 2018,
there were approximately 47,481 holders of record of JHG’s common stock.
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 31, 2018, the last trading day of 2018, 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, 2013, in JHG’s common stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any. This data is not intended to forecast future performance of JHG’s
common stock.
Common Stock Purchases
At the Annual General Meeting held on May 3, 2018, shareholders authorized JHG to make on-market purchases of up
to 10% of the issued share capital of the Group. In August 2018, the Group commenced an on-market buyback program
to repurchase up to $100 million of its ordinary shares on the NYSE and its CDIs on the ASX over 12 months. The
Group purchased 3,993,374 shares of common stock for $99.8 million in 2018. The purchased shares were cancelled.
On February 4, 2019, the Board approved JHG commencing a new on-market share buyback program in 2019, on a date
to be determined and announced by JHG. The Group intends to spend up to $200 million to buy its ordinary shares on
the NYSE and its CDIs on the ASX for its share buyback program that is expected to be completed over the next 12
months. The program is subject to JHG appointing a corporate broker.
26
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
JHG Common Stock
JHG’s common stock is traded on the New York Stock Exchange (the “NYSE”) (symbol: JHG). On December 31, 2018,
there were approximately 47,481 holders of record of JHG’s common stock.
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 31, 2018, the last trading day of 2018, 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, 2013, in JHG’s common stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any. This data is not intended to forecast future performance of JHG’s
common stock.
During the first quarter 2019, JHG will purchase shares on-market for the annual share grants associated with 2018
variable compensation, which is not connected with the above Board approval. As a policy, JHG does not issue new
shares to employees as part of its annual compensation practices.
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.
The following table presents JHG ordinary shares purchased on-market by month during 2018 in satisfaction of
employee awards and entitlements, and in connection with the share buyback program.
Period
January
February
March
April
May
June
July
August
September
October
November
December
Total
Total
number of
shares
purchased
Average
price paid per
share
Total number of shares
purchased as part of
publicly announced
programs
5,783 $
1,130,501
1,196,671
13,007
39,207
2,747
12,330
1,235,278
560,737
41,407
1,206,793
1,037,262
6,481,723 $
41.00
35.74
34.37
32.47
31.97
32.16
31.84
28.56
27.13
25.10
23.53
21.26
28.68
Approximate dollar value of
shares that may yet
be purchased under the
programs (end of month, in millions)
—
—
—
—
—
—
$ 100
$ 65
$ 50
$ 50
$ 22
$ -
—
—
—
—
—
—
—
1,221,029
552,475
—
1,198,986
1,020,884
3,993,374
Common Stock Purchases
At the Annual General Meeting held on May 3, 2018, shareholders authorized JHG to make on-market purchases of up
to 10% of the issued share capital of the Group. In August 2018, the Group commenced an on-market buyback program
to repurchase up to $100 million of its ordinary shares on the NYSE and its CDIs on the ASX over 12 months. The
Group purchased 3,993,374 shares of common stock for $99.8 million in 2018. The purchased shares were cancelled.
On February 4, 2019, the Board approved JHG commencing a new on-market share buyback program in 2019, on a date
to be determined and announced by JHG. The Group intends to spend up to $200 million to buy its ordinary shares on
the NYSE and its CDIs on the ASX for its share buyback program that is expected to be completed over the next 12
months. The program is subject to JHG appointing a corporate broker.
26
27
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. Data presented for the years
ended December 31, 2016, 2015 and 2014, are pre-merger and are not comparable with the results presented in 2017 or
2018. Data presented for the year ended December 31, 2017, includes the impact of the Merger from May 30, 2017,
through the end of the year.
Consolidated statement of comprehensive income:
Total revenues
Operating expenses
Operating income
Operating margin
Interest expense (1)
Investment gains (losses), net (2)
Other non-operating income (expenses), net
Income tax benefit (provision) (3)
Net income
Net loss (income) attributable to noncontrolling interests (4)
Net income attributable to JHG
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 (5)
Cash flow:
Cash flows provided by operating activities
Operating data (in billions):
Ending AUM
Average AUM
Year ended December 31,
2016
(dollars in millions, except per share data and operating data)
2015
2018
2017
2014
860.4
317.3
$ 2,306.4 $ 1,818.3 $ 1,018.2 $ 1,177.7 $ 1,120.2
821.7
298.5
26.9% 26.6%
(19.3)
285.9
(1.5)
(52.6)
511.0
(7.7)
503.3
1,376.0
442.3
24.3%
(11.9)
18.0
(1.0)
211.0
658.4
(2.9)
523.8 $ 655.5 $ 189.0 $
1,656.6
649.8
28.2%
(15.7)
(40.9)
68.6
(162.2)
499.6
24.2
786.1
232.1
22.8%
(6.6)
(11.7)
(1.9)
(34.6)
177.3
11.7
(20.1)
39.7
0.6
(6.1)
331.4
(1.6)
329.8 $
$
$
2.61 $
3.93 $
1.66 $
2.78 $
4.21
195.9
162.3
1,111.1
1,154.5 1,154.4
—
1.40 $
$
£0.0915
£0.1040
0.64 $
— $
£0.0950 £0.0845
—
— $
$ 6,911.9 $ 7,272.7 $ 2,433.4 $ 2,835.2 $ 2,840.5
233.0
$
87.5
$
52.6
$
4.4
$
— $
319.1 $ 379.2 $
70.7 $
729.9 $ 752.6 $
39.0 $
99.6 $
136.1 $ 190.3 $ 158.0 $
220.9 $
86.3 $
49.4 $
82.9 $
79.2 $
$
670.8 $ 444.1 $ 235.1 $
388.9 $
226.8
$
$
328.5 $ 370.8 $ 124.7 $
367.7 $ 262.1 $ 129.4 $
135.6 $
127.7 $
126.5
121.2
(1) 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.
(2) 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.
(3) 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.
28
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. Data presented for the years
ended December 31, 2016, 2015 and 2014, are pre-merger and are not comparable with the results presented in 2017 or
2018. Data presented for the year ended December 31, 2017, includes the impact of the Merger from May 30, 2017,
through the end of the year.
Net income attributable to JHG
$
523.8 $ 655.5 $ 189.0 $
329.8 $
503.3
Year ended December 31,
2018
2017
2016
2015
2014
(dollars in millions, except per share data and operating data)
$ 2,306.4 $ 1,818.3 $ 1,018.2 $ 1,177.7 $ 1,120.2
1,656.6
1,376.0
649.8
442.3
786.1
232.1
860.4
317.3
821.7
298.5
28.2%
24.3%
22.8%
26.9% 26.6%
(15.7)
(40.9)
68.6
(162.2)
499.6
24.2
(11.9)
18.0
(1.0)
211.0
658.4
(2.9)
(6.6)
(11.7)
(1.9)
(34.6)
177.3
11.7
(20.1)
(19.3)
39.7
285.9
0.6
(6.1)
(1.5)
(52.6)
331.4
511.0
(1.6)
(7.7)
$
2.61 $
3.93 $
1.66 $
2.78 $
4.21
195.9
162.3
1,111.1
1,154.5 1,154.4
—
£0.0915
£0.1040
£0.0950 £0.0845
$
1.40 $
0.64 $
— $
— $
—
$ 6,911.9 $ 7,272.7 $ 2,433.4 $ 2,835.2 $ 2,840.5
$
$
$
$
319.1 $ 379.2 $
729.9 $ 752.6 $
79.2 $
99.6 $
70.7 $
39.0 $
136.1 $ 190.3 $ 158.0 $
86.3 $
49.4 $
82.9 $
87.5
52.6
4.4
— $
220.9 $
233.0
Consolidated statement of comprehensive income:
Total revenues
Operating expenses
Operating income
Operating margin
Interest expense (1)
Investment gains (losses), net (2)
Other non-operating income (expenses), net
Income tax benefit (provision) (3)
Net income
Net loss (income) attributable to noncontrolling interests (4)
Earnings per share attributable to JHG common
Weighted-average diluted common shares outstanding (in
Dividends declared and paid per share:
shareholders:
Diluted
millions)
GBP
USD
Total assets
Consolidated balance sheet (as of December 31):
Long-term debt (including current portion)
Deferred income taxes, net
Other non-current liabilities
Redeemable noncontrolling interests (5)
Cash flow:
Operating data (in billions):
Ending AUM
Average AUM
Cash flows provided by operating activities
$
670.8 $ 444.1 $ 235.1 $
388.9 $
226.8
(1) 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.
(2) 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.
(3) 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.
(4) The Group’s net loss (income) attributable to noncontrolling interests primarily relate to the Group’s seeded
investment products and will fluctuate based on the market value of the investments.
(5) Changes in redeemable noncontrolling interest are due to changes in ownership and the market value of seed capital
investments.
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 May 30, 2017, JHG completed a merger of equals with JCG (the “Merger”). As a result of the Merger, JCG and its
consolidated subsidiaries became subsidiaries of JHG.
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, resources are allocated and the business is managed by the chief
operating decision-maker, the Chief Executive Officer (“CEO”), on an aggregated basis. Strategic and financial
management decisions are determined centrally by the CEO 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 sometimes 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.
$
$
328.5 $ 370.8 $ 124.7 $
135.6 $
367.7 $ 262.1 $ 129.4 $
127.7 $
126.5
121.2
2018 SUMMARY
2018 Highlights
•
Investment performance remained solid, with 55%, 61% and 72% of AUM outperforming benchmarks on a
one-, three- and five-year basis, respectively, as of December 31, 2018.
• Decrease of AUM to $328.5 billion, down 11% from December 31, 2017, due to net outflows, adverse market
movements and unfavorable foreign currency translation.
•
2018 diluted earnings per share of $2.61, or $2.74 on an adjusted basis. Refer to the Non-GAAP Financial
Measures section for information on adjusted non-GAAP figures.
• Targeted cost synergies of $125 million as of December 31, 2018, achieved well ahead of plan.
28
29
• Completion of a strategic partnership with BNP Paribas Securities Services (“BNP Paribas”), supporting the
Group’s global operating model.
• During the year ended December 31, 2018, the Group acquired 3,993,374 shares of its common stock for
approximately $100 million, with an additional $200 million of buybacks approved for 2019.
• Redemption and settlement of the Group’s 2018 Convertible Notes with $95.3 million cash.
Financial Summary
Results are reported on a U.S. GAAP basis. Adjusted non-GAAP figures are presented in the Non-GAAP Financial
Measures section.
Revenue for the year ended December 31, 2018, was $2,306.4 million, an increase of $488.1 million, or 27%, from
December 31, 2017. This increase was primarily driven by five additional months of JCG revenues totaling $542.0
million during the year ended December 31, 2018. Average AUM increased by 5% and positively impacted management
fees during the year ended December 31, 2018, compared to the same period in 2017. These increases are partially offset
by lower performance fees.
Total operating expenses for the year ended December 31, 2018, were $1,656.6 million, an increase of $280.6 million, or
20%, compared to operating expenses for the year ended December 31, 2017. Five additional months of JCG operations
contributed $337.9 million to operating expenses in the year ended December 31, 2018. Deal and integration costs,
which were significantly higher in 2017 compared to 2018, also contributed to the variance.
Operating income for the year ended December 31, 2018, was $649.8 million, an increase of $207.5 million, or 47%,
compared to the year ended December 31, 2017. The Group’s operating margin was 28.2% in 2018, compared to 24.3%
in 2017. Five additional months of JCG operations contributed $204.1 million to operating income in the year ended
December 31, 2018.
Net income attributable to JHG in the year ended December 31, 2018, was $523.8 million, a decrease of $131.7 million,
or (20%), compared to the year ended December 31, 2017. The decrease was mainly due to an increase in income taxes
due to a higher effective tax rate in 2018 compared to 2017, as well as a one-time tax benefit that was recorded in 2017
due to changes in U.S. tax laws. This decrease was partially offset by an additional five months of JCG operations,
which contributed $183.8 million to net income attributable to JHG in the year ended December 31, 2018. Other non-
operating income (expenses), net (excluding the five additional months of JCG) also improved $45.6 million during the
year ended December 31, 2018, compared to the same period in 2017, mainly due to fair value adjustments related to the
Dai-ichi options, a gain recognized on the disposal of the Group’s back-office, middle-office and custody functions in
the U.S. and foreign currency translation.
Investment Performance of Assets Under Management
The following table is a summary of investment performance as of December 31, 2018:
Percentage of assets under management outperforming benchmark
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total Group
1 year
3 years
5 years
67 %
36 %
20 %
81 %
35 %
55 %
55 %
88 %
11 %
90 %
94 %
61 %
71 %
93 %
15 %
91 %
100 %
72 %
30
• Completion of a strategic partnership with BNP Paribas Securities Services (“BNP Paribas”), supporting the
Group’s global operating model.
• During the year ended December 31, 2018, the Group acquired 3,993,374 shares of its common stock for
approximately $100 million, with an additional $200 million of buybacks approved for 2019.
• Redemption and settlement of the Group’s 2018 Convertible Notes with $95.3 million cash.
Financial Summary
Measures section.
Results are reported on a U.S. GAAP basis. Adjusted non-GAAP figures are presented in the Non-GAAP Financial
Revenue for the year ended December 31, 2018, was $2,306.4 million, an increase of $488.1 million, or 27%, from
December 31, 2017. This increase was primarily driven by five additional months of JCG revenues totaling $542.0
million during the year ended December 31, 2018. Average AUM increased by 5% and positively impacted management
fees during the year ended December 31, 2018, compared to the same period in 2017. These increases are partially offset
by lower performance fees.
Total operating expenses for the year ended December 31, 2018, were $1,656.6 million, an increase of $280.6 million, or
20%, compared to operating expenses for the year ended December 31, 2017. Five additional months of JCG operations
contributed $337.9 million to operating expenses in the year ended December 31, 2018. Deal and integration costs,
which were significantly higher in 2017 compared to 2018, also contributed to the variance.
Operating income for the year ended December 31, 2018, was $649.8 million, an increase of $207.5 million, or 47%,
compared to the year ended December 31, 2017. The Group’s operating margin was 28.2% in 2018, compared to 24.3%
in 2017. Five additional months of JCG operations contributed $204.1 million to operating income in the year ended
December 31, 2018.
Net income attributable to JHG in the year ended December 31, 2018, was $523.8 million, a decrease of $131.7 million,
or (20%), compared to the year ended December 31, 2017. The decrease was mainly due to an increase in income taxes
due to a higher effective tax rate in 2018 compared to 2017, as well as a one-time tax benefit that was recorded in 2017
due to changes in U.S. tax laws. This decrease was partially offset by an additional five months of JCG operations,
which contributed $183.8 million to net income attributable to JHG in the year ended December 31, 2018. Other non-
operating income (expenses), net (excluding the five additional months of JCG) also improved $45.6 million during the
year ended December 31, 2018, compared to the same period in 2017, mainly due to fair value adjustments related to the
Dai-ichi options, a gain recognized on the disposal of the Group’s back-office, middle-office and custody functions in
the U.S. and foreign currency translation.
Investment Performance of Assets Under Management
The following table is a summary of investment performance as of December 31, 2018:
Percentage of assets under management outperforming benchmark
1 year
3 years
5 years
Equities
Fixed Income
Quantitative Equities
Multi-Asset
Alternatives
Total Group
67 %
36 %
20 %
81 %
35 %
55 %
55 %
88 %
11 %
90 %
94 %
61 %
71 %
93 %
15 %
91 %
100 %
72 %
Assets Under Management
The Group’s AUM as of December 31, 2018, was $328.5 billion, a decrease of $42.3 billion, or (11%) from
December 31, 2017, driven primarily by net redemptions of $18.1 billion, adverse market movements of $15.7 billion
and unfavorable foreign exchange movements of $8.5 billion due to the strengthening of the U.S. dollar (“USD”).
JHG’s non-USD AUM is primarily denominated in Great British pounds (“GBP”), euros (“EUR”) and Australian dollars
(“AUD”). During the year ended December 31, 2018, the USD strengthened against the GBP, the EUR and the AUD. As
of December 31, 2018, approximately 34% of the Group’s AUM was non-USD-denominated, resulting in a net
unfavorable currency effect, particularly in products exposed to GBP.
VelocityShares ETNs and certain index products are not included within AUM as JHG is not the named adviser or
subadviser to ETNs or index products. VelocityShares ETN assets totaled $2.2 billion and $4.0 billion as of
December 31, 2018, and December 31, 2017, respectively. VelocityShares index product assets not included within
AUM totaled $1.7 billion and $0.1 billion as of December 31, 2018, and December 31, 2017, respectively.
Asset and flows by capability for the years ended December 31, 2018, 2017 and 2016, are as follows (in billions):
Closing AUM
Dec. 31,
2017
Net sales
Redemptions (1) (redemptions) Markets
Sales
FX (2)
Reclassification
Dec. 31,
2018
Closing AUM
$
189.7 $ 33.8 $
80.1
21.0
(43.9) $
(24.8)
(10.1) $ (10.4) $
(3.8)
(0.8)
(3.3) $
(3.6)
1.7 $
0.5
167.6
72.4
49.9
31.6
19.5
3.7
7.6
5.0
(5.3)
(5.8)
(9.4)
(89.2) $
(1.6)
1.8
(4.4)
(18.1) $ (15.7) $
(3.8)
(0.5)
(0.2)
(0.2)
(0.5)
(0.9)
(8.5) $
—
(2.2)
—
— $
44.3
30.2
14.0
328.5
Total
$
370.8 $ 71.1 $
Closing AUM
Dec. 31,
2016 (3)
Sales
Redemptions (1) (redemptions) Markets FX (2)
Net sales
Closing AUM
Acquisitions & Dec. 31,
disposals
2017
$
63.6 $ 32.6 $
34.7
17.2
(32.6) $
(15.7)
— $ 21.2 $
1.5
1.5
5.2 $
3.8
99.7 $
38.6
189.7
80.1
—
9.0
17.4
1.6
2.8
7.7
(5.2)
(3.8)
(7.6)
(64.9) $
5.4
(3.6)
2.7
(1.0)
0.1
0.9
(3.0) $ 31.7 $ 11.6 $
0.1
0.9
1.6
48.0
20.0
(0.5)
205.8 $
49.9
31.6
19.5
370.8
Total
$
124.7 $ 61.9 $
By capability
Equities
Fixed Income
Quantitative
Equities
Multi-Asset
Alternatives
By capability
Equities
Fixed Income
Quantitative
Equities
Multi-Asset
Alternatives
Closing AUM
Dec. 31,
2015 (3)
Sales
Redemptions (1) (redemptions) Markets FX (2)
Net sales
Closing AUM
Acquisitions & Dec. 31,
2016 (3)
disposals
By capability
Equities
Fixed Income
Multi-Asset
Alternatives
$
68.6 $ 16.2 $
36.5
10.4
20.1
10.6
0.6
7.7
Total
$
135.6 $ 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
—
6.8 $ (12.5) $
(4.3) $
(4.6)
(1.7)
(1.9)
— $
—
—
—
— $
63.6
34.7
9.0
17.4
124.7
(1) Redemptions include the impact of client transfers, which could cause a positive balance on occasion.
30
31
(2) FX reflects movements in AUM resulting from changes in foreign currency rates as non-USD denominated AUM is
translated into USD.
(3) AUM as of December 31, 2016 and 2015, has been reclassified between capabilities following the completion of the
Merger.
Closing Assets Under Management
The following table presents the closing AUM, split by client type and client location, as of December 31, 2018 (in
billions):
By client type
Intermediary
Institutional
Self-directed
Total
By client location
North America
EMEA & LatAm
Asia-Pacific
Total
Closing AUM
December 31, 2018
143.1
$
129.0
56.4
328.5
$
Closing AUM
December 31, 2018
172.4
$
102.7
53.4
328.5
$
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 is listed or quoted on a recognized securities exchange
or market and is 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), exchanges or financial institutions 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, 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 to determine 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.
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.
In other cases, 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
32
translated into USD.
Merger.
Closing Assets Under Management
billions):
By client type
Intermediary
Institutional
Self-directed
Total
By client location
North America
EMEA & LatAm
Asia-Pacific
Total
Closing AUM
December 31, 2018
$
$
$
$
143.1
129.0
56.4
328.5
172.4
102.7
53.4
328.5
Closing AUM
December 31, 2018
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 is listed or quoted on a recognized securities exchange
or market and is 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), exchanges or financial institutions 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, 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 to determine 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.
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.
In other cases, 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
(2) FX reflects movements in AUM resulting from changes in foreign currency rates as non-USD denominated AUM is
(3) AUM as of December 31, 2016 and 2015, has been reclassified between capabilities following the completion of the
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.
The following table presents the closing AUM, split by client type and client location, as of December 31, 2018 (in
Results of Operations
The year ended December 31, 2017, includes seven months (June through December) of JCG post-merger activity, while
the year ended December 31, 2018 includes JCG activity for all months in the period. This scenario creates significant
variances throughout the Results of Operations when comparing activity for the year ended December 31, 2018, to the
same period in 2017. For purposes of the Results of Operations discussions below, the variances due to this scenario will
be separately identified and disclosed as “the inclusion of five additional months of JCG.”
Foreign currency translation impacts the expense analysis throughout the Results of Operations section. The translation
of GBP to USD is the primary driver of foreign currency translation in expenses. The GBP weakened against the USD
during the year ended December 31, 2018, compared to the same period in 2017. Revenue is also impacted by foreign
currency translation, but the impact is generally determined by the primary currency of the fund.
Revenue
Revenue (in millions):
Management fees
Performance fees
Shareowner servicing fees
Other revenue
Total revenue
* n/m — Not meaningful
Management fees
Year ended December 31,
2017
2016
2018
2018 vs.
2017
2017 vs.
2016
$ 1,947.4 $ 1,480.9 $
886.1
54.8
—
77.3
$ 2,306.4 $ 1,818.3 $ 1,018.2
7.1
154.2
197.7
103.9
87.3
146.2
31.5 %
(93.2) %
76.6 %
35.2 %
26.8 %
67.1 %
89.6 %
n/m *
89.1 %
78.6 %
Management fees increased by $466.5 million, or 31.5%, during the year ended December 31, 2018, compared to the
same period in 2017. The inclusion of five additional months of JCG management fees of $437.2 million was the
primary driver of the increase. Higher average AUM due to favorable markets and foreign currency translation also
increased management fees by $59.1 million and $22.8 million, respectively. These increases were partially offset by
the net outflows causing a decrease in management fees during the year ended December 31, 2018.
Management fees increased by $594.8 million, or 67.1%, 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 prior 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, and lower average gross fee
margins. Lower margins are primarily due to 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.
32
33
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, 2018, 2017 and 2016 (in
millions):
Year ended December 31,
2017
2018
2016
2018 vs.
2017
2017 vs.
2016
Performance fees (in millions):
SICAVs
UK OEICs & Unit Trusts
Offshore Absolute Return
Segregated Mandates
Investment Trusts
Mutual Funds
Other
Total performance fees
* n/m — Not meaningful
$
$
5.3 $
4.4
3.4
24.8
6.9
(37.7)
—
7.1 $
49.1 $
22.8
8.2
31.0
11.8
(19.5)
0.5
103.9 $
18.1
8.6
13.6
8.2
4.6
—
1.7
54.8
(89.2) %
(80.7) %
(58.5) %
(20.0) %
(41.5) %
93.3 %
(100.0) %
(93.2) %
171.3 %
165.1 %
(39.7) %
278.0 %
156.5 %
n/m *
(70.6) %
89.6 %
Performance fees decreased by $96.8 million, or (93.2%), during the year ended December 31, 2018, compared to the
same period in 2017. The decrease for the year ended December 31, 2018, compared to the same period in 2017, was
primarily due to a decrease in SICAV and UK OEICs & unit trusts performance fees from a decline in performance of
several large European equity and absolute return products as well as a decrease in segregated mandates and investment
trusts due to fewer annual performance fee crystallizations. The inclusion of five additional months of JCG net
performance fees also contributed $9.2 million to the decrease.
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 improved performance which led 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.
34
Performance fees
millions):
Performance fees (in millions):
SICAVs
UK OEICs & Unit Trusts
Offshore Absolute Return
Segregated Mandates
Investment Trusts
Mutual Funds
Other
Total performance fees
* n/m — Not meaningful
Year ended December 31,
2018 vs.
2018
2017
2016
2017
2017 vs.
2016
$
5.3 $
49.1 $
4.4
3.4
24.8
6.9
(37.7)
—
22.8
8.2
31.0
11.8
(19.5)
0.5
18.1
8.6
13.6
8.2
4.6
—
1.7
(89.2) %
171.3 %
(80.7) %
165.1 %
(58.5) %
(39.7) %
(20.0) %
278.0 %
(41.5) %
156.5 %
93.3 %
n/m *
(100.0) %
(70.6) %
$
7.1 $
103.9 $
54.8
(93.2) %
89.6 %
Performance fees decreased by $96.8 million, or (93.2%), during the year ended December 31, 2018, compared to the
same period in 2017. The decrease for the year ended December 31, 2018, compared to the same period in 2017, was
primarily due to a decrease in SICAV and UK OEICs & unit trusts performance fees from a decline in performance of
several large European equity and absolute return products as well as a decrease in segregated mandates and investment
trusts due to fewer annual performance fee crystallizations. The inclusion of five additional months of JCG net
performance fees also contributed $9.2 million to the decrease.
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 improved performance which led 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.
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, 2018, 2017 and 2016 (in
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-crystallized performance fee, performance fee participation rate, performance fee frequency and
performance fee methodology (dollars in millions, except where noted):
UK OEICs &
Unit Trusts
SICAVs
Offshore
Absolute
Return
Funds
Segregated
Mandates /
Managed
CDO / Private
Equity /
Property /
Other
Investment
Trusts
Australia
MIS
U.S. Mutual
Funds
Performance Fees
Year ended December 31, 2018
Year ended December 31, 2017
Year ended December 31, 2016
$
$
$
4.4 $
22.8 $
8.6 $
5.3 $
49.2 $
18.1 $
3.4 $
8.2 $
13.6 $
24.8 $
31.4 $
9.2 $
6.9 $
11.8 $
4.6 $
— $
— $
0.7 $
(37.7)
(19.5)
—
Number of funds generating performance fees
Year ended December 31, 2018(1)
Year ended December 31, 2017(1)
Year ended December 31, 2016(1)
AUM generating performance fees (in billions)
AUM at December 31, 2018 generating FY18
performance fees
AUM at December 31, 2017 generating FY18
performance fees
AUM at December 31, 2016 generating FY18
performance fees
$
$
$
Number of funds eligible to earn performance fees
As of December 31, 2018
As of December 31, 2017
As of December 31, 2016
Un-crystallized performance fees (in billions)
AUM at December 31, 2018 with an un-crystallized
performance fee at December 31, 2018, vesting in
2019(2)
AUM at December 31, 2017 with an un-crystallized
performance fee at December 31, 2017, vesting in
2018 (2)
AUM at December 31, 2016 with an un-crystallized
performance fee at December 31, 2016, vesting in
2017 (2)
$
$
$
3
3
3
12
18
14
6
24
16
44
72
14
2
5
3
—
—
2
17
13
—
2.9 $
4.3 $
0.4 $
20.6 $
1.3 $
— $
39.1
3.1 $
11.7 $
1.9 $
36.3 $
2.8 $
— $
43.0
2.4 $
5.2 $
1.4 $
4.7 $
1.1 $
0.1 $
—
4
4
4
26
25
26
10
21
22
87
76
45
6
8
8
—
2
2
17
19
—
— $
— $
—
n/a $
— $
—
n/a
3.5 $
11.9 $
0.3
n/a $
1.8 $
—
2.3 $
3.1 $
1.3
n/a $
0.6 $
n/a
n/a
n/a
Performance fee participation rate percentage (3)
15%-20%
10%-20%
10%-20%
5%-28%
15%
15%
+/−15 %
Performance fee frequency
Quarterly
Annually
Annually
and
Quarterly
Performance fee methodology (4)
Relative/Absolute
plus HWM
Relative
plus HWM
Absolute
plus HWM
Quarterly,
Semi-
Annually
and
Annually
Bespoke
Annually
Semi-Annually
Monthly
Relative
plus HWM
Relative plus
HWM
Relative
plus HWM
(1) For Offshore Absolute Return Funds this excludes funds earning a performance fee on redemption and only includes
those with a period end crystallization date.
(2) Reflects the total AUM of all funds with a performance fee opportunity at any point in the relevant year.
(3) Participation rate reflects JHG’s share of outperformance.
(4) Relative performance if measured versus applicable benchmarks, and is subject to a high water mark (“HWM”) for
relevant funds.
34
35
Shareowner servicing fees
Shareowner servicing fees are primarily composed of JCG mutual fund servicing fees. For the year ended December 31,
2018, shareowner servicing fees increased $66.9 million compared to the same period in 2017, primarily due to the
inclusion of five additional months of JCG shareowner servicing fees of $64.2 million and higher AUM.
Other revenue
Other revenue increased by $51.5 million during the year ended December 31, 2018, compared to the same period in
2017, with the largest driver being the inclusion of five additional months of JCG distribution and service fee revenue of
$49.9 million.
Other revenue increased by $68.9 million during the year ended December 31, 2017, compared to the year ended
December 31, 2016. Legacy JCG contributed $73.7 million to the year ended December 31, 2017, which 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.
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
Total operating expenses
Employee compensation and benefits
Year ended December 31,
2017
2016
2018
2018 vs.
2017
2017 vs.
2016
$
613.0 $
188.6
446.7
46.9
37.9
253.7
69.8
543.3 $
150.8
351.9
43.8
31.2
202.2
52.8
$ 1,656.6 $ 1,376.0 $
273.5
87.5
227.4
46.2
13.9
109.8
27.8
786.1
12.8 %
25.1 %
26.9 %
7.1 %
21.5 %
25.5 %
32.2 %
20.4 %
98.6 %
72.3 %
54.7 %
(5.2) %
124.5 %
84.2 %
89.9 %
75.0 %
During the year ended December 31, 2018, employee compensation and benefits increased $69.7 million compared to
the year ended December 31, 2017. The increase was primarily driven by the inclusion of five additional months of JCG,
which contributed $131.6 million. Foreign currency translation also contributed $6.8 million to the increase. These
increases are partially offset by lower redundancy charges, lower performance fee variable compensation, lower bonus
accruals and one-time cash awards in lieu of long-term incentive plan awards, which reduced costs by $32.3 million,
$17.8 million, $18.5 million and $4.2 million, respectively.
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 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.
Long-term incentive plans
Long-term incentive plans increased $37.8 million during the year ended December 31, 2018, compared to the year
ended December 31, 2017. The increase was primarily driven by the inclusion of five additional months of JCG long-
term incentive plans expenses of $35.3 million and a $39.2 million increase due to new grants. Unfavorable foreign
currency translation of $1.8 million also contributed to the increase during the year ended December 31, 2018. These
increases were partially offset by a $26.2 million decrease from the vesting of awards granted in previous years and a
$10.5 million decrease due to fair value adjustments related to mutual fund awards.
36
Shareowner servicing fees
Other revenue
$49.9 million.
Shareowner servicing fees are primarily composed of JCG mutual fund servicing fees. For the year ended December 31,
2018, shareowner servicing fees increased $66.9 million compared to the same period in 2017, primarily due to the
inclusion of five additional months of JCG shareowner servicing fees of $64.2 million and higher AUM.
Other revenue increased by $51.5 million during the year ended December 31, 2018, compared to the same period in
2017, with the largest driver being the inclusion of five additional months of JCG distribution and service fee revenue of
Other revenue increased by $68.9 million during the year ended December 31, 2017, compared to the year ended
December 31, 2016. Legacy JCG contributed $73.7 million to the year ended December 31, 2017, which 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.
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
Total operating expenses
Employee compensation and benefits
Year ended December 31,
2018
2017
2016
2018 vs.
2017
2017 vs.
2016
$
613.0 $
543.3 $
273.5
188.6
446.7
46.9
37.9
253.7
69.8
150.8
351.9
43.8
31.2
202.2
52.8
87.5
227.4
46.2
13.9
109.8
27.8
$ 1,656.6 $ 1,376.0 $
786.1
12.8 %
25.1 %
26.9 %
7.1 %
21.5 %
25.5 %
32.2 %
20.4 %
98.6 %
72.3 %
54.7 %
(5.2) %
124.5 %
84.2 %
89.9 %
75.0 %
During the year ended December 31, 2018, employee compensation and benefits increased $69.7 million compared to
the year ended December 31, 2017. The increase was primarily driven by the inclusion of five additional months of JCG,
which contributed $131.6 million. Foreign currency translation also contributed $6.8 million to the increase. These
increases are partially offset by lower redundancy charges, lower performance fee variable compensation, lower bonus
accruals and one-time cash awards in lieu of long-term incentive plan awards, which reduced costs by $32.3 million,
$17.8 million, $18.5 million and $4.2 million, respectively.
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 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.
Long-term incentive plans
Long-term incentive plans increased $37.8 million during the year ended December 31, 2018, compared to the year
ended December 31, 2017. The increase was primarily driven by the inclusion of five additional months of JCG long-
term incentive plans expenses of $35.3 million and a $39.2 million increase due to new grants. Unfavorable foreign
currency translation of $1.8 million also contributed to the increase during the year ended December 31, 2018. These
increases were partially offset by a $26.2 million decrease from the vesting of awards granted in previous years and a
$10.5 million decrease due to fair value adjustments related to mutual fund awards.
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 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.
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, 2018,
distribution expenses increased by $94.8 million, with the inclusion of five additional months of JCG distribution
expenses of $104.9 million as the primary driver of the increase. New revenue sharing agreements also contributed $1.7
million to the increase. The remaining change for the year ended December 31, 2018, was due to the UK OEIC and
SICAV product mix.
For the year ended December 31, 2017, distribution expenses increased by $124.5 million. The increase was primarily
driven by legacy JCG, which contributed $136.7 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.
Investment administration
Investment administration expenses, which represent back-office operations (including fund administration and fund
accounting), increased $3.1 million during the year ended December 31, 2018, compared to the same period in 2017.
The increase is mostly due to $5.7 million in expenses related to transitioning JHG’s back-office, middle-office and
custody functions to BNP Paribas.
Investment administration expenses 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.
Marketing
Marketing expenses for the year ended December 31, 2018, increased by $6.7 million, compared to the year ended
December 31, 2017. The increase was primarily driven by the inclusion of five additional months of JCG marketing
expenses of $8.0 million.
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 JCG and Merger-related costs. Expenses in relation to the
Merger increased $5.5 million during the year ended December 31, 2017. 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 $51.5 million during the year ended December 31, 2018,
compared to the year ended December 31, 2017. The increase was primarily driven by the inclusion of five additional
months of JCG general, administrative and occupancy expenses of $43.7 million. The outcome of a court case and
research costs related to MiFID II increased expenses during the year ended December 31, 2018, by $12.2 million and
$16.9 million, respectively. In addition, a $7.6 million increase in irrecoverable sales tax primarily due to a $6.9 million
credit during the year ended December 31, 2017, a $5.2 million increase in legal and other professional fees, and
unfavorable foreign currency translation of $2.0 million contributed to the year-over-year increase. These increases are
partially offset by a $33.0 million decrease of deal and integration costs (excluding JCG) related to the Merger.
36
37
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. 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.
Depreciation and amortization
Depreciation and amortization expense increased by $17.0 million during the year ended December 31, 2018, compared
to 2017. The increase is primarily due to a $7.2 million impairment related to Gartmore investment management
contracts classified as intangible assets on the Consolidated Balance Sheets in addition to the inclusion of five additional
months of JCG amortization of intangibles recognized as a result of the Merger. Refer to Item 8 – Financial Statements
and Supplementary Data, Note 7 – Goodwill and Intangible Assets for additional information on the impairment
assessment.
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.
Non-Operating Income and Expenses
Year ended December 31,
2017
2016
2018
Non-operating income and expenses (in millions):
Interest expense
Investment gains (losses), net
Other non-operating income (expenses), net
Income tax provision
$
(15.7) $
(40.9)
68.6
(162.2)
(11.9) $
18.0
(1.0)
211.0
(6.6)
(11.7)
(1.9)
(34.6)
Interest expense
2018 vs.
2017
2017 vs.
2016
31.9 %
80.3 %
(327.2) % 253.8 %
(47.4) %
(176.9) % 709.8 %
n/m *
Interest expense increased by $3.8 million during the year ended December 31, 2018, compared to the year ended
December 31, 2017. The increase is primarily due to interest on the 4.875% Senior Notes due 2025 (“2025 Senior
Notes”) as a result of the Merger.
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 2018 Convertible Notes and
the 2025 Senior Notes.
Investment gains (losses), net
The components of investment gains (losses), net for the years ended December 31, 2018, 2017 and 2016, are as follows
(in millions):
Year ended December 31,
2017
2016
2018
2018 vs.
2017
2017 vs.
2016
Investment gains (losses), net (in millions):
Seeded investment products and derivatives, net
Gain on sale of Volantis
Other
Investment gains (losses), net
* n/m — Not meaningful
$
$
(42.6) $
—
1.7
(40.9) $
4.0 $
10.2
3.8
18.0 $
(12.4) (1,165.0) %
—
0.7
(11.7)
n/m *
(55.3) %
(327.2) %
132.3 %
n/m *
442.9 %
253.8 %
38
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. 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.
Depreciation and amortization
Depreciation and amortization expense increased by $17.0 million during the year ended December 31, 2018, compared
to 2017. The increase is primarily due to a $7.2 million impairment related to Gartmore investment management
contracts classified as intangible assets on the Consolidated Balance Sheets in addition to the inclusion of five additional
months of JCG amortization of intangibles recognized as a result of the Merger. Refer to Item 8 – Financial Statements
and Supplementary Data, Note 7 – Goodwill and Intangible Assets for additional information on the impairment
assessment.
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.
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
$
(15.7) $
(11.9) $
(6.6)
31.9 %
80.3 %
(40.9)
68.6
(162.2)
18.0
(1.0)
211.0
(11.7)
(327.2) % 253.8 %
(1.9)
n/m *
(47.4) %
(34.6)
(176.9) % 709.8 %
Interest expense
Interest expense increased by $3.8 million during the year ended December 31, 2018, compared to the year ended
December 31, 2017. The increase is primarily due to interest on the 4.875% Senior Notes due 2025 (“2025 Senior
Notes”) as a result of the Merger.
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 2018 Convertible Notes and
the 2025 Senior Notes.
Investment gains (losses), net
(in millions):
Gain on sale of Volantis
Other
Investment gains (losses), net
* n/m — Not meaningful
The components of investment gains (losses), net for the years ended December 31, 2018, 2017 and 2016, are as follows
Investment gains (losses), net (in millions):
Seeded investment products and derivatives, net
$
(42.6) $
4.0 $
(12.4) (1,165.0) %
132.3 %
Year ended December 31,
2018
2017
2016
2018 vs.
2017
2017 vs.
2016
—
1.7
10.2
3.8
—
0.7
n/m *
n/m *
(55.3) %
442.9 %
$
(40.9) $
18.0 $
(11.7)
(327.2) %
253.8 %
Investment gains (losses), net moved unfavorably by $58.9 million during the year ended December 31, 2018, compared
to 2017. The variance is primarily due to fair value adjustments in relation to the Group’s consolidated variable interest
entities (“VIEs”) and other seeded investment products. The $10.2 million gain recognized on the sale of Volantis in
2017 also contributed to the year-over-year unfavorable change.
Investment gains (losses), net improved $29.7 million during the year ended December 31, 2017, compared to 2016.
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.
Other non-operating income (expenses), net
Other non-operating income (expenses), net improved $69.6 million during the year ended December 31, 2018,
compared to the same period in 2017. Fair value adjustments related to the Dai-ichi options, which expired in October
2018, benefited other non-operating income (expenses), net by $26.2 million during the year ended December 31, 2018,
compared to the same period in 2017. The increase was also due to a $22.3 million gain recognized during the year
ended December 31, 2018, on the sale of the Group’s back-office and middle-office functions in the U.S. Interest income
and favorable foreign currency translation of $15.5 million and $5.9 million, respectively, also contributed to the
increase during the year ended December 31, 2018, compared to the same period in 2017.
Year ended December 31,
2018 vs.
2017 vs.
2018
2017
2016
2017
2016
Income Tax Provision
The Group’s effective tax rates for the years ended December 31, 2018, 2017 and 2016, are as follows:
Effective tax rate
2018
Year ended December 31,
2016
2017
24.5 % (47.1) % 16.3 %
In accordance with SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and
Job Act (Tax Act), the Company recognized the provisional impacts related to re-measurement of deferred tax assets and
liabilities and the one-time transition tax in its results for the annual period ended December 31, 2017. As of the year
ended December 31, 2018, the Company has completed its accounting for all aspects of the Tax Act, and recorded an
additional tax benefit of $3.0 million to income tax expense related to transition tax, under the Tax Act.
The Tax Act also included a new provision to tax global intangible low-taxed income (“GILTI”) effective beginning for
tax years after December 31, 2017. The GILTI imposes a minimum tax on income of a Controlled Foreign Corporation
(“CFC”) in excess of a prescribed rate of return on tangible assets held by the CFC. Under U.S. GAAP, an accounting
policy can be made to either (i) account for GILTI as current period costs when incurred; or (ii) recognized as deferred
taxes. Although the Company does not have a GILTI liability in the current year, the Group has made a policy decision
to record GILTI tax as a current-period expense when incurred. Also effective during the year ended December 31,
2018, under the Tax Act, was the base erosion and anti-abuse tax (“BEAT”). The BEAT provisions eliminate the
deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater
than regular tax. The impact of BEAT on the Group is not significant.
The primary driver of the 2017 rate benefit is related to the re-measurement of deferred tax assets and liabilities from the
Act’s rate change in 2017 and 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. 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 23% to 25% range in 2019. The primary influence
driving the annual statutory tax rate above the average statutory tax rate for 2018 is the mix shift in regional profitability
38
39
with different tax jurisdictions. Any legislative changes and new or proposed Treasury regulations may result in
additional income tax impacts which could be material in the period any such changes are enacted.
2019 operating expenses
Non-compensation operating expenses are expected to decrease in 2019 compared to 2018. The adjusted compensation
to revenue ratio in 2019 is expected to be in the low 40s, similar to 2018.
JHG 2017 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 (in millions):
Year ended
Year ended
December 31, JCG January December 31,
2017 — JHG 2017 — May 2017 — JHG
Pro Forma
Statutory
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 (expenses) income
Income before taxes
Income tax provision
Net income
$ 1,480.9 $
103.9
87.3
146.2
1,818.3
543.3
150.8
351.9
43.8
31.2
202.2
52.8
1,376.0
442.3
(11.9)
18.0
(1.0)
447.4
211.0
658.4
(2.9)
655.5 $
388.4 $ 1,869.3
84.7
(19.2)
144.5
57.2
197.4
51.2
2,295.9
477.6
155.0
32.0
95.9
—
31.6
62.3
13.9
390.7
86.9
(6.8)
1.5
1.5
83.1
(31.4)
51.7
(2.6)
49.1 $
698.3
182.8
447.8
43.8
62.8
264.5
66.7
1,766.7
529.2
(18.7)
19.5
0.5
530.5
179.6
710.1
(5.5)
704.6
Net (income) attributable to noncontrolling interests
Net income attributable to JHG
$
The following summary provides pro forma information concerning the Group’s principal geographic areas for the year
ended December 31, 2017 (in millions):
Pro forma operating revenues
U.S.
UK
Luxembourg
International
Total
Year ended December 31,
2017
$
$
1,261.2
701.6
280.9
52.2
2,295.9
40
with different tax jurisdictions. Any legislative changes and new or proposed Treasury regulations may result in
additional income tax impacts which could be material in the period any such changes are enacted.
Non-GAAP Financial Measures
Non-compensation operating expenses are expected to decrease in 2019 compared to 2018. The adjusted compensation
to revenue ratio in 2019 is expected to be in the low 40s, similar to 2018.
2019 operating expenses
JHG 2017 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 (in millions):
Revenue:
Management fees
Performance fees
Other revenue
Total revenue
Operating expenses:
Shareowner servicing fees
Long-term incentive plans
Distribution expenses
Investment administration
Marketing
Employee compensation and benefits
General, administrative and occupancy
Depreciation and amortization
Total operating expenses
Operating income
Interest expense
Investment gains, net
Income before taxes
Income tax provision
Net income
Other non-operating (expenses) income
Pro forma operating revenues
U.S.
UK
Luxembourg
International
Total
Year ended
Year ended
December 31, JCG January December 31,
2017 — JHG 2017 — May 2017 — JHG
Statutory
2017
Pro Forma
$ 1,480.9 $
388.4 $ 1,869.3
103.9
87.3
146.2
1,818.3
543.3
150.8
351.9
43.8
31.2
202.2
52.8
442.3
(11.9)
18.0
(1.0)
447.4
211.0
658.4
(2.9)
(19.2)
57.2
51.2
477.6
155.0
32.0
95.9
—
31.6
62.3
13.9
86.9
(6.8)
1.5
1.5
83.1
(31.4)
51.7
(2.6)
1,376.0
390.7
1,766.7
84.7
144.5
197.4
2,295.9
698.3
182.8
447.8
43.8
62.8
264.5
66.7
529.2
(18.7)
19.5
0.5
530.5
179.6
710.1
(5.5)
1,261.2
701.6
280.9
52.2
2,295.9
Year ended December 31,
2017
$
$
Net (income) attributable to noncontrolling interests
Net income attributable to JHG
$
655.5 $
49.1 $
704.6
The following summary provides pro forma information concerning the Group’s principal geographic areas for the year
ended December 31, 2017 (in millions):
JHG reports its financial results in accordance with U.S. 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.
Alternative performance measures
The following is a reconciliation of revenue, operating income, net income attributable to JHG and diluted earnings per
share to adjusted revenue, adjusted operating income, adjusted net income attributable to JHG and adjusted diluted
earnings per share for the years ended December 31, 2018 and 2017 (in millions, except per share and operating margin
data):
Reconciliation of revenue to adjusted revenue
Revenue
Distribution expenses (1)
Adjusted revenue
Reconciliation of operating income to adjusted operating income
Operating income
Employee compensation and benefits (2)
Long-term incentive plans (2)
Investment administration(2)
General, administrative and occupancy (2)
Depreciation and amortization (3)
Adjusted operating income
Operating margin (4)
Adjusted operating margin (5)
Reconciliation of net income attributable to JHG to adjusted net income
attributable to JHG
Net income attributable to JHG
Employee compensation and benefits (2)
Long-term incentive plans (2)
Investment administration(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 net income attributable to JHG
Less: allocation of earnings to participating stock-based awards
Adjusted net income attributable to JHG common shareholders
Weighted-average common shares outstanding — diluted (two class)
Diluted earnings per share (two class) (9)
Adjusted diluted earnings per share (two class) (10)
$
$
$
$
$
$
$
$
Year ended
December 31,
2018
Year ended
December 31,
2017 (Pro forma)
2,306.4 $
(446.7)
1,859.7 $
2,295.9
(447.8)
1,848.1
649.8 $
21.4
10.6
0.7
6.8
36.7
726.0 $
28.2 %
39.0 %
523.8 $
21.4
10.6
0.7
6.8
36.7
3.1
—
(46.0)
(7.5)
549.6
(13.4)
536.2 $
196.3
2.61 $
2.74 $
529.2
54.1
17.6
28.9
65.8
36.3
731.9
23.0 %
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 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.
40
41
(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 information technology 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) Operating margin is operating income divided by revenue.
(5) Adjusted operating margin is adjusted operating income divided by adjusted 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 gains 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 2017 adjustment
includes the impact of U.S. tax legislation passed in December 2017.
(9) Diluted earnings per share is net income attributable to JHG common shareholders divided by weighted-average
diluted common shares outstanding.
(10) Adjusted diluted earnings per share is adjusted 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, 2018 and 2017 (in millions):
Cash and cash equivalents held by the Group
Investment securities held by the Group
Fees and other receivables
Debt
December 31,
2018
2017
$ 879.0 $ 754.2
$ 277.9 $ 261.5
$ 309.2 $ 419.6
$ 319.1 $ 379.2
Cash and cash equivalents consist primarily of cash at banks held in money market funds. Cash and cash equivalents
held by consolidated VIEs and consolidated voting rights entities (“VREs”) are not available for general corporate
purposes and have been excluded from the table above.
42
(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 information technology 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) Operating margin is operating income divided by revenue.
(5) Adjusted operating margin is adjusted operating income divided by adjusted 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 gains 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 2017 adjustment
includes the impact of U.S. tax legislation passed in December 2017.
(10) Adjusted diluted earnings per share is adjusted 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, 2018 and 2017 (in millions):
Cash and cash equivalents held by the Group
Investment securities held by the Group
Fees and other receivables
Debt
December 31,
2018
2017
$ 879.0 $ 754.2
$ 277.9 $ 261.5
$ 309.2 $ 419.6
$ 319.1 $ 379.2
Cash and cash equivalents consist primarily of cash at banks held in money market funds. Cash and cash equivalents
held by consolidated 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,
interest expense, dividend payments, income tax payments and contingent consideration payments. 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, 2018, 2017 and 2016, is as follows (in millions):
Cash flows provided by (used for):
Year ended December 31,
2017
2016
2018
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
Cash balance at end of year
Operating Activities
$ 670.8 $ 444.1 $ 235.1
(108.3)
(338.6)
(48.7)
(260.5)
583.7
$ 916.6 $ 794.2 $ 323.2
519.5
(504.7)
12.1
471.0
323.2
100.9
(616.8)
(32.5)
122.4
794.2
(9) Diluted earnings per share is net income attributable to JHG common shareholders divided by weighted-average
Investing Activities
diluted common shares outstanding.
Cash provided by (used for) investing activities for the years ended December 31, 2018, 2017 and 2016, is as follows (in
millions):
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.
Purchases and sales of investment securities, net
Purchases and sales of securities by consolidated investment
products, net
Property, equipment and software
Proceeds from BNP Paribas transaction, net
Cash received (paid) on settled hedges, net
Cash acquired from acquisition of JCG
Other
Cash provided by (used for) investing activities
Year ended December 31,
2017
2018
35.1 $
$
7.5 $
2016
20.6
36.5
(29.1)
36.5
16.0
—
5.9
(65.6)
(14.2)
—
(47.9)
—
(1.2)
$ 100.9 $ 519.5 $ (108.3)
141.4
(17.7)
—
(23.7)
417.2
(5.2)
Cash inflows from investing activities in 2018 were primarily due to proceeds received from the sale of the Group’s
back-office and middle-office functions in the U.S., net sales of investment securities and cash received on settled
hedges within JHG’s economic seed hedge program. 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 cash inflows are partially offset by cash outflows related to property,
equipment and software purchases.
42
43
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 of $148.9 million from disposal of investments within
consolidated seeded investment products and redemptions of seed capital investment securities.
In 2016, the Group’s purchases and sales of investment securities, net contributed a cash use of $45.0 million to cash
used for investing activities while cash paid on settled hedges contributed a cash use of $47.9 million.
Financing Activities
Cash used for financing activities for the years ended December 31, 2018, 2017 and 2016, is as follows (in millions):
Dividends paid to shareholders
Repayment of long-term debt
Third-party sales (redemptions) in consolidated seeded investment products,
net
Purchase of common stock for stock-based compensation plans
Purchase of common stock as part of share buyback program
Payment of contingent consideration
Proceeds from issuance of options
Proceeds from settlement of convertible note hedge
Settlement of stock warrant
Proceeds from stock-based compensation plans
Other
Cash used for financing activities
$
$
Year ended December 31,
2017
(256.0) $
(92.5)
2018
(275.1) $
(95.3)
2016
(157.5)
(203.4)
(36.5)
(86.6)
(99.8)
(22.7)
—
—
—
—
(0.8)
(616.8) $
(141.4)
(52.1)
—
65.6
(54.3)
—
25.7
59.3
(47.8)
6.0
(5.9)
(504.7) $
—
—
—
11.0
—
(338.6)
Cash outflows from financing activities in 2018 were primarily due to $275.1 million of dividends paid to JHG
shareholders, common stock purchase for stock-based compensation plans and the share buyback program totaling
$186.4 million and payment of the remaining principal balance related to the Group’s 2018 Convertible Notes.
Cash outflows from financing activities in 2017 included dividend payments of $256.0 million, third-party redemptions
in consolidated seeded investment products of $92.5 million and principal payments related to JHG’s 2018 Convertible
Notes of $92.5 million.
Other Sources of Liquidity
At December 31, 2018, 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. The Group exercised the options to extend the term of the Credit Facility on the first
and second anniversary of the date of the agreement. The revised maturity date of the Credit Facility is February 16,
2024.
The Credit Facility 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.
44
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 of $148.9 million from disposal of investments within
consolidated seeded investment products and redemptions of seed capital investment securities.
In 2016, the Group’s purchases and sales of investment securities, net contributed a cash use of $45.0 million to cash
used for investing activities while cash paid on settled hedges contributed a cash use of $47.9 million.
Financing Activities
Cash used for financing activities for the years ended December 31, 2018, 2017 and 2016, is as follows (in millions):
Dividends paid to shareholders
Repayment of long-term debt
net
Third-party sales (redemptions) in consolidated seeded investment products,
Purchase of common stock for stock-based compensation plans
Purchase of common stock as part of share buyback program
Payment of contingent consideration
Proceeds from issuance of options
Proceeds from settlement of convertible note hedge
Settlement of stock warrant
Proceeds from stock-based compensation plans
Other
Cash used for financing activities
Year ended December 31,
2018
2017
$
(275.1) $
(256.0) $
(95.3)
(92.5)
(36.5)
(86.6)
(99.8)
(22.7)
—
—
—
—
(0.8)
(141.4)
(52.1)
—
25.7
59.3
(47.8)
6.0
(5.9)
2016
(157.5)
(203.4)
65.6
(54.3)
—
—
—
—
11.0
—
Cash outflows from financing activities in 2018 were primarily due to $275.1 million of dividends paid to JHG
shareholders, common stock purchase for stock-based compensation plans and the share buyback program totaling
$186.4 million and payment of the remaining principal balance related to the Group’s 2018 Convertible Notes.
Cash outflows from financing activities in 2017 included dividend payments of $256.0 million, third-party redemptions
in consolidated seeded investment products of $92.5 million and principal payments related to JHG’s 2018 Convertible
Notes of $92.5 million.
Other Sources of Liquidity
At December 31, 2018, 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. The Group exercised the options to extend the term of the Credit Facility on the first
and second anniversary of the date of the agreement. The revised maturity date of the Credit Facility is February 16,
2024.
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 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 £282.3 million ($359.5 million), resulting in capital above the regulatory group’s regulatory requirement
of £133.6 million ($170.2 million) as of December 31, 2018, 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, 2018 (in millions):
Debt
Interest payments
Capital leases
Operating leases
Total
1 to 3 years 3 to 5 years 5 years
Less than
1 year
$
— $
14.6
1.2
31.9
— $
43.9
0.7
60.1
$ 47.7 $ 104.7 $
More than
Total
— $ 300.0 $ 300.0
101.2
13.4
29.3
1.9
—
—
48.4
203.5
63.1
77.7 $ 376.5 $ 606.6
$
(616.8) $
(504.7) $
(338.6)
Short-Term Liquidity Requirements
Common Stock Purchases
Debt maturing in more than five years represents the principal value of the 2025 Senior Notes.
At the Annual General Meeting held on May 3, 2018, shareholders authorized JHG to make on-market purchases of up
to 10% of the issued share capital of the Group. In August 2018, the Group commenced an on-market buyback program
to repurchase up to $100 million of its ordinary shares on the NYSE and its CDIs on the ASX over 12 months. The
Group purchased 3,993,374 shares of common stock for $99.8 million in 2018. The purchased shares were cancelled.
On February 4, 2019, the Board approved JHG commencing a new on-market share buyback program in 2019. The
Group intends to spend up to $200 million to buy its ordinary shares on the NYSE and its CDIs on the ASX for its share
buyback program that is expected to be completed over the next 12 months. The program is subject to JHG appointing a
corporate broker.
During the first quarter 2019, JHG will purchase shares on-market for the annual share grants associated with 2018
variable compensation, which is not connected with the above Board approval. As a policy, JHG does not issue new
shares to employees as part of its annual compensation practices.
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.
The Credit Facility may be used for general corporate purposes. The Credit Facility bears interest on borrowings
outstanding at the relevant interbank offer rate plus a spread.
Dividends
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.
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, and general business
conditions and legal requirements. Dividends are subject to quarterly declaration by JHG’s Board of Directors.
44
45
The following cash dividends were declared and paid during the year ended December 31, 2018:
Dividend
per share
$0.32
$0.36
$0.36
$0.36
Date declared
February 5, 2018
May 8, 2018
July 31, 2018
October 31, 2018
$
$
$
$
Dividends paid
(in millions)
Date paid
March 2, 2018
June 1, 2018
August 24, 2018
63.1
71.6
71.2
69.2 November 30, 2018
On February 4, 2019, JHG’s Board of Directors declared a fourth quarter 2018 cash dividend of $0.36 per share. The
dividend will be paid on February 26, 2019, to shareholders of record at the close of business on February 15, 2019.
Long-Term Liquidity Requirements
Expected long-term commitments as of December 31, 2018, include operating and capital lease payment; 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 and Kapstream. JHG expects to fund its
long-term commitments with existing cash, cash generated from operations or by accessing capital and credit markets as
necessary.
2025 Senior Notes
The 2025 Senior Notes have a principal value of $300.0 million as of December 31, 2018, pay interest at 4.875%
semiannually on February 1 and August 1 of each year, and mature on August 1, 2025. JHG fully and unconditionally
guarantees the obligations of JCG in relation to the 2025 Senior Notes.
Intech
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 9.0% of Intech’s pre-incentive profits.
Contingent Consideration
The total maximum contingent amount payable related to Geneva, Perennial and Kapstream over the entire contingent
consideration period is $61.3 million, $42.2 million and $27.5 million, respectively, as of December 31, 2018. On
January 31, 2019, Kapstream reached defined revenue targets and the Group paid $14.4 million in February 2019.
For additional details of the contingent consideration refer to Note 9 — Fair Value Measurements.
Defined Benefit Pension Plan
The Group’s latest triennial valuation of its defined benefit pension plan resulted in a surplus on a technical provision’s
basis of $15.3 million (£12.0 million).
46
The following cash dividends were declared and paid during the year ended December 31, 2018:
Off-Balance Sheet Arrangements
Dividend
per share
Dividends paid
(in millions)
$0.32
$0.36
$0.36
$0.36
Date declared
February 5, 2018
May 8, 2018
July 31, 2018
October 31, 2018
$
$
$
$
63.1
71.6
71.2
Date paid
March 2, 2018
June 1, 2018
August 24, 2018
69.2 November 30, 2018
On February 4, 2019, JHG’s Board of Directors declared a fourth quarter 2018 cash dividend of $0.36 per share. The
dividend will be paid on February 26, 2019, to shareholders of record at the close of business on February 15, 2019.
Long-Term Liquidity Requirements
Expected long-term commitments as of December 31, 2018, include operating and capital lease payment; 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 and Kapstream. JHG expects to fund its
long-term commitments with existing cash, cash generated from operations or by accessing capital and credit markets as
necessary.
2025 Senior Notes
Intech
The 2025 Senior Notes have a principal value of $300.0 million as of December 31, 2018, pay interest at 4.875%
semiannually on February 1 and August 1 of each year, and mature on August 1, 2025. JHG fully and unconditionally
guarantees the obligations of JCG in relation to the 2025 Senior Notes.
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 9.0% of Intech’s pre-incentive profits.
Contingent Consideration
Defined Benefit Pension Plan
The total maximum contingent amount payable related to Geneva, Perennial and Kapstream over the entire contingent
consideration period is $61.3 million, $42.2 million and $27.5 million, respectively, as of December 31, 2018. On
January 31, 2019, Kapstream reached defined revenue targets and the Group paid $14.4 million in February 2019.
For additional details of the contingent consideration refer to Note 9 — Fair Value Measurements.
The Group’s latest triennial valuation of its defined benefit pension plan resulted in a surplus on a technical provision’s
basis of $15.3 million (£12.0 million).
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 U.S.
GAAP. The preparation of financial statements in conformity with U.S. 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.
Valuation of Investment Securities
Fair value of JHG’s investment securities 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.
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 re-measured 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.
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
46
47
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
JHG performs its annual impairment assessment of goodwill and indefinite-lived intangible assets on October 1. For its
2018 assessment, the Group elected to perform step one of the goodwill impairment assessment comparing the estimated
fair value of its single reporting unit to its carrying value. JHG opted to use a market value approach with a control
premium to estimate the enterprise value of its sole reporting unit. The results of the assessment revealed the estimated
fair value of the reporting unit was $1.6 billion greater than the carrying value. While the results of the assessment were
favorable, the stock price (a key input in the calculation) has declined since the October 1, 2018, assessment date and
JHG is at risk of failing step one of the assessment in 2019 if the price of JHG’s stock continues to deteriorate and
becomes sustained.
JHG also assessed its indefinite-lived intangible assets as part of the annual impairment assessment. A qualitative
approach was used to determine the likelihood of impairment, with AUM being the focus of the assessment. After
reviewing the results of the qualitative assessment, the Group concluded it is more likely than not that the fair values of
the Group’s intangible assets exceed their carrying values. However, certain intangible assets are at risk of impairment in
2019 primarily due to declines in product-specific AUM.
JHG’s definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. As such, the Group identified and recorded a $7.2 million impairment
associated with its Gartmore investment management agreements, which was recognized within depreciation and
amortization on the Group’s Consolidated Statements of Comprehensive Income for the year ended December 31, 2018.
No other definite-lived intangible asset impairments were identified during the year ended December 31, 2018.
Retirement Benefit Plans
The Group provides employees with retirement benefits through defined benefit 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.
48
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
JHG performs its annual impairment assessment of goodwill and indefinite-lived intangible assets on October 1. For its
2018 assessment, the Group elected to perform step one of the goodwill impairment assessment comparing the estimated
fair value of its single reporting unit to its carrying value. JHG opted to use a market value approach with a control
premium to estimate the enterprise value of its sole reporting unit. The results of the assessment revealed the estimated
fair value of the reporting unit was $1.6 billion greater than the carrying value. While the results of the assessment were
favorable, the stock price (a key input in the calculation) has declined since the October 1, 2018, assessment date and
JHG is at risk of failing step one of the assessment in 2019 if the price of JHG’s stock continues to deteriorate and
becomes sustained.
JHG also assessed its indefinite-lived intangible assets as part of the annual impairment assessment. A qualitative
approach was used to determine the likelihood of impairment, with AUM being the focus of the assessment. After
reviewing the results of the qualitative assessment, the Group concluded it is more likely than not that the fair values of
the Group’s intangible assets exceed their carrying values. However, certain intangible assets are at risk of impairment in
2019 primarily due to declines in product-specific AUM.
JHG’s definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. As such, the Group identified and recorded a $7.2 million impairment
associated with its Gartmore investment management agreements, which was recognized within depreciation and
amortization on the Group’s Consolidated Statements of Comprehensive Income for the year ended December 31, 2018.
No other definite-lived intangible asset impairments were identified during the year ended December 31, 2018.
Retirement Benefit Plans
The Group provides employees with retirement benefits through defined benefit 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 table below shows the movement in funded status that would result from certain sensitivity changes (in millions):
Discount rate: −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, 2018
10.2
$
2.5
$
17.8
$
54.8
$
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 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
change, 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.
48
49
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 $7.1 million, $103.9 million
and $54.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018 and
2017, $68.6 billion and $98.8 billion of AUM were generating performance fees, respectively.
Investment Securities
At December 31, 2018, the Group was exposed to market price risk as a result of investment securities on its
Consolidated Balance Sheets. The following is a summary of the effect that a hypothetical 10% increase or decrease in
market prices would have on JHG’s investment securities subject to market price fluctuations as of December 31, 2018
(in millions):
Investment securities:
Seeded investment products
Investments related to deferred compensation plans
Other
Total investment securities
Fair value
assuming a 10% assuming a 10%
Fair value
Fair value
increase
decrease
$
$
447.5 $
120.3
6.7
574.5 $
492.3 $
132.3
7.4
632.0 $
402.8
108.3
6.0
517.1
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, 2018 and 2017 (in millions):
Futures
Credit default swaps
Index swaps
Total return swaps
Foreign currency forward contacts
Notional value
December 31, 2018 December 31, 2017
190.6
147.1 $
$
117.5
133.2 $
$
76.7
$
— $
70.3
77.2 $
$
118.8
131.8 $
$
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.
50
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 $7.1 million, $103.9 million
and $54.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018 and
2017, $68.6 billion and $98.8 billion of AUM were generating performance fees, respectively.
Investment Securities
(in millions):
At December 31, 2018, the Group was exposed to market price risk as a result of investment securities on its
Consolidated Balance Sheets. The following is a summary of the effect that a hypothetical 10% increase or decrease in
market prices would have on JHG’s investment securities subject to market price fluctuations as of December 31, 2018
Investment securities:
Seeded investment products
Other
Total investment securities
Investments related to deferred compensation plans
Fair value
Fair value
assuming a 10% assuming a 10%
Fair value
increase
decrease
$
447.5 $
492.3 $
120.3
6.7
132.3
7.4
$
574.5 $
632.0 $
402.8
108.3
6.0
517.1
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, 2018 and 2017 (in millions):
Futures
Credit default swaps
Index swaps
Total return swaps
Foreign currency forward contacts
December 31, 2018 December 31, 2017
Notional value
$
$
$
$
$
147.1 $
133.2 $
— $
77.2 $
131.8 $
190.6
117.5
76.7
70.3
118.8
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.
Performance Fees
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.
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):
December 31, 2018
December 31, 2017
Other
comprehensive
income
Other
comprehensive
income
Net income
attributable to attributable to attributable to attributable to
Net income
Great British pound
Australian dollar
Euro
JHG
JHG
JHG
JHG
$
$
$
(13.9) $
(4.2) $
(0.6) $
176.2 $
27.9 $
0.8 $
(19.5) $
— $
16.4 $
150.0
30.0
2.0
50
51
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Financial Statements:
Reports of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP
Management’s Report on Internal Control Over Financial Reporting
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and
2016
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2017 and 2016
Notes to the 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
53
55
56
57
58
59
60
52
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Financial Statements:
Reports of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP
Management’s Report on Internal Control Over Financial Reporting
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and
2016
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2017 and 2016
Notes to the 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
53
55
56
57
58
59
60
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Janus Henderson Group plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Janus Henderson Group plc and its
subsidiaries (the “Group”) as of December 31, 2018 and 2017, 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, 2018, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the Group's internal
control over financial reporting as of December 31, 2018, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Group as of December 31, 2018 and 2017, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Group maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2018, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Group's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management's Report on Internal Control over Financial
Reporting. Our responsibility is to express opinions on the Group’s consolidated financial statements and on
the Group's internal control over financial reporting 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 Group 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 in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements 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. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we
52
53
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
London, UK
February 26, 2019
We have served as the Group’s auditor since 2014.
54
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
Management’s Report on Internal Control over Financial Reporting
opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
London, UK
February 26, 2019
We have served as the Group’s auditor since 2014.
JHG management is responsible for establishing and maintaining adequate internal control over JHG’s financial
reporting, as defined in Rules 13a 15(f) and 15d 15(f) under the Securities Exchange Act of 1934. JHG’s internal control
system was designed to provide reasonable assurance to JHG’s management and Board of Directors regarding the
preparation and fair presentation of published financial statements. There are inherent limitations in the effectiveness of
any internal control, including the possibility of human error and the circumvention or overriding of controls.
Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.
JHG management has assessed the effectiveness of JHG’s internal controls over financial reporting as of December 31,
2018. In making this assessment, JHG management used the framework set forth in the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013).
Based on the assessment using those criteria, JHG management believes that as of December 31, 2018, internal control
over financial reporting is effective.
JHG’s independent registered public accounting firm audited the financial statements included in the Annual Report on
Form 10-K and has issued an audit report on management’s assessment of JHG’s internal control over financial
reporting. This report appears on page 53 of this Annual Report on Form 10-K.
February 26, 2019
54
55
JANUS HENDERSON GROUP PLC
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions, Except Share Data)
December 31, December 31,
2018
2017
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, 480,000,000 shares authorized and 196,412,764 and 200,406,138 shares issued
and outstanding, respectively)
Additional paid-in-capital
Treasury shares ( 4,523,802 and 4,071,284 shares held, respectively)
Accumulated other comprehensive loss, net of tax
Retained earnings
Total shareholders’ equity
Nonredeemable noncontrolling interests
Total equity
Total liabilities, redeemable noncontrolling interests and equity
$
$
880.4
291.8
309.2
144.4
$
$
36.2
282.7
5.0
69.4
2,019.1
69.5
3,123.3
1,478.0
206.5
15.5
6,911.9
233.2
345.4
—
143.3
6.5
728.4
54.7
319.1
729.9
3.7
79.2
1,915.0
760.1
280.4
419.6
239.9
34.1
419.7
12.9
75.9
2,242.6
70.6
3,204.8
1,533.9
199.3
21.5
7,272.7
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
136.1
190.3
294.6
3,824.5
(170.8)
(423.5)
1,314.5
4,839.3
21.5
4,860.8
6,911.9
$
300.6
3,842.9
(155.8)
(301.8)
1,151.4
4,837.3
38.2
4,875.5
7,272.7
The accompanying notes are an integral part of these consolidated financial statements.
56
JANUS HENDERSON GROUP PLC
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions, Except Share Data)
JANUS HENDERSON GROUP PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Millions, Except per 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:
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)
Accounts payable and accrued liabilities
Current portion of accrued compensation, benefits and staff costs
$
$
REDEEMABLE NONCONTROLLING INTERESTS
EQUITY
Common stock ( $1.50 par, 480,000,000 shares authorized and 196,412,764 and 200,406,138 shares issued
and outstanding, respectively)
Additional paid-in-capital
Treasury shares ( 4,523,802 and 4,071,284 shares held, respectively)
Accumulated other comprehensive loss, net of tax
Retained earnings
Total shareholders’ equity
Nonredeemable noncontrolling interests
Total equity
Total liabilities, redeemable noncontrolling interests and equity
$
$
The accompanying notes are an integral part of these consolidated financial statements.
December 31, December 31,
2018
2017
$
$
2,019.1
2,242.6
$
6,911.9
$
7,272.7
880.4
291.8
309.2
144.4
36.2
282.7
5.0
69.4
69.5
3,123.3
1,478.0
206.5
15.5
233.2
345.4
—
143.3
6.5
728.4
54.7
319.1
729.9
3.7
79.2
294.6
3,824.5
(170.8)
(423.5)
1,314.5
4,839.3
21.5
4,860.8
6,911.9
760.1
280.4
419.6
239.9
34.1
419.7
12.9
75.9
70.6
3,204.8
1,533.9
199.3
21.5
292.9
398.7
57.2
234.8
21.5
1,005.1
23.0
322.0
752.6
4.6
99.6
300.6
3,842.9
(155.8)
(301.8)
1,151.4
4,837.3
38.2
4,875.5
7,272.7
1,915.0
2,206.9
136.1
190.3
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
Total comprehensive income (loss) attributable to JHG
$
$
$
Year ended December 31,
2017
2018
2016
$ 1,947.4 $ 1,480.9 $
7.1
154.2
197.7
2,306.4
103.9
87.3
146.2
1,818.3
886.1
54.8
—
77.3
1,018.2
613.0
188.6
446.7
46.9
37.9
253.7
69.8
1,656.6
649.8
(15.7)
(40.9)
68.6
661.8
(162.2)
499.6
24.2
523.8 $
543.3
150.8
351.9
43.8
31.2
202.2
52.8
1,376.0
442.3
(11.9)
18.0
(1.0)
447.4
211.0
658.4
(2.9)
655.5 $
273.5
87.5
227.4
46.2
13.9
109.8
27.8
786.1
232.1
(6.6)
(11.7)
(1.9)
211.9
(34.6)
177.3
11.7
189.0
2.62 $
2.61 $
3.97 $
3.93 $
1.69
1.66
(124.3) $
—
3.7
(120.6)
1.4
(119.2) $
379.0 $
25.6
404.6 $
125.0 $
(2.0)
(11.1)
111.9
20.8
132.7 $
770.3 $
17.9
788.2 $
(247.1)
(0.4)
15.0
(232.5)
(12.4)
(244.9)
(55.2)
(0.7)
(55.9)
The accompanying notes are an integral part of these consolidated financial statements.
56
57
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:
$
499.6
$
658.4
$
177.3
Year ended December 31,
2017
2018
2016
Depreciation and amortization
Deferred income taxes
Stock-based compensation plan expense
Gains (losses) from equity-method investments, net
Investment gains (losses), net
Gain from BNP Paribas transaction
Dai-ichi option fair value adjustments
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
Proceeds from (purchase of):
Investment securities, net
Property, equipment and software
Investment securities by consolidated seeded investment products, net
Investment income received by consolidated funds
Cash movement on deconsolidation of consolidated funds
Proceeds from BNP Paribas transaction, net
Cash received (paid) on settled hedges, net
Dividends received from equity-method investments
Dividends attributable to noncontrolling interests
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
Purchase of common stock for share buyback program
Dividends paid to shareholders
Repayment of long-term debt
Payment of contingent consideration
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
69.8
(10.5)
82.4
—
40.9
(22.3)
(26.8)
(16.1)
4.8
3.9
134.5
(89.4)
670.8
52.8
(355.6)
67.4
0.6
(18.0)
—
—
(20.9)
7.2
(0.9)
(117.8)
170.9
444.1
27.8
2.0
37.3
3.1
(1.2)
—
—
(4.6)
18.1
(4.4)
(6.1)
(14.2)
235.1
—
417.2
—
35.1
(29.1)
36.5
—
—
36.5
16.0
—
—
5.9
100.9
—
—
—
8.6
(86.6)
(99.8)
(275.1)
(95.3)
(22.7)
(8.1)
(36.5)
(1.3)
(616.8)
(32.5)
122.4
794.2
916.6
14.8
184.7
880.4
36.2
916.6
$
$
$
$
$
7.5
(17.7)
141.4
7.9
(11.2)
—
(23.7)
0.2
(2.6)
0.5
519.5
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
794.2
8.0
113.1
760.1
34.1
794.2
$
$
$
$
$
20.6
(14.2)
(65.6)
6.5
(8.4)
—
(47.9)
0.7
—
—
(108.3)
—
—
—
11.0
(54.3)
—
(157.5)
(203.4)
—
65.6
—
(338.6)
(48.7)
(260.5)
583.7
323.2
7.3
40.7
279.0
44.2
323.2
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
58
JANUS HENDERSON GROUP PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
3
.
7
7
1
)
5
.
2
3
2
(
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5
.
7
5
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4
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5
6
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1
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(
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3
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1
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—
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(
2
.
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—
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.
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—
—
—
—
—
—
CASH FLOWS PROVIDED BY (USED FOR):
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Stock-based compensation plan expense
Gains (losses) from equity-method investments, net
Investment gains (losses), net
Gain from BNP Paribas transaction
Dai-ichi option fair value adjustments
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
Proceeds from (purchase of):
Investment securities, net
Property, equipment and software
Investment securities by consolidated seeded investment products, net
Investment income received by consolidated funds
Cash movement on deconsolidation of consolidated funds
Proceeds from BNP Paribas transaction, net
Cash received (paid) on settled hedges, net
Dividends received from equity-method investments
Dividends attributable to noncontrolling interests
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
Purchase of common stock for share buyback program
Dividends paid to shareholders
Repayment of long-term debt
Payment of contingent consideration
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
Year ended December 31,
2018
2017
2016
$
499.6
$
658.4
$
177.3
—
417.2
—
69.8
(10.5)
82.4
—
40.9
(22.3)
(26.8)
(16.1)
4.8
3.9
134.5
(89.4)
670.8
35.1
(29.1)
36.5
—
—
36.5
16.0
—
—
5.9
100.9
—
—
—
8.6
(86.6)
(99.8)
(275.1)
(95.3)
(22.7)
(8.1)
(36.5)
(1.3)
(616.8)
(32.5)
122.4
794.2
916.6
14.8
184.7
880.4
36.2
916.6
52.8
(355.6)
67.4
0.6
(18.0)
—
—
(20.9)
7.2
(0.9)
(117.8)
170.9
444.1
7.5
(17.7)
141.4
7.9
(11.2)
—
(23.7)
0.2
(2.6)
0.5
519.5
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
794.2
8.0
113.1
760.1
34.1
794.2
27.8
2.0
37.3
3.1
(1.2)
—
—
(4.6)
18.1
(4.4)
(6.1)
(14.2)
235.1
20.6
(14.2)
(65.6)
6.5
(8.4)
—
(47.9)
0.7
—
—
(108.3)
—
—
—
11.0
(54.3)
—
(157.5)
(203.4)
—
65.6
—
(338.6)
(48.7)
(260.5)
583.7
323.2
7.3
40.7
279.0
44.2
323.2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
58
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9
5
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.
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 U.S. GAAP. The Group’s consolidated financial
statements include all majority-owned subsidiaries and consolidated seeded investment products. 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 dividend, and the Group’s main economic environment, management concluded
that the post-Merger functional currency of JHG is USD.
Certain prior year amounts in the Consolidated Statements of Comprehensive Income have been reclassified to conform
to current year presentation. Specifically, revenue amounts related to certain transfer agent and administrative activities
performed for investment products that were previously classified in other revenue were reclassified to shareowner
servicing fees. There is no change to consolidated total revenue, operating income, net income or cash flows as a result
of this change in classification.
Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. 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, resources are allocated and the business is managed by the chief
operating decision maker, the CEO, on an aggregated basis. Strategic and financial management decisions are
determined centrally by the CEO and, on this basis, the Group operates as a single segment investment management
business.
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 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
60
JANUS HENDERSON GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Description of the Business
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.
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.
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 are 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 $24.7 million,
$24.6 million and $8.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Property,
equipment and software are summarized as follows (in millions):
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 U.S. GAAP. The Group’s consolidated financial
statements include all majority-owned subsidiaries and consolidated seeded investment products. 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 dividend, and the Group’s main economic environment, management concluded
that the post-Merger functional currency of JHG is USD.
Certain prior year amounts in the Consolidated Statements of Comprehensive Income have been reclassified to conform
to current year presentation. Specifically, revenue amounts related to certain transfer agent and administrative activities
performed for investment products that were previously classified in other revenue were reclassified to shareowner
servicing fees. There is no change to consolidated total revenue, operating income, net income or cash flows as a result
of this change in classification.
Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. 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.
JHG is a global asset manager and manages a range of investment products, operating across various product lines,
distribution channels and geographic regions. However, resources are allocated and the business is managed by the chief
operating decision maker, the CEO, on an aggregated basis. Strategic and financial management decisions are
determined centrally by the CEO and, on this basis, the Group operates as a single segment investment management
Segment Information
business.
Consolidation of Investment Products
Furniture, fixtures and computer equipment
Leasehold improvements
Computer software
Property, equipment and software, gross
Accumulated depreciation
Property, equipment and software, net
Depreciation
period
3-10 years
Over the shorter of 20
years or the period of
the lease
3-7 years
29.8
58.3
$ 132.2 $ 120.0
(49.4)
70.6
December 31,
2018
2017
$
31.3 $
31.9
(62.7)
69.5 $
35.3
65.6
$
The Group performs periodic consolidation analyses of its seeded investment products to determine if the product is a
VIE or a 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
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
60
61
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, 2018, 2017 and 2016.
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 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 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 contingent 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.
62
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
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.
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, 2018, 2017 and 2016.
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.
Deferred Commissions
Equity Method Investments
Investment Securities
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.
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.
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 JHG 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 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 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 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 contingent 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.
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.
Other Investment Securities
Other investment securities primarily 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 these 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.
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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.
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.
Nonredeemable Noncontrolling Interests and Redeemable Noncontrolling Interests
Nonredeemable 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
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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.
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.
Derivative Instruments
Level 1 Fair Value Measurements
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.
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.
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.
Nonredeemable Noncontrolling Interests and Redeemable Noncontrolling Interests
Level 3 Fair Value Measurements
Nonredeemable 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
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.
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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 this note 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.
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 is measured and recognized based on the five-step process outlined in U.S. GAAP. Revenue is determined
based on the transaction price negotiated with the customer, net of rebates. Management fees, performance fees,
shareowner servicing fees and other revenue are derived from providing professional services to manage investment
products.
Management fees are earned over time as services are provided and are generally based on a percentage of the market
value of AUM. These fees 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. Performance fees are generated on
certain management contracts when performance hurdles or other specified criteria are achieved. Performance fees for
all fund ranges and separate accounts are recognized when it is probable that a significant reversal of revenue recognized
will not occur in future periods. There are no performance fee contracts where revenue can be clawed back. There are no
cumulative revenues recognized that would be reversed if all of the existing investments became worthless.
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 earned but not yet received is recognized within fees and other receivables on the Group’s
Condensed Consolidated Balance Sheets.
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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 this note for further information.
Shareowner servicing fees are earned for services rendered related to transfer agent and administrative activities
performed for investment products. These services are transferred over time and are generally based on a percentage of
the market value of AUM.
Other revenue includes distribution and servicing fees earned from U.S. mutual funds associated with mutual fund
transfer agent, accounting, shareholder servicing and participant recordkeeping activities. These services are transferred
over time and are generally based on a percentage of the market value of AUM.
Income Taxes
U.S. Mutual Fund Performance Fees
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.
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
products.
Revenue is measured and recognized based on the five-step process outlined in U.S. GAAP. Revenue is determined
based on the transaction price negotiated with the customer, net of rebates. Management fees, performance fees,
shareowner servicing fees and other revenue are derived from providing professional services to manage investment
Management fees are earned over time as services are provided and are generally based on a percentage of the market
value of AUM. These fees 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. Performance fees are generated on
certain management contracts when performance hurdles or other specified criteria are achieved. Performance fees for
all fund ranges and separate accounts are recognized when it is probable that a significant reversal of revenue recognized
will not occur in future periods. There are no performance fee contracts where revenue can be clawed back. There are no
cumulative revenues recognized that would be reversed if all of the existing investments became worthless.
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 earned but not yet received is recognized within fees and other receivables on the Group’s
Condensed Consolidated Balance Sheets.
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: (i) 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 (ii) 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.
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.
Principal versus Agent
The Group utilizes third-party intermediaries to fulfill certain performance obligations in its revenue agreements.
Generally, JHG is deemed to be the principal in these arrangements because the Group controls the investment
management and other related services before they are transferred to customers. Such control is evidenced by the
Group’s primary responsibility to customers, the ability to negotiate the third-party contract price and select and direct
third-party service providers, or a combination of these factors. Therefore, distribution and service fee revenues and the
related third-party distribution and service expenses are reported on a gross basis.
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 a graded basis 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.
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The Group had nil and $9.9 million of stock-based compensation costs included in retained earnings during the years
ended December 31, 2018 and 2017, respectively, and no proceeds from stock-based compensation plans included in
retained earnings for either of the years ended December 31, 2018 and 2017. 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, 2018
and 2017, was nil and $(105.4) million, respectively.
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.
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
that 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.
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 re-measured 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 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.
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The Group had nil and $9.9 million of stock-based compensation costs included in retained earnings during the years
ended December 31, 2018 and 2017, respectively, and no proceeds from stock-based compensation plans included in
retained earnings for either of the years ended December 31, 2018 and 2017. 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, 2018
and 2017, was nil and $(105.4) million, respectively.
Commissions
Earnings Per Share
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.
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
that 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.
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 re-measured 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 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.
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
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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 that have been amortized in the period. Net
periodic benefit costs are recognized as an operating expense.
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
Recent Accounting Pronouncements Adopted
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 at 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 became effective on
January 1, 2018.
70
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 that have been amortized in the period. Net
periodic benefit costs are recognized as an operating expense.
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
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
million.
shares became $1.50.
Note 3 — Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted
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 at 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 became effective on
January 1, 2018.
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
became effective on January 1, 2018. In addition, entities are required to adopt the amendment by using the same
transition method they used to adopt the new revenue standard.
The Group adopted the new revenue recognition standard, along with the updated principal-versus-agent guidance,
effective January 1, 2018, using the retrospective method, which required adjustments to be reflected as of January 1,
2016. In connection with the adoption of this guidance, the Group determined that the new guidance does not change the
timing of when the Group recognizes revenue. However, management did conclude that certain distribution and
servicing fees earned from its U.S. mutual funds associated with mutual fund transfer agent, accounting, shareholder
servicing and participant recordkeeping activities could no longer be reported net of the expenses paid to third-party
intermediaries that perform such services. Under the new guidance, the Group is deemed to have control over the
distribution and servicing activities before they are transferred to the U.S. mutual funds. As such, distribution and
servicing fees collected from the Group’s U.S. mutual funds are reported separately from distribution and servicing fees
paid to third-party intermediaries on the Group’s Condensed Consolidated Statements of Comprehensive Income.
The adoption of the standard increased management fees, shareowner servicing fees, other revenue and distribution
expenses on the Group’s Condensed Consolidated Statements of Comprehensive Income as follows (in millions):
Increase in:
Management fees
Shareowner servicing fees
Other revenue
Distribution expenses
Year ended December 31,
2017
2016
$
$
$
$
15.8 $
9.7 $
49.1 $
74.6 $
18.3
—
—
18.3
The adoption of the standard did not have an impact to net income attributable to JHG on the Group’s Condensed
Consolidated Statements of Comprehensive Income.
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 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 became
effective on January 1, 2018.
On January 1, 2018, the Group adopted the financial instruments accounting standard on a modified retrospective basis.
The accounting standard required the Group to reclassify a $2.5 million unrealized gain related to available-for-sale
securities in accumulated other comprehensive loss to retained earnings as a beginning of period cumulative-effect
adjustment. As of January 1, 2018, the balance in accumulated other comprehensive loss related to available-for-sale
securities is zero, and gains and losses associated with all equity securities are recognized in investment gains (losses),
net on the Group’s Condensed Consolidated Statements of Comprehensive Income.
Retirement Benefit Plans
In March 2017, the FASB issued an Accounting Standards Update (“ASU”) that requires the bifurcation of net periodic
pension costs. The service cost component is presented with other employee compensation costs in operating income,
70
71
while the other components of net periodic pension costs are presented separately outside of operations. The guidance
became effective on January 1, 2018. The impact to other components of net periodic pension costs (presented separately
outside of operating expenses) for the year ended December 31, 2018, was $5.8 million.
Statements 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 became effective on January 1, 2018. The adoption of the new accounting
standard did not have a material impact on the Group’s Condensed Consolidated Statements of Cash Flows.
Fair Value Measurement Disclosures
In August 2018, the FASB issued an ASU in order to modify the disclosure requirements on fair value measurements.
The ASU provides for the removal of disclosure requirements related to (i) transfers between Level 1 and Level 2 of the
fair value hierarchy, (ii) the policy for timing of transfer between levels and (iii) the valuation processes for Level 3 fair
value measurements. The ASU modifies disclosure requirements to report liquidation events for investments in entities
that calculate NAV. The ASU also adds requirements related to unrealized gains and losses included in other
comprehensive income, and requirements related to the range and weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements.
The ASU is effective January 1, 2020, and allows for early adoption of the disclosure removals and modifications
separate from the additions. The Group early adopted the removal and modification provisions effective September 30,
2018, and has removed its disclosures related to Level 1 and Level 2 transfers. Disclosures related to the valuation
processes for Level 3 fair value measurements have also been removed. The Group is currently evaluating the impact of
adopting the disclosure additions prescribed by the ASU.
Recent Accounting Pronouncements Not Yet Adopted
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 onto 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 fiscal years beginning after December 15, 2018.
The Group is finalizing its evaluation of the effect of adopting this new accounting standard and has focused its efforts
on determining the impact of the guidance on its property and equipment leases. The Group’s property leases represent
the vast majority of its lease commitments, with office spaces in Denver and London representing a significant portion of
its property. The Group will adopt the guidance effective January 1, 2019, using the modified retrospective approach.
Comparative prior periods will not be adjusted upon adoption, and the Group will utilize the practical expedients
available under the guidance. Specifically, the Group will not (i) reassess existing contracts for embedded leases,
(ii) reassess existing lease agreements for finance or operating classification, and (iii) reassess existing lease agreements
in consideration of initial direct costs.
Although subject to finalization of its analysis, the Group anticipates recording right of use assets of approximately
$133 million and a corresponding lease liability of approximately $150 million upon adoption of the guidance.
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
72
while the other components of net periodic pension costs are presented separately outside of operations. The guidance
became effective on January 1, 2018. The impact to other components of net periodic pension costs (presented separately
outside of operating expenses) for the year ended December 31, 2018, was $5.8 million.
Group is finalizing its evaluation of the effect of adopting this new accounting standard. The standard is not expected to
have a material impact on the Group’s results of operations or financial position.
Retirement Benefit Plans
In August 2018, the FASB issued an ASU that modifies the disclosure requirements for employers that sponsor defined
benefit pension plans. The ASU removes, adds and clarifies a number of disclosure requirements related to sponsored
benefit plans. The standard is effective January 1, 2021, for calendar year-end companies, and early adoption is
permitted. The Group is evaluating the effect of adopting this new accounting standard.
Implementation Costs — Cloud Computing Arrangements
In August 2018, the FASB issued an ASU that aligns the requirements for capitalizing implementation costs incurred in
a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to
develop or obtain internal-use software. The ASU is effective January 1, 2020, for calendar year-end companies and for
the interim periods within those years. Early adoption is permitted. The ASU allows either a retrospective or prospective
approach to all implementation costs incurred after adoption. The Group is evaluating the effect of adopting this new
accounting standard.
Note 4 — Acquisitions
Merger with JCG
On May 30, 2017 (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.
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.
Statements 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 became effective on January 1, 2018. The adoption of the new accounting
standard did not have a material impact on the Group’s Condensed Consolidated Statements of Cash Flows.
Fair Value Measurement Disclosures
In August 2018, the FASB issued an ASU in order to modify the disclosure requirements on fair value measurements.
The ASU provides for the removal of disclosure requirements related to (i) transfers between Level 1 and Level 2 of the
fair value hierarchy, (ii) the policy for timing of transfer between levels and (iii) the valuation processes for Level 3 fair
value measurements. The ASU modifies disclosure requirements to report liquidation events for investments in entities
that calculate NAV. The ASU also adds requirements related to unrealized gains and losses included in other
comprehensive income, and requirements related to the range and weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements.
The ASU is effective January 1, 2020, and allows for early adoption of the disclosure removals and modifications
separate from the additions. The Group early adopted the removal and modification provisions effective September 30,
2018, and has removed its disclosures related to Level 1 and Level 2 transfers. Disclosures related to the valuation
processes for Level 3 fair value measurements have also been removed. The Group is currently evaluating the impact of
adopting the disclosure additions prescribed by the ASU.
Recent Accounting Pronouncements Not Yet Adopted
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 onto 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 fiscal years beginning after December 15, 2018.
The Group is finalizing its evaluation of the effect of adopting this new accounting standard and has focused its efforts
on determining the impact of the guidance on its property and equipment leases. The Group’s property leases represent
the vast majority of its lease commitments, with office spaces in Denver and London representing a significant portion of
its property. The Group will adopt the guidance effective January 1, 2019, using the modified retrospective approach.
Comparative prior periods will not be adjusted upon adoption, and the Group will utilize the practical expedients
available under the guidance. Specifically, the Group will not (i) reassess existing contracts for embedded leases,
(ii) reassess existing lease agreements for finance or operating classification, and (iii) reassess existing lease agreements
in consideration of initial direct costs.
Although subject to finalization of its analysis, the Group anticipates recording right of use assets of approximately
$133 million and a corresponding lease liability of approximately $150 million upon adoption of the guidance.
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
72
73
Fair Values of Assets Acquired and Liabilities Assumed
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
Net assets acquired
Goodwill
Final purchase
price allocation
$
$
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
2,630.2
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. 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
Debt
Useful
life (weighted-
Fair value average in years)
$ 2,155.0
202.0
33.0
14.0
381.0
$ 2,785.0
Indefinite
15
15
Indefinite
Indefinite
The fair value of JHG’s debt was valued using broker quotes and recent trading activity, which are considered fair value
Level 2 inputs.
74
Fair Values of Assets Acquired and Liabilities Assumed
Deferred Tax Liabilities, Net
The final allocation of the consideration transferred to the assets acquired and liabilities assumed are presented in the
following table (in millions):
Final purchase
price allocation
$
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
$
2,630.2
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
Net assets acquired
Goodwill
Intangible Assets
Investment management contracts:
Mutual funds
Separate accounts
ETNs
ETFs
Trademarks
Total
Debt
Level 2 inputs.
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.
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. Acquired intangible assets and their weighted-average estimated
useful lives are presented in the following table (in millions):
Useful
life (weighted-
Fair value average in years)
$ 2,155.0
Indefinite
202.0
33.0
14.0
381.0
15
15
Indefinite
Indefinite
$ 2,785.0
The fair value of JHG’s debt was valued using broker quotes and recent trading activity, which are considered fair value
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
JCG Results of Operations
Year ended December 31,
2017
2016
$ 2,182.6 $ 2,010.6
336.2
$
704.6 $
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
Contingent Consideration
Closing Date —
December 31, 2017
752.9
$
354.0
$
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, 2018, 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.
Unconsolidated Variable Interest Entities
At December 31, 2018 and 2017, JHG’s carrying value of investment securities included on the Consolidated Balance
Sheets pertaining to unconsolidated VIEs was $3.1 million and $6.2 million, respectively. JHG’s total exposure to
unconsolidated VIEs represents the value of its economic ownership interest in the investment securities.
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75
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
JHG's net interest in consolidated VREs
December 31, December 31,
2018
2017
$
$
13.9 $
1.4
0.1
(0.1)
15.3
(6.0)
9.3 $
18.9
5.9
0.6
(2.2)
23.2
(6.6)
16.6
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 Voting Rights Entities
At December 31, 2018 and 2017, JHG’s carrying value of investment securities included on the Consolidated Balance
Sheets pertaining to unconsolidated VREs was $50.7 million and $50.0 million, respectively. JHG’s total exposure to
unconsolidated VREs represents the value of its economic ownership interest in the investment securities.
Note 6 — Investment Securities
JHG’s investment securities as of December 31, 2018 and 2017, are summarized as follows (in millions):
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 investment securities
December 31,
2018
2017
282.7 $
13.9
53.8
71.6
25.5
447.5
120.3
6.7
574.5 $
419.7
18.9
56.2
75.6
27.5
597.9
94.0
8.2
700.1
$
$
Trading Securities
Net unrealized gains (losses) on investment securities held as of December 31, 2018, 2017 and 2016, are summarized as
follows (in millions):
Unrealized gains (losses) on investment securities held at
period end
$ (40.6) $
25.2 $
8.4
76
Year ended December 31,
2017
2016
2018
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):
December 31, December 31,
2018
2017
$
13.9 $
1.4
0.1
(0.1)
15.3
(6.0)
18.9
5.9
0.6
(2.2)
23.2
(6.6)
16.6
Investment securities
Cash and cash equivalents
Other current assets
Accounts payable and accrued liabilities
Total
Redeemable noncontrolling interests in consolidated VREs
JHG's net interest in consolidated VREs
$
9.3 $
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 Voting Rights Entities
At December 31, 2018 and 2017, JHG’s carrying value of investment securities included on the Consolidated Balance
Sheets pertaining to unconsolidated VREs was $50.7 million and $50.0 million, respectively. JHG’s total exposure to
unconsolidated VREs represents the value of its economic ownership interest in the investment securities.
Note 6 — Investment Securities
JHG’s investment securities as of December 31, 2018 and 2017, are summarized as follows (in millions):
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 investment securities
December 31,
2018
2017
$
282.7 $
419.7
13.9
53.8
71.6
25.5
447.5
120.3
6.7
18.9
56.2
75.6
27.5
597.9
94.0
8.2
$
574.5 $
700.1
Trading Securities
follows (in millions):
Net unrealized gains (losses) on investment securities held as of December 31, 2018, 2017 and 2016, are summarized as
Unrealized gains (losses) on investment securities held at
period end
$ (40.6) $
25.2 $
8.4
Year ended December 31,
2018
2017
2016
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, 2018 and 2017 (in millions):
Futures
Credit default swaps
Index swaps
Total return swaps
Foreign currency forward contracts
Notional Value
December 31, 2018 December 31, 2017
190.6
$
117.5
76.7
70.3
118.8
147.1 $
133.2
—
77.2
131.8
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 and are immaterial individually and in
aggregate.
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, 2018, 2017 and
2016 (in millions):
Foreign currency translation
Foreign currency forward contracts
Total
$
$
Derivative Instruments in Consolidated Seeded Investment Products
Year ended December 31,
2017
(3.2) $
3.2
— $
2018
(6.8) $
6.8
— $
2016
29.6
(29.6)
—
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 and are immaterial individually and in
aggregate. Gains and losses on these derivative instruments are classified within investment gains (losses), net in JHG’s
Consolidated Statements of Comprehensive Income.
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JHG’s consolidated seeded investment products were party to the following derivative instruments as of December 31,
2018 and 2017 (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, 2018 December 31, 2017
241.2
$
10.2
15.0
36.7
58.3
144.3
2.7
135.9
267.8 $
8.7
6.2
23.7
61.5
9.6
8.3
154.9
As of December 31, 2018 and 2017, 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, 2018 and 2017, the notional values of the agreements
totaled $3.9 million and $4.0 million, 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, 2018 and 2017, the fair value of the credit default swap contracts selling protection was $0.1 million and
$0.1 million, respectively.
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, 2018, 2017 and 2016 (in millions):
Seeded investment products and derivatives, net
Gain on sale of Volantis
Other
Investment gains (losses), net
Purchases, Sales, Settlements and Maturities
Year ended December 31,
2017
2016
2018
$ (42.6) $
—
1.7
$ (40.9) $
4.0 $ (12.4)
—
10.2
0.7
3.8
18.0 $ (11.7)
Cash flows related to investment securities for the years ended December 31, 2018, 2017 and 2016, are summarized as
follows (in millions):
Investment securities
2018
Sales,
Year ended December 31,
2017
Sales,
2016
Sales,
Purchases settlements Purchases settlements Purchases
and
and
and
and
and
settlements
and
settlements maturities settlements maturities settlements maturities
36.6
$ (626.3) $ 697.1 $ (827.5) $ 976.4 $ (81.6) $
78
JHG’s consolidated seeded investment products were party to the following derivative instruments as of December 31,
Note 7 — Goodwill and Intangible Assets
2018 and 2017 (in millions):
JHG’s goodwill and intangible assets are summarized below (in millions):
Foreign
currency
December 31,
2018
December 31,
2017
Amortization Impairment translation Disposal
Futures
Contracts for differences
Credit default swaps
Total return swaps
Interest rate swaps
Options
Swaptions
Foreign currency forward contracts
Notional Value
December 31, 2018 December 31, 2017
$
267.8 $
8.7
6.2
23.7
61.5
9.6
8.3
154.9
241.2
10.2
15.0
36.7
58.3
144.3
2.7
135.9
As of December 31, 2018 and 2017, 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, 2018 and 2017, the notional values of the agreements
totaled $3.9 million and $4.0 million, 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, 2018 and 2017, the fair value of the credit default swap contracts selling protection was $0.1 million and
$0.1 million, respectively.
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, 2018, 2017 and 2016 (in millions):
Seeded investment products and derivatives, net
$ (42.6) $
4.0 $ (12.4)
Year ended December 31,
2018
2017
2016
—
1.7
10.2
3.8
—
0.7
$ (40.9) $
18.0 $ (11.7)
Gain on sale of Volantis
Other
Investment gains (losses), net
Purchases, Sales, Settlements and Maturities
Investment securities
Year ended December 31,
2018
Sales,
2017
Sales,
2016
Sales,
Purchases settlements Purchases settlements Purchases
settlements
and
and
and
and
and
and
settlements maturities settlements maturities settlements maturities
$ (626.3) $ 697.1 $ (827.5) $ 976.4 $ (81.6) $
36.6
Indefinite-lived intangible assets:
Investment management agreements
Trademarks
$
2,543.9 $
381.2
— $
—
(7.2) $
—
(41.2) $
(0.4)
— $
—
2,495.5
380.8
Definite-lived intangible assets:
Client relationships
Accumulated amortization
Net intangible assets
Goodwill
369.4
(89.7)
3,204.8 $
1,533.9 $
$
$
—
(29.5)
(29.5) $
— $
—
—
(7.2) $
— $
(6.1)
2.9
(44.8) $
(46.4) $
—
—
— $
(9.5) $
363.3
(116.3)
3,123.3
1,478.0
December 31,
2016
Merger
Amortization
Foreign
currency
translation
December 31,
2017
Indefinite-lived intangible assets:
Investment management agreements
Trademarks
$
334.8 $
—
2,169.0 $
381.0
— $
—
40.1 $
0.2
2,543.9
381.2
Definite-lived intangible assets:
Client relationships
Accumulated amortization
Net intangible assets
Goodwill
126.9
(60.4)
401.3 $
741.5 $
235.0
—
2,785.0 $
726.5 $
$
$
—
(22.9)
(22.9) $
— $
7.5
(6.4)
41.4 $
65.9 $
369.4
(89.7)
3,204.8
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.
The opening goodwill balance originates from the various acquisitions the Group has undertaken in addition to 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.
Cash flows related to investment securities for the years ended December 31, 2018, 2017 and 2016, are summarized as
Transaction with BNP Paribas
follows (in millions):
On March 31, 2018, the Group and BNP Paribas Securities Services (“BNP Paribas”) completed a transaction
transferring JHG’s back-office (including fund administration and fund accounting); middle-office (including portfolio
accounting, securities operations and trading operations); and custody functions in the U.S. to BNP Paribas. As part of
the transaction, more than 100 JHG employees, based in Denver, Colorado, transitioned to BNP Paribas, and BNP
Paribas became the fund services provider for JHG’s U.S.-regulated mutual funds. Gross consideration of $40.0 million
was received for the transaction, which resulted in the recognition of a $22.3 million gain in other non-operating income
(expenses), net on the Consolidated Statements of Comprehensive Income. JHG also allocated $9.5 million of goodwill
to the transaction, which resulted in a $9.5 million goodwill reduction, disclosed in the disposal column in the table
above.
78
79
Future Amortization
Expected future amortization expense related to definite-lived intangible assets is summarized below (in millions):
Year ended December 31,
2019
2020
2021
2022
2023
Thereafter
Total
Impairment Testing
Amount
$
29.4
29.4
26.5
18.0
17.8
125.9
247.0
$
JHG performs its annual impairment assessment of goodwill and indefinite-lived intangible assets on October 1. For its
2018 assessment, the Group elected to perform step one of the goodwill impairment assessment comparing the estimated
fair value of the reporting unit to its carrying value. JHG opted to use a market value approach with a control premium to
estimate the enterprise value of its sole reporting unit. The results of the assessment revealed the estimated fair value of
the reporting unit was $1.6 billion greater than the carrying value.
JHG also assessed its indefinite-lived intangible assets as part of the annual impairment assessment. A qualitative
approach was used to determine the likelihood of impairment, with AUM being the focus of the assessment. After
reviewing the results of the qualitative assessment, the Group concluded it is more likely than not that the fair values of
the Group’s intangible assets exceed their carrying values.
JHG’s definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. As such, the Group identified and recorded a $7.2 million impairment
associated with its Gartmore investment management agreements, which was recognized within depreciation and
amortization on the Group’s Consolidated Statement of Comprehensive Income for the year ended December 31, 2018.
No other definite-lived intangible asset impairments were identified during the year ended December 31, 2018.
No goodwill or intangible asset impairment losses were identified during the 2017 impairment test.
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.
Note 8 — Equity Method Investments
Equity method investments of $7.8 million and $5.9 million were recognized on the Group’s Consolidated Balance
Sheets within other non-current assets as of December 31, 2018 and 2017, 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:
Long Tail Alpha
Optimum Investment Management Limited
Country of
incorporation
and principal
Functional Percentage
2018
place of operation Currency
Owned
2017
Percentage
Owned
USA
UK
USD
GBP
20 %
— %
20 %
50 %
The Group’s share of net gain (loss) from equity method investments recognized within investment gains (losses), net on
the Group’s Consolidated Statements of Comprehensive Income was $2.0 million gain and ($0.6) million loss during the
80
Significant
Significant other
Quoted prices in
active markets for
and liabilities
identical assets observable inputs unobservable inputs
years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, JHG acquired the
remaining 50% of Optimum Investment Management Limited and had 100% ownership of the investment as of
December 31, 2018.
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, 2018 (in millions):
Fair value measurements using:
Expected future amortization expense related to definite-lived intangible assets is summarized below (in millions):
Amount
$
29.4
29.4
26.5
18.0
17.8
125.9
247.0
$
Future Amortization
Year ended December 31,
2019
2020
2021
2022
2023
Thereafter
Total
Impairment Testing
JHG performs its annual impairment assessment of goodwill and indefinite-lived intangible assets on October 1. For its
2018 assessment, the Group elected to perform step one of the goodwill impairment assessment comparing the estimated
fair value of the reporting unit to its carrying value. JHG opted to use a market value approach with a control premium to
estimate the enterprise value of its sole reporting unit. The results of the assessment revealed the estimated fair value of
the reporting unit was $1.6 billion greater than the carrying value.
JHG also assessed its indefinite-lived intangible assets as part of the annual impairment assessment. A qualitative
approach was used to determine the likelihood of impairment, with AUM being the focus of the assessment. After
reviewing the results of the qualitative assessment, the Group concluded it is more likely than not that the fair values of
the Group’s intangible assets exceed their carrying values.
JHG’s definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. As such, the Group identified and recorded a $7.2 million impairment
associated with its Gartmore investment management agreements, which was recognized within depreciation and
amortization on the Group’s Consolidated Statement of Comprehensive Income for the year ended December 31, 2018.
No other definite-lived intangible asset impairments were identified during the year ended December 31, 2018.
No goodwill or intangible asset impairment losses were identified during the 2017 impairment test.
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.
Note 8 — Equity Method Investments
Equity method investments of $7.8 million and $5.9 million were recognized on the Group’s Consolidated Balance
Sheets within other non-current assets as of December 31, 2018 and 2017, 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:
Long Tail Alpha
Optimum Investment Management Limited
Country of
incorporation
2018
2017
and principal
Functional Percentage
Percentage
place of operation Currency
Owned
Owned
USA
UK
USD
GBP
20 %
— %
20 %
50 %
The Group’s share of net gain (loss) from equity method investments recognized within investment gains (losses), net on
the Group’s Consolidated Statements of Comprehensive Income was $2.0 million gain and ($0.6) million loss during the
Assets:
Cash equivalents
Investment securities:
Consolidated VIEs
Other investment securities
Total investment securities
Seed hedge derivatives
Derivatives in consolidated seeded investment
products
Volantis contingent consideration
Total assets
Liabilities:
(Level 1)
(Level 2)
(Level 3)
Total
$
381.8 $
— $
— $ 381.8
103.8
194.5
298.3
—
159.7
97.3
257.0
3.2
—
—
680.1 $
0.9
—
261.1 $
$
19.2
—
19.2
—
282.7
291.8
574.5
3.2
0.9
—
3.9
3.9
23.1 $ 964.3
Derivatives in consolidated seeded investment
products
Financial liabilities in consolidated seeded investment
products
Seed hedge derivatives
Long-term debt (1)
Deferred bonuses
Contingent consideration
$
Total liabilities
Redeemable noncontrolling interests:
Consolidated seeded investment products
Intech
Total redeemable noncontrolling interests
$
$
$
— $
2.1 $
— $
2.1
0.4
—
—
—
—
0.4 $
— $
—
— $
—
1.1
301.4
—
—
304.6 $
—
—
—
68.5
61.3
0.4
1.1
301.4
68.5
61.3
129.8 $ 434.8
— $
—
— $
121.6 $ 121.6
14.5
136.1 $ 136.1
14.5
(1) Carried at amortized cost on JHG’s Consolidated Balance Sheets and disclosed at fair value.
80
81
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
and liabilities
identical assets observable inputs unobservable inputs
Significant other
Significant
Assets:
Cash equivalents
Investment securities:
Consolidated VIEs
Other investment securities
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
Total liabilities
Redeemable noncontrolling interests:
Consolidated seeded investment products
Intech
Total redeemable noncontrolling interests in
consolidated seeded investment products
(Level 1)
(Level 2)
(Level 3)
Total
$
422.5 $
— $
— $
422.5
131.0
185.7
316.7
0.9
251.4
94.5
345.9
—
2.9
—
743.0 $
3.6
—
349.5 $
$
37.3
0.2
37.5
—
419.7
280.4
700.1
0.9
6.5
—
9.0
9.0
46.5 $ 1,139.0
$
1.8 $
2.5 $
— $
4.3
11.6
5.9
—
—
—
—
—
19.3 $
—
4.2
57.3
323.4
—
—
—
387.4 $
—
—
—
—
64.7
76.6
26.1
167.4 $
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
$
$
$
(1) Carried at amortized cost on JHG’s Consolidated Balance Sheets and disclosed at fair value.
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, derivative
instruments 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.
82
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):
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. 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 a
discount rate. As of December 31, 2018, the fair value of the Volantis contingent consideration asset was $3.9 million.
Contingent Consideration
The maximum amount payable and fair value of Geneva, Perennial, Kapstream and VelocityShares contingent
consideration is summarized below (in millions):
As of December 31, 2018
Maximum amount payable
Fair value included in:
Accounts payable and accrued liabilities
Other non-current liabilities
Total fair value
Fair value included in:
Accounts payable and accrued liabilities
Other non-current liabilities
Total fair value
Acquisition of Geneva
Geneva
61.3 $
Perennial Kapstream VelocityShares
—
42.2 $
27.5 $
— $
25.3
25.3 $
— $
9.9
9.9 $
13.8 $
12.3
26.1 $
—
—
—
$
$
$
As of December 31, 2017
Geneva
Perennial Kapstream VelocityShares
$
$
— $
19.3
19.3 $
— $
7.0
7.0 $
18.8 $
25.4
44.2 $
6.1
—
6.1
The fair value of the contingent consideration payable upon the acquisition of Geneva Capital Management LLC
(“Geneva”) 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.
Fair value adjustments, including the unwind of the discount, to the contingent consideration during the year ended
December 31, 2018, resulted in a $6.0 million increase in the liability. The fair value adjustment was recorded to other
non-operating income (expenses), net on the Group’s Condensed Consolidated Statements of Comprehensive Income.
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 2019 if revenues of the
Perennial equities business meet certain targets. The total maximum payment over the remaining contingent
consideration period is $5.3 million as of December 31, 2018. In addition, there is a maximum amount of $36.9 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.
82
83
Assets:
Cash equivalents
Investment securities:
Consolidated VIEs
Other investment securities
Total investment securities
Seed hedge derivatives
products
Contingent consideration
Derivatives in consolidated seeded investment
Total assets
Liabilities:
products
Derivatives in consolidated seeded investment
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
Total liabilities
Fair value measurements using:
Quoted prices in
active markets for
and liabilities
Significant other
Significant
identical assets observable inputs unobservable inputs
(Level 1)
(Level 2)
(Level 3)
Total
$
422.5 $
— $
— $
422.5
$
743.0 $
349.5 $
46.5 $ 1,139.0
$
1.8 $
2.5 $
— $
4.3
131.0
185.7
316.7
0.9
2.9
—
11.6
5.9
—
—
—
—
—
251.4
94.5
345.9
—
3.6
—
—
4.2
57.3
323.4
—
—
—
37.3
0.2
37.5
—
—
9.0
419.7
280.4
700.1
0.9
6.5
9.0
—
—
—
—
64.7
76.6
26.1
11.6
10.1
57.3
323.4
64.7
76.6
26.1
$
19.3 $
387.4 $
167.4 $
574.1
Redeemable noncontrolling interests:
Consolidated seeded investment products
$
Intech
Total redeemable noncontrolling interests in
— $
—
— $
—
174.9 $
174.9
15.4
15.4
consolidated seeded investment products
$
— $
— $
190.3 $
190.3
(1) Carried at amortized cost on JHG’s Consolidated Balance Sheets and disclosed at fair value.
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, derivative
instruments 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.
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 forecasted amounts meet the defined
targets. The significant unobservable input used in the valuation is forecasted revenue. No fair value adjustments were
made to the contingent consideration during the year ended December 31, 2018.
Acquisition of Kapstream
The outstanding Kapstream Capital Pty Limited (“Kapstream”) contingent cash consideration in respect to the initial
acquisition of a 51% controlling interest was payable in the third quarter of 2018 if certain Kapstream AUM reached
defined targets. On June 30, 2018 (36 months after acquisition), Kapstream reached defined AUM targets and the Group
paid $3.8 million in July 2018.
The purchase of the remaining 49% had contingent consideration of up to $43.0 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 is 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. When Kapstream achieves 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 and 2019, the first and second anniversary of
the acquisition, Kapstream reached defined revenue targets, and the Group paid $15.3 million in February 2018 and
$14.4 million in February 2019.
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. No fair value adjustment was necessary during the year ended December
31, 2018, however, the liability decreased due to the unwind of the discount and foreign currency.
Acquisition of VelocityShares
JCG’s acquisition of VS Holdings Inc. (“VelocityShares”) in 2014 included contingent consideration. The payment is
contingent on certain VelocityShares’ ETPs reaching defined net revenue targets. VelocityShares reached defined net
revenue targets in November 2017, and the Group paid $3.6 million in January 2018. No other payments were made
during the year ended December 31, 2018, and the remaining contingent consideration expired in November 2018.
Fair value adjustments, and the unwind of the discount, to the consideration during the year ended December 31, 2018,
resulted in a $2.5 million decrease to the liability, which reduced the fair value to nil as of December 31, 2018. The fair
value adjustment was recorded to other non-operating income (expenses), net on the Group’s Condensed Consolidated
Statements of Comprehensive Income.
Deferred Bonuses
Deferred bonuses represent liabilities to employees over the vesting period that will be settled by investments in JHG
products.
Dai-ichi Options
The options sold to Dai-ichi expired on October 3, 2018. 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
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
84
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 forecasted amounts meet the defined
targets. The significant unobservable input used in the valuation is forecasted revenue. No fair value adjustments were
made to the contingent consideration during the year ended December 31, 2018.
Acquisition of Kapstream
The outstanding Kapstream Capital Pty Limited (“Kapstream”) contingent cash consideration in respect to the initial
acquisition of a 51% controlling interest was payable in the third quarter of 2018 if certain Kapstream AUM reached
defined targets. On June 30, 2018 (36 months after acquisition), Kapstream reached defined AUM targets and the Group
paid $3.8 million in July 2018.
The purchase of the remaining 49% had contingent consideration of up to $43.0 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 is 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. When Kapstream achieves 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 and 2019, the first and second anniversary of
the acquisition, Kapstream reached defined revenue targets, and the Group paid $15.3 million in February 2018 and
$14.4 million in February 2019.
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. No fair value adjustment was necessary during the year ended December
31, 2018, however, the liability decreased due to the unwind of the discount and foreign currency.
Acquisition of VelocityShares
JCG’s acquisition of VS Holdings Inc. (“VelocityShares”) in 2014 included contingent consideration. The payment is
contingent on certain VelocityShares’ ETPs reaching defined net revenue targets. VelocityShares reached defined net
revenue targets in November 2017, and the Group paid $3.6 million in January 2018. No other payments were made
during the year ended December 31, 2018, and the remaining contingent consideration expired in November 2018.
Fair value adjustments, and the unwind of the discount, to the consideration during the year ended December 31, 2018,
resulted in a $2.5 million decrease to the liability, which reduced the fair value to nil as of December 31, 2018. The fair
value adjustment was recorded to other non-operating income (expenses), net on the Group’s Condensed Consolidated
Statements of Comprehensive Income.
Deferred bonuses represent liabilities to employees over the vesting period that will be settled by investments in JHG
Deferred Bonuses
products.
Dai-ichi Options
The options sold to Dai-ichi expired on October 3, 2018. 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.
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, 2018 and 2017, are as follows (in
millions):
Beginning of year fair value
Balance acquired from the Merger
Additions
Disposals
Settlements
Transfers to Level 2
Movement recognized in net income
Movements recognized in other comprehensive income
End of year fair value
Year ended December 31,
2018
2017
$
$
46.5 $
—
—
(7.6)
(5.9)
—
(9.5)
(0.4)
23.1 $
42.7
3.0
10.9
—
(11.5)
(1.1)
2.2
0.3
46.5
Changes in fair value of JHG’s individual Level 3 liabilities and redeemable noncontrolling interests for the years ended
December 31, 2018 and 2017, are as follows (in millions):
Year ended December 31,
2018
2017
Redeemable
Redeemable
Contingent Deferred Dai-ichi noncontrolling Contingent Deferred Dai-ichi noncontrolling
consideration bonuses
consideration bonuses
interests
interests
option
option
$
76.6 $ 64.7 $ 26.1 $
190.3 $
25.5 $ 42.9 $ — $
158.0
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
—
—
—
—
—
—
—
—
—
—
11.2
3.8
—
—
(26.8)
—
—
(36.2)
—
(0.8)
45.4
—
—
—
—
—
—
25.7
—
—
3.0
19.4
—
—
(0.6)
35.8
—
3.7
—
2.0
—
—
—
(15.2)
—
—
—
(11.0)
—
(22.8)
—
—
—
—
0.1
(0.6)
—
—
—
—
—
—
2.3
(0.3)
(3.7)
61.3 $ 68.5 $
—
0.7
— $
(1.5)
136.1 $
2.7
2.4
76.6 $ 64.7 $ 26.1 $
1.0
(0.2)
190.3
Redeemable Noncontrolling Interests in Intech
End of year fair value
$
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
An increase in AUM levels and/or a decrease in the discount rate would increase the fair value of the contingent
consideration liability, while a decrease in forecasted AUM and/or an increase in the discount rate would decrease the
liability.
84
85
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, 2018, and December 31,
2017, are as follows (in millions):
As of December 31, 2018
Investment securities of consolidated VIEs — trading
As of December 31, 2017
Investment securities of consolidated VIEs —
trading
Significant
unobservable
inputs
$ 19.2 Discounted Discount rate
Valuation
technique
Fair
value
cash flow EBITDA multiple
Price-earnings ratio
Inputs
15%
18.5
28.4
Fair
value
Valuation
technique
Significant
unobservable
inputs
Range
(weighted-average)
$ 37.3 Discounted Discount rate
cash flow EBITDA multiple
Price-earnings ratio
12.0% - 15.0% (14.3)%
11.6 - 15.1 (14.3)
22.6 - 61.3 (52.4)
An increase in AUM levels and/or a decrease in the discount rate would increase the fair value of the level 3 assets,
while a decrease in AUM and/or an increase in the discount rate would decrease the asset.
Note 10 — Debt
Debt as of December 31, 2018 and 2017, 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
$
$
Carrying
December 31, 2018
Fair
value
December 31, 2017
Carrying Fair
value
value
value
319.1 $ 301.4 $ 322.0 $ 323.4
57.3
380.7
57.3
319.1 $ 301.4 $ 322.0 $ 323.4
57.2
379.2
57.2
—
301.4
—
—
319.1
—
The Group’s 4.875% Senior Notes due 2025 ( the “2025 Senior Notes”) have a principal value of $300.0 million as of
December 31, 2018, 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 include unamortized debt premium, net at December 31, 2018, of $19.1 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. JHG fully and unconditionally guarantees the
obligations of JCG in relation to the 2025 Senior Notes.
0.750% Convertible Senior Notes Due 2018
During the year ended December 31, 2018, $57.5 million principal amount of the Group’s 0.750% Convertible Senior
Notes due 2018 (the “2018 Convertible Notes”) was redeemed and settled with cash for a total cash outlay of $95.3
million. The difference between the principal redeemed and the cash paid primarily represents the value of the
conversion feature. As of July 15, 2018 (maturity date), the obligations associated with the 2018 Convertible Notes were
settled with cash, and the carrying value was reduced to zero.
86
Significant Unobservable Inputs
Convertible Note Hedge and Warrants
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, 2018, and December 31,
2017, are as follows (in millions):
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.
As of December 31, 2018
Investment securities of consolidated VIEs — trading
$ 19.2 Discounted Discount rate
Credit Facility
At December 31, 2018, 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, 2018, JHG was
in compliance with all covenants, and there were no borrowings under the Credit Facility at December 31, 2018, 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. The Group exercised the options to extend the term of the Credit
Facility on the first and second anniversary of the date of the agreement. The revised maturity date of the Credit Facility
is February 16, 2024.
Note 11 — Income Taxes
The components of the Group’s provision for income taxes for the years ended December 31, 2018, 2017 and 2016, are
as follows (in millions):
Year ended December 31,
2017
2016
2018
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)
Total income tax expense (benefit)
$
48.8 $
116.7
7.2
172.7
51.5 $ 30.3
1.1
83.1
1.2
10.0
32.6
144.6
(3.1)
(6.6)
(0.8)
(10.5)
0.3
(354.4)
(1.5)
(355.6)
$ 162.2 $ (211.0) $
(2.2)
3.0
1.2
2.0
34.6
The components of the Group’s total income before taxes for the years ended December 31, 2018, 2017 and 2016, are as
follows (in millions):
Fair
value
Valuation
technique
Significant
unobservable
inputs
cash flow EBITDA multiple
Price-earnings ratio
Inputs
15%
18.5
28.4
Fair
Valuation
value
technique
Significant
unobservable
inputs
Range
(weighted-average)
$ 37.3 Discounted Discount rate
12.0% - 15.0% (14.3)%
cash flow EBITDA multiple
Price-earnings ratio
11.6 - 15.1 (14.3)
22.6 - 61.3 (52.4)
As of December 31, 2017
Investment securities of consolidated VIEs —
trading
An increase in AUM levels and/or a decrease in the discount rate would increase the fair value of the level 3 assets,
while a decrease in AUM and/or an increase in the discount rate would decrease the asset.
Note 10 — Debt
Debt as of December 31, 2018 and 2017, 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, 2018
December 31, 2017
Carrying
Fair
Carrying Fair
value
value
value
value
$
319.1 $ 301.4 $ 322.0 $ 323.4
—
57.2
57.3
319.1
301.4
379.2
380.7
—
57.2
57.3
—
—
$
319.1 $ 301.4 $ 322.0 $ 323.4
The Group’s 4.875% Senior Notes due 2025 ( the “2025 Senior Notes”) have a principal value of $300.0 million as of
December 31, 2018, 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 include unamortized debt premium, net at December 31, 2018, of $19.1 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. JHG fully and unconditionally guarantees the
obligations of JCG in relation to the 2025 Senior Notes.
0.750% Convertible Senior Notes Due 2018
During the year ended December 31, 2018, $57.5 million principal amount of the Group’s 0.750% Convertible Senior
Notes due 2018 (the “2018 Convertible Notes”) was redeemed and settled with cash for a total cash outlay of $95.3
million. The difference between the principal redeemed and the cash paid primarily represents the value of the
conversion feature. As of July 15, 2018 (maturity date), the obligations associated with the 2018 Convertible Notes were
settled with cash, and the carrying value was reduced to zero.
Year ended December 31,
2017
2016
2018
86
87
UK
U.S.
International
Total income before taxes
$ 178.3 $ 229.0 $ 180.9
(0.1)
31.1
$ 661.8 $ 447.4 $ 211.9
190.5
27.9
467.4
16.1
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,
2018
2017
2016
UK statutory corporation tax rate
Effect of foreign tax rates
Equity-based compensation
Finalization of positions with HMRC(1)
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
19.0 % 19.3 % 20.0 %
7.4
3.9
0.2
0.3
0.3
—
0.7
0.3
1.2
—
(77.4)
0.1
(0.4)
(1.2)
1.7
1.4
23.8 % (47.0) % 15.2 %
0.7
(0.1)
24.5 % (47.1) % 16.3 %
(1.1)
(3.4)
(0.8)
0.6
0.8
(1.9)
0.9
0.1
1.1
(1)
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.
Tax Legislation
In accordance with SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and
Job Act (Tax Act), the Company recognized the provisional impacts related to re-measurement of deferred tax assets and
liabilities and the one-time transition tax in its results for the annual period ended December 31, 2017. As of the year
ended December 31, 2018, the Company has completed its accounting for all aspects of the Tax Act and recorded an
additional net tax benefit of $3.0 million to income tax expense related to transition tax, under the Tax Act.
The Tax Act also included a new provision to tax global intangible low-taxed income (“GILTI”) effective beginning for
tax years after December 31, 2017. The GILTI imposes a minimum tax on income of a Controlled Foreign Corporation
(“CFC”) in excess of a prescribed rate of return on tangible assets held by the CFC. Under U.S. GAAP, an accounting
policy can be made to either (i) account for GILTI as current period costs when incurred; or (ii) be recognized as
deferred taxes. Although the Company does not have a GILTI liability in the current year, the Group has made a policy
decision to record GILTI tax as a current-period expense when incurred. Also effective during the year ended December
31, 2018 under the Tax Act, was the base erosion and anti-abuse tax (“BEAT”). The BEAT provisions eliminate the
deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater
than regular tax. The impact of BEAT on the Group is not significant.
Any legislative changes and new or proposed Treasury regulations may result in additional income tax impacts, which
could be material in the period any such changes are enacted.
88
UK statutory corporation tax rate
Effect of foreign tax rates
Equity-based compensation
Finalization of positions with HMRC(1)
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
Year ended December 31,
2018
2017
2016
19.0 % 19.3 % 20.0 %
3.9
0.3
—
0.3
—
0.1
(1.2)
1.4
7.4
0.2
0.3
0.7
1.2
(77.4)
(0.4)
1.7
(1.1)
(3.4)
(0.8)
0.6
0.8
(1.9)
0.9
0.1
23.8 % (47.0) % 15.2 %
0.7
(0.1)
1.1
24.5 % (47.1) % 16.3 %
(1)
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.
Tax Legislation
In accordance with SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and
Job Act (Tax Act), the Company recognized the provisional impacts related to re-measurement of deferred tax assets and
liabilities and the one-time transition tax in its results for the annual period ended December 31, 2017. As of the year
ended December 31, 2018, the Company has completed its accounting for all aspects of the Tax Act and recorded an
additional net tax benefit of $3.0 million to income tax expense related to transition tax, under the Tax Act.
The Tax Act also included a new provision to tax global intangible low-taxed income (“GILTI”) effective beginning for
tax years after December 31, 2017. The GILTI imposes a minimum tax on income of a Controlled Foreign Corporation
(“CFC”) in excess of a prescribed rate of return on tangible assets held by the CFC. Under U.S. GAAP, an accounting
policy can be made to either (i) account for GILTI as current period costs when incurred; or (ii) be recognized as
deferred taxes. Although the Company does not have a GILTI liability in the current year, the Group has made a policy
decision to record GILTI tax as a current-period expense when incurred. Also effective during the year ended December
31, 2018 under the Tax Act, was the base erosion and anti-abuse tax (“BEAT”). The BEAT provisions eliminate the
deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater
than regular tax. The impact of BEAT on the Group is not significant.
Any legislative changes and new or proposed Treasury regulations may result in additional income tax impacts, which
could be material in the period any such changes are enacted.
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
Deferred Taxes
income from operations.
The significant components of the Group’s deferred tax assets and liabilities as of December 31, 2018 and 2017, 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
$
December 31,
2018
2017
60.8 $
55.9
3.1
5.4
11.8
137.0
(55.6)
81.4 $
55.2
59.4
2.2
6.2
7.9
130.9
(57.2)
73.7
Deferred tax liabilities:
Retirement benefits
Goodwill and acquired intangible assets
Other
Gross deferred tax liabilities
Net deferred tax (liabilities)(1)
$
(23.9) $
(24.4)
(795.4)
(6.5)
(826.3)
$ (729.9) $ (752.6)
(783.9)
(3.5)
(811.3)
(1) The change in the net deferred tax liabilities does not equal the deferred tax expense due to the FX adjustment on
deferred tax liabilities booked through equity.
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, 2018 and 2017, are as follows (in millions):
Deferred tax liabilities, net
December 31,
2018
2017
$ (729.9) $ (752.6)
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 decreased by $1.6 million in 2018.
The decrease is primarily attributable to foreign currency translation on capital losses although the foreign net operating
losses increased during the current year.
As a multinational corporation, the Group operates in various locations outside the U.S. and generates earnings from its
non-U.S. subsidiaries. Prior to enactment of the Tax Act, the Group indefinitely reinvested the undistributed earnings of
all its non-U.S. subsidiaries, except for income previously taxed in the U.S. or subject to regulatory or legal repatriation
restrictions or requirements. Effective January 1, 2018, the Group intends to assert indefinite reinvestment on
distributions exceeding the tax basis and undistributed earnings for Janus UK Holdings Corp. and Kapstream.
88
89
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, 2018, 2017 and 2016, 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
2018
10.2 $
—
2.2
1.4
(0.5)
(0.7)
(0.2)
12.4 $
2.5 $
5.0
3.4
0.8
(0.9)
(0.9)
0.3
10.2 $
18.4
—
—
—
(13.1)
—
(2.8)
2.5
$
$
If recognized, the balance 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, 2018, 2017 and 2016, the total accrued interest balance relating to uncertain tax positions was $1.5
million, $1.5 million and $0.7 million, respectively. Potential penalties at December 31, 2018, 2017 and 2016, 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, 2018 are 2015 and
onwards for U.S. federal tax, and a few states have open years from 2008. The tax years from 2014 and onwards remain
open for the UK under the normal four-year time limit.
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 $0.6 million within the next 12 months, ignoring
changes due to foreign currency translation.
Note 12 — Other Financial Statement Captions
Other current assets on JHG’s Consolidated Balance Sheets at December 31, 2018 and 2017, are composed of the
following (in millions):
Prepaid expenses
Current corporation tax
Other current assets
Total other current assets
December 31,
2018
2017
$
$
22.6 $
4.3
42.5
69.4 $
24.1
3.5
48.3
75.9
Other non-current assets on the Consolidated Balance Sheets of $15.5 million as of December 31, 2018, primarily relate
to equity-method investments. The $21.5 million balance as of December 31, 2017, primarily relates to deferred
consideration for Volantis and equity-method investments.
90
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, 2018, 2017 and 2016, 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,
2018
2017
2016
$
10.2 $
2.5 $
18.4
—
2.2
1.4
(0.5)
(0.7)
(0.2)
5.0
3.4
0.8
(0.9)
(0.9)
0.3
—
—
—
(13.1)
—
(2.8)
2.5
$
12.4 $
10.2 $
If recognized, the balance 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, 2018, 2017 and 2016, the total accrued interest balance relating to uncertain tax positions was $1.5
million, $1.5 million and $0.7 million, respectively. Potential penalties at December 31, 2018, 2017 and 2016, 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, 2018 are 2015 and
onwards for U.S. federal tax, and a few states have open years from 2008. The tax years from 2014 and onwards remain
open for the UK under the normal four-year time limit.
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 $0.6 million within the next 12 months, ignoring
changes due to foreign currency translation.
Note 12 — Other Financial Statement Captions
Other current assets on JHG’s Consolidated Balance Sheets at December 31, 2018 and 2017, are composed of the
following (in millions):
Prepaid expenses
Current corporation tax
Other current assets
Total other current assets
December 31,
2018
2017
$
22.6 $
4.3
42.5
$
69.4 $
24.1
3.5
48.3
75.9
Other non-current assets on the Consolidated Balance Sheets of $15.5 million as of December 31, 2018, primarily relate
to equity-method investments. The $21.5 million balance as of December 31, 2017, primarily relates to deferred
consideration for Volantis and equity-method investments.
Accounts payable and accrued liabilities on JHG’s Consolidated Balance Sheets at December 31, 2018 and 2017,
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
Total accounts payable and accrued liabilities
December 31,
2018
42.2 $
30.2
84.7
157.1 $
28.0
13.8
—
1.1
33.2
233.2 $
2017
44.4
24.4
48.0
116.8
33.7
24.9
26.1
10.5
80.9
292.9
$
$
$
Other non-current liabilities on JHG’s Consolidated Balance Sheets at December 31, 2018 and 2017, 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,
2018
2017
$
$
10.6 $
10.3
47.5
10.8
79.2 $
13.7
20.7
26.2
39.0
99.6
Other creditors included within other non-current liabilities primarily comprise the non-current portion of onerous lease
obligations as of December 31, 2018 and 2017. As a result of historic acquisitions, the Group is party to two material
operating leases in respect of 8 Lancelot Place, London and Rex House, Queen Street, London. The onerous leases run
for a further period of five years and eight years, respectively. At the cease use 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.
Note 13 — Noncontrolling Interests
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests as of December 31, 2018 and 2017, consisted of the following (in millions):
Consolidated seeded investment products
Intech:
Appreciation rights
Founding member ownership interests
Total redeemable noncontrolling interests
Consolidated Seeded Investment Products
December 31,
2018
121.6 $
2017
174.9
$
10.9
3.6
136.1 $
11.0
4.4
190.3
$
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
90
91
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, 2018, 2017 and 2016 (in millions):
Opening balance
Balance acquired from the Merger
Changes in market value
Changes in ownership
Foreign currency translation
Closing balance
2018
Year ended December 31,
2017
$ 174.9 $ 158.0 $
2016
82.9
—
35.3
61.7
(21.9)
$ 121.6 $ 174.9 $ 158.0
—
(15.5)
(36.3)
(1.5)
23.2
(9.8)
3.7
(0.2)
Changes in ownership reflect third-party investment in consolidated seeded investment products, additional seed capital
investment or seed capital redemptions.
Intech
Intech ownership interests held by a founding member had an estimated fair value of $3.6 million as of December 31,
2018, 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.
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, 2018 and 2017, are as follows (in millions):
Nonredeemable noncontrolling interests in:
Seed capital investments
Intech
Total nonredeemable noncontrolling interests
Note 14 — Long-Term Incentive Compensation
December 31,
2018
2017
$
$
8.3 $
13.2
21.5 $
24.9
13.3
38.2
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 2018 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.
92
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 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.
The following table presents the movement in redeemable noncontrolling interests in consolidated seeded investment
Restricted Share Plan (“RSP”)
products for the years ended December 31, 2018, 2017 and 2016 (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,
2018
2017
2016
$ 174.9 $ 158.0 $
82.9
—
(15.5)
(36.3)
(1.5)
23.2
(9.8)
3.7
(0.2)
—
35.3
61.7
(21.9)
$ 121.6 $ 174.9 $ 158.0
Changes in ownership reflect third-party investment in consolidated seeded investment products, additional seed capital
investment or seed capital redemptions.
Intech
value.
Intech ownership interests held by a founding member had an estimated fair value of $3.6 million as of December 31,
2018, 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
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, 2018 and 2017, are as follows (in millions):
Nonredeemable noncontrolling interests in:
Seed capital investments
Intech
Total nonredeemable noncontrolling interests
Note 14 — Long-Term Incentive Compensation
December 31,
2018
2017
$
8.3 $
13.2
$
21.5 $
24.9
13.3
38.2
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 2018 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 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”),
two free matching shares are awarded for no additional payment. Matching shares will be forfeited if purchased shares
are withdrawn from the trust within one year.
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 2018 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 £20.16 per share, £18.40
per share and £20.60 per share for 2018, 2017 and 2016, respectively, and represents 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 2018 and 2017, ESPP was not offered to U.S. employees. The pre-set
option price of prior year awards was $31.20 for 2016 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. There were no CSOP awards made for the year
2018. The option price for prior year awards was £22.80 for the 2017 CSOP and £26.10 for the 2016 CSOP. The 2015
CSOP became exercisable for UK employees in April 2018; the option price was £28.48. The 2016 CSOP became
available to exercise for U.S. employees in April 2018 as the U.S. CSOP is a two-year plan.
92
93
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. There were no ExSOP awards made for the year 2018. The market price per share at grant for prior
year awards was £22.62 for the 2017 ExSOP and £25.00 for the 2016 ExSOP. The hurdle price per share for prior year
awards was set at £24.90 for 2017 and £28.45 for 2016. The shares have a three year vesting period with a subsequent
two year exercise period. The 2015 ExSOP became exercisable for employees in April 2018 with a market price at grant
of £28.21 and a hurdle price at £31.05.
Restricted Stock Awards (“RSA”)
RSAs are generally issued as part of annual variable compensation and for recruitment and retention purposes in
accordance with the 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 CEO 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 CEO 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. On December 31, 2018, 38,236
price-vesting units vested.
JCG granted 134,666 price-vesting units to its CEO 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.
JHG granted 108,184 price-vesting units to its CEOs on February 28, 2018, valued at $3.7 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.
Mutual Fund Share Awards (“MFSA”)
MFSAs are generally issued as part of annual variable compensation and for recruitment and retention purposes. At
December 31, 2018, the cost basis of unvested mutual fund share awards totaled $57.7 million. 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. The awards
are time-based awards that generally vest three or four years from the grant date.
94
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. There were no ExSOP awards made for the year 2018. The market price per share at grant for prior
year awards was £22.62 for the 2017 ExSOP and £25.00 for the 2016 ExSOP. The hurdle price per share for prior year
awards was set at £24.90 for 2017 and £28.45 for 2016. The shares have a three year vesting period with a subsequent
two year exercise period. The 2015 ExSOP became exercisable for employees in April 2018 with a market price at grant
of £28.21 and a hurdle price at £31.05.
Restricted Stock Awards (“RSA”)
Price-Vesting Units
RSAs are generally issued as part of annual variable compensation and for recruitment and retention purposes in
accordance with the 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.
JCG granted 137,178 price-vesting units to its CEO 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 CEO 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. On December 31, 2018, 38,236
price-vesting units vested.
JCG granted 134,666 price-vesting units to its CEO 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.
JHG granted 108,184 price-vesting units to its CEOs on February 28, 2018, valued at $3.7 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.
Mutual Fund Share Awards (“MFSA”)
MFSAs are generally issued as part of annual variable compensation and for recruitment and retention purposes. At
December 31, 2018, the cost basis of unvested mutual fund share awards totaled $57.7 million. 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. The awards
are time-based awards that generally vest three or four years from the grant date.
Executive Shared Ownership Plan (“ExSOP”)
Perkins Senior Profits Interests Awards
On November 18, 2013, Perkins granted senior profits interests awards, which fully vested on December 31, 2018, and
provided an entitlement to a total of 10% of Perkins’ annual taxable income. These awards had 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, 2018, the formula-driven
value was zero and there was no liability on JHG’s Consolidated Balance Sheets.
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 an 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 9.0% 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:
Assumptions
October 2014 February 2015 March 2016
grant
grant
grant
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (in years)
Grant date fair value (in millions)
Merger date fair value (in millions)
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 profit 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, 2018, the total undiscounted estimated post-employment payments for profits interests and
phantom interests was $45.1 million (the majority will not be paid until 10 to 20 years after the grant date). The
94
95
estimated post-employment payments will be evaluated and adjusted quarterly, as necessary, with changes recorded in
results of operations. As of December 31, 2018, the carrying value of the liability associated with the Intech profits
interests and phantom interests was $17.1 million and is included in other non-current assets on JHG’s Consolidated
Balance Sheets.
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)
Market conditions
FTSE 350
ASX 100
Non-Market
Net Fund Flows Condition
Investment Performance Condition
Operating Margin Condition
People Strategy Condition
Weighting
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 of 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)
Market conditions
Relative TSR
Non-Market
Relative investment performance
Relative net income before tax growth
Weighting
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.
96
estimated post-employment payments will be evaluated and adjusted quarterly, as necessary, with changes recorded in
results of operations. As of December 31, 2018, the carrying value of the liability associated with the Intech profits
interests and phantom interests was $17.1 million and is included in other non-current assets on JHG’s Consolidated
Balance Sheets.
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
Market conditions
Relative TSR
Non-Market
Relative investment performance
Relative net income before tax growth
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 of 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
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.
25 %
25 %
15 %
15 %
10 %
10 %
50 %
25 %
25 %
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 vested 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 vested in April 2018. The performance period for the second
tranche of 2015 LTIP was completed on December 31, 2018. 25% of the pre-Merger awards and 35.5% of the
post-Merger awards will vest in April 2019.
The performance period for the first tranche of 2016 LTIP was completed on December 31, 2018. 25% of the
pre-Merger awards and 35.5% of the post-Merger awards will vest in April 2019.
The components of the Group’s long-term incentive compensation expense for the years ended December 31, 2018,
2017 and 2016, 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
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
2018
18.7 $
2.6
10.1
3.0
0.8
0.6
0.9
44.9
—
81.6
54.9
24.3
18.4
9.4
2016
17.5
7.5
5.1
3.0
1.9
1.4
0.7
—
0.2
37.3
35.0
—
—
13.2
Total charge to the Consolidated Statements of
Comprehensive Income
$ 188.6 $ 151.5 $
85.5
96
97
At December 31, 2018, unrecognized and unearned compensation, based on vesting outcomes as of December 31, 2018,
on the 2018 LTIP, and the weighted-average number of years over which the compensation cost will be recognized are
summarized as follows (in millions):
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
Total remaining charge to the Consolidated Statements of
Comprehensive Income
Weighted-
Unrecognized
compensation
11.0
$
1.1
9.0
0.9
0.6
0.5
1.1
45.9
70.1
39.0
21.3
27.4
17.7
average
years
1.4
0.9
1.7
0.6
1.1
1.1
1.7
2.3
2.0
1.4
2.6
5.4
1.0
$
175.5
2.4
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 2018, 2017 and 2016. The fair value of stock options granted were 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 Option Pricing Model
2018
2017
2016
Year ended December 31,
SAYE CSOP U.S. CSOP ExSOP SAYE CSOP U.S. CSOP ExSOP SAYE U.S. SAYE
64.71 p
27.01 p
27.78 p
33.43 p
27.40 p
58.49 p
33.51 p
75.28 p
32.81 p
4.99
Fair value of options granted £
Assumptions:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (years)
4.12 % 4.12 % 3.98 %
29.67 % 30.26 % 29.72 %
0.45 % 0.58 % 0.53 %
3
2
3
3.98 %
29.35 %
0.40 %
2
3.85 % 4.64 %
32.20 % 32.41 %
0.70 % 0.27 %
3
3
4.64 % 4.64 % 3.99 % 4.12 %
35.19 % 32.41 % 32.13 % 30.26 %
0.16 % 0.27 % 0.19 % 0.58 %
2
3
3
3
98
At December 31, 2018, unrecognized and unearned compensation, based on vesting outcomes as of December 31, 2018,
on the 2018 LTIP, and the weighted-average number of years over which the compensation cost will be recognized are
summarized as follows (in millions):
Monte Carlo Model – LTIP 2015
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
Weighted-
Unrecognized
average
compensation
years
$
11.0
1.1
9.0
0.9
0.6
0.5
1.1
45.9
70.1
39.0
21.3
27.4
17.7
1.4
0.9
1.7
0.6
1.1
1.1
1.7
2.3
2.0
1.4
2.6
5.4
1.0
Total remaining charge to the Consolidated Statements of
Comprehensive Income
$
175.5
2.4
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 were granted to employees in 2018, 2017 and 2016. The fair value of stock options granted were estimated
on the date of each grant using the Black-Scholes option pricing model and a Monte Carlo model, with the following
Stock Options
assumptions:
Black-Scholes Option Pricing Model
2018
2017
2016
Year ended December 31,
Fair value of options granted £
4.99
33.43 p
32.81 p
27.78 p
75.28 p
33.51 p
27.01 p
27.40 p
58.49 p
64.71 p
SAYE CSOP U.S. CSOP ExSOP SAYE CSOP U.S. CSOP ExSOP SAYE U.S. SAYE
Assumptions:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (years)
3.85 % 4.64 %
4.64 % 4.64 % 3.99 % 4.12 %
4.12 % 4.12 % 3.98 %
32.20 % 32.41 %
35.19 % 32.41 % 32.13 % 30.26 %
29.67 % 30.26 % 29.72 %
0.70 % 0.27 %
0.16 % 0.27 % 0.19 % 0.58 %
0.45 % 0.58 % 0.53 %
3
3
2
3
3
3
2
3
3
3.98 %
29.35 %
0.40 %
2
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
Monte Carlo Model – LTIP 2016
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
Year ended December 31, 2018
% Allocation
of award
Tranche 1
Tranche 2
50 %
25 %
25 %
118.96 p
209.76 p
209.76 p
124.11 p
206.59 p
206.59 p
May 1, 2015
January 1, 2015
December 31, 2017
May 1, 2018
May 30, 2017
233.7 p
May 1, 2015
January 1, 2015
December 31, 2018
May 1, 2019
May 30, 2017
233.7 p
0.1 % pa
4.5 % pa
30 % pa
9.0 %
80 %
0.1 % pa
4.5 % pa
30 % pa
6.2 %
60 %
Year Ended December 31, 2018
% Allocation
of award
Tranche 1
Tranche 2
50 %
25 %
25 %
120.98 p
200.42 p
200.42 p
123.64 p
197.39 p
197.39 p
May 24, 2016
January 1, 2016
December 31, 2018
March 24, 2019
May 30, 2017
233.7 p
May 24, 2016
January 1, 2016
December 31, 2019
March 24, 2020
May 30, 2017
233.7 p
0.1 % pa
4.5 % pa
30 % pa
9.0 %
0.1 % pa
4.5 % pa
30 % pa
6.2 %
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 three-year coupon rate and two-year coupon rate, respectively, at grant date.
98
99
The table below summarizes the Group’s outstanding options, exercisable options and options vested or expected to vest
for the years ended December 31, 2018, 2017 and 2016:
Outstanding at January 1
Share consolidation
Acquired from Merger
Granted
Exercised
Forfeited
Outstanding at December 31
Exercisable (1)
Vested or expected to vest
2018
Weighted-
average
Shares
price
Shares
2017
Weighted-
average
price
4,319,706 $ 22.55
—
— $
—
— $
84,273 $ 26.88
(212,562) $ 12.31
(1,051,655) $ 11.81
3,139,762 $ 28.19
707,848 $ 36.02
—
1,157,663 $
45,560,242 $
1.97
(41,004,619) $ 19.82
92,949 $ 18.76
2,042,321 $ 13.66
(404,735) $ 20.32
(1,966,452) $
7.41
4,319,706 $ 22.55
663,342 $ 34.67
2,999,811 $ 15.57
2016
Weighted-
average
Shares
price
43,890,407 £ 1.34
—
— £
— £
—
16,251,758 £ 1.53
(11,039,274) £ 0.73
(3,542,649) £ 1.81
45,560,242 £ 1.53
5,014,642 £ 0.87
24,849,673 £ 0.44
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.
The following table summarizes the intrinsic value of exercised, outstanding and exercisable options at December 31,
2018, 2017 and 2016 (in millions):
Exercised
Outstanding
Exercisable
Deferred Equity Plan
December 31,
2017
2016
2018
$
$
$
2.8 £ 18.9
0.1 £
0.2 £ 15.9 £ 47.7
7.5
0.2 £
3.9 £
The table below summarizes DEP unvested stock awards for the years ended December 31, 2018, 2017 and 2016:
2018
Weighted-
average
2017
Weighted-
average
2016
Weighted-
average
Shares
Shares
price
price
26,653,694 £ 1.79
16,466,630 $ 3.17
—
— £
(14,825,509) $ 31.64
—
— £
1,275 $ 15.43
919,967 $ 31.40
9,134,443 £ 2.47
(873,810) $ 31.33 (16,862,324) £ 1.63
(2,459,183) £ 1.59
(246,462) $ 28.06
16,466,630 £ 2.46
1,442,091 $ 32.36
Outstanding at January 1
Share consolidation
Adjustment
Granted
Exercised
Forfeited
Unvested at December 31
Shares
price
—
—
1,442,091 $ 32.36
— $
— $
1,129,504 $ 33.55
(731,596) $ 33.80
(101,223) $ 33.07
1,738,776 $ 33.41
100
The table below summarizes the Group’s outstanding options, exercisable options and options vested or expected to vest
Restricted Stock Awards
for the years ended December 31, 2018, 2017 and 2016:
The table below summarizes unvested restricted stock awards for the years ended December 31, 2018 and 2017:
Outstanding at January 1
Share consolidation
Acquired from Merger
Granted
Exercised
Forfeited
Outstanding at December 31
Exercisable (1)
2018
Weighted-
average
2017
Weighted-
average
2016
Weighted-
average
Shares
price
Shares
price
Shares
price
4,319,706 $ 22.55
45,560,242 $
1.97
43,890,407 £ 1.34
— $
— $
—
—
(41,004,619) $ 19.82
92,949 $ 18.76
— £
— £
—
—
84,273 $ 26.88
2,042,321 $ 13.66
16,251,758 £ 1.53
(212,562) $ 12.31
(404,735) $ 20.32
(11,039,274) £ 0.73
(1,051,655) $ 11.81
(1,966,452) $
7.41
(3,542,649) £ 1.81
3,139,762 $ 28.19
4,319,706 $ 22.55
45,560,242 £ 1.53
707,848 $ 36.02
663,342 $ 34.67
5,014,642 £ 0.87
Outstanding at January 1
Acquired from the Merger
Granted
Exercised
Forfeited
Unvested at December 31
2018
2017
Weighted-
average
price
Shares
Weighted-
average
price
Shares
— $
3,537,221 $ 30.81
— $
1,107,382 $ 35.57
(1,197,671) $ 30.76
(68,782) $ 32.49
—
— 4,068,619 $ 30.72
73,982 $ 35.08
(444,884) $ 30.73
(160,496) $ 30.72
3,378,150 $ 32.35 3,537,221 $ 30.81
Vested or expected to vest
1,157,663 $
—
2,999,811 $ 15.57
24,849,673 £ 0.44
Note 15 — Retirement Benefit Plans
Included in the above table is the Group’s nil cost LTIP options, which constitute the majority of forfeitures.
Defined Contribution Plans
(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.
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.
The following table summarizes the intrinsic value of exercised, outstanding and exercisable options at December 31,
2018, 2017 and 2016 (in millions):
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, 2018, JHG matched 5.0% of employee-eligible compensation in the 401(k) plan.
December 31,
2018
2017
2016
$
$
$
0.1 £
2.8 £ 18.9
0.2 £ 15.9 £ 47.7
0.2 £
3.9 £
7.5
Exercised
Outstanding
Exercisable
Deferred Equity Plan
Outstanding at January 1
Share consolidation
Adjustment
Granted
Exercised
Forfeited
Unvested at December 31
The table below summarizes DEP unvested stock awards for the years ended December 31, 2018, 2017 and 2016:
2018
Weighted-
average
2017
Weighted-
average
2016
Weighted-
average
Shares
price
Shares
price
Shares
price
1,442,091 $ 32.36
16,466,630 $ 3.17
26,653,694 £ 1.79
— $
— $
—
—
(14,825,509) $ 31.64
1,275 $ 15.43
— £
— £
—
—
1,129,504 $ 33.55
919,967 $ 31.40
9,134,443 £ 2.47
(731,596) $ 33.80
(873,810) $ 31.33 (16,862,324) £ 1.63
(101,223) $ 33.07
(246,462) $ 28.06
(2,459,183) £ 1.59
1,738,776 $ 33.41
1,442,091 $ 32.36
16,466,630 £ 2.46
Expenses related to the 401(k) plan are included in employee compensation and benefits on JHG’s Consolidated
Statements of Comprehensive Income and were $5.8 million and $8.6 million during the year ended December 31, 2018
and 2017, respectively. 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, 2018, 2017 and 2016, in respect of the non-U.S. defined contribution plan was $7.5 million, $11.8
million and $11.6 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 surplus on a technical provisions basis of $15.3
million (£12.0 million).
100
101
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, 2018 and December 31, 2017. The Group’s plan assets, benefit obligations and funded status as of 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
Plan amendments
Benefits paid
Actuarial gain (loss)
Foreign currency translation
Benefit obligation as of December 31
Funded status as of year end
Tax at source
Net retirement benefit asset recognized in the Consolidated Balance Sheets
$
December 31,
2018
2017
941.8 $
(11.1)
12.5
(14.7)
(24.0)
(55.0)
849.5
(719.1)
(1.2)
(17.3)
24.0
(3.9)
14.7
47.6
41.9
(613.3)
236.2
(33.4)
202.8 $
877.3
34.8
20.5
(13.8)
(58.6)
81.6
941.8
(679.2)
(1.2)
(19.2)
58.6
—
13.8
(29.8)
(62.1)
(719.1)
222.7
(28.0)
194.7
Amounts recognized on the Consolidated Balance Sheet, net of tax at source as of December 31, 2018 and 2017, consist
of the following (in millions):
December 31,
2018
2017
$
206.5 $
199.3
(3.7)
202.8 $
(4.6)
194.7
Retirement benefit assets recognized in the Consolidated Balance Sheets:
Janus Henderson Group UK Pension Scheme
Retirement benefit obligations recognized in the Consolidated Balance Sheets:
Janus Henderson Group unapproved pension scheme
Net retirement benefit asset recognized in the Consolidated Balance Sheets
$
102
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, 2018 and December 31, 2017. The Group’s plan assets, benefit obligations and funded status as of 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
Plan amendments
Benefits paid
Actuarial gain (loss)
Foreign currency translation
Benefit obligation as of December 31
Funded status as of year end
Tax at source
December 31,
2018
2017
$
941.8 $
(11.1)
12.5
(14.7)
(24.0)
(55.0)
849.5
(719.1)
(1.2)
(17.3)
24.0
(3.9)
14.7
47.6
41.9
(613.3)
236.2
(33.4)
877.3
34.8
20.5
(13.8)
(58.6)
81.6
941.8
(679.2)
(1.2)
(19.2)
58.6
—
13.8
(29.8)
(62.1)
(719.1)
222.7
(28.0)
194.7
Net retirement benefit asset recognized in the Consolidated Balance Sheets
$
202.8 $
Amounts recognized on the Consolidated Balance Sheet, net of tax at source as of December 31, 2018 and 2017, consist
of the following (in millions):
Retirement benefit assets recognized in the Consolidated Balance Sheets:
Janus Henderson Group UK Pension Scheme
Retirement benefit obligations recognized in the Consolidated Balance Sheets:
Janus Henderson Group unapproved pension scheme
Net retirement benefit asset recognized in the Consolidated Balance Sheets
$
202.8 $
December 31,
2018
2017
$
206.5 $
199.3
(3.7)
(4.6)
194.7
The following key assumptions were used in determining the defined benefit obligation as of December 31, 2018 and
2017:
Discount rate
Inflation - salaries
Inflation - RPI
Inflation - CPI
Pension increases (RPI capped at 5% per annum ("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,
2018
2017
2.9 %
2.5 %
3.1 %
2.0 %
3.0 %
2.1 %
28.2
29.2
2.6 %
2.5 %
3.1 %
2.0 %
3.0 %
2.1 %
28.3
29.4
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, 2018 and 2017, by major asset class, are as follows (in
millions):
Cash and cash equivalents
Money market instruments
Forward foreign exchange contracts
Fixed income investments
Equity investments
Total assets at fair value
December 31,
2018
6.4 $
21.6
0.3
623.2
198.0
849.5 $
2017
10.8
1.7
0.4
745.2
183.7
941.8
$
$
As of December 31, 2018, $198.0 million of JHGPS assets were held in JHG-managed funds.
The assets of the JHGPS are allocated to a growth portfolio and to fixed income 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 fixed
income portfolio. The fixed income portfolio is managed on a segregated basis, with the primary objective of meeting
the cash flows as they mature.
The strategic allocation as of December 31, 2018 and 2017 was broadly 25% growth portfolio and 75% bond assets.
102
103
The following table presents JHGPS plan assets at fair value on a recurring basis as of December 31, 2018 (in millions):
Fair value measurements using:
Quoted prices in
active markets for
and liabilities
identical assets observable inputs unobservable inputs
Significant other
Significant
Cash and cash equivalents
Money market instruments
Forward foreign exchange contracts
Fixed income investments
Equity investments
Total
(Level 1)
(Level 2)
(Level 3)
$
$
6.4 $
—
0.3
619.0
—
625.7 $
— $
21.6
—
4.2
198.0
223.8 $
Total
6.4
— $
22
—
0.3
—
623.2
—
—
198.0
— $ 849.5
The expected rate of return on assets for the financial period ending December 31, 2018, was 2.5% p.a. based on
financial conditions as of December 31, 2017 (2017: 2.6% 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, 2018 and 2017, are shown below
(in millions):
Opening accumulated unamortized actuarial gain
Current year actuarial gain (loss)
Tax at source on current year actuarial gain (loss)
Current year prior service cost
Release of actuarial gain due to settlement event
Release of tax at source due to settlement event
Closing accumulated unamortized actuarial gain
December 31,
2018
21.0 $
14.4
(6.5)
(3.7)
(1.1)
0.6
24.7 $
2017
32.1
(15.3)
4.7
—
(1.6)
1.1
21.0
$
$
No actuarial gains were amortized from accumulated other comprehensive income during the year ended December 31,
2018 (2017: nil). No actuarial gains are expected to be amortized from accumulated other comprehensive income into
net periodic benefit cost during 2019.
104
The following table presents JHGPS plan assets at fair value on a recurring basis as of December 31, 2018 (in millions):
Net periodic benefit cost
Fair value measurements using:
Quoted prices in
active markets for
and liabilities
Significant other
Significant
identical assets observable inputs unobservable inputs
(Level 1)
(Level 2)
(Level 3)
Total
$
6.4 $
— $
— $
—
0.3
619.0
—
21.6
—
4.2
198.0
6.4
22
0.3
623.2
198.0
—
—
—
—
$
625.7 $
223.8 $
— $ 849.5
Cash and cash equivalents
Money market instruments
Forward foreign exchange contracts
Fixed income investments
Equity investments
Total
asset class.
Actuarial gains and losses
(in millions):
The expected rate of return on assets for the financial period ending December 31, 2018, was 2.5% p.a. based on
financial conditions as of December 31, 2017 (2017: 2.6% 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
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, 2018 and 2017, are shown below
Opening accumulated unamortized actuarial gain
Current year actuarial gain (loss)
Tax at source on current year actuarial gain (loss)
Current year prior service cost
Release of actuarial gain due to settlement event
Release of tax at source due to settlement event
Closing accumulated unamortized actuarial gain
December 31,
2018
2017
$
21.0 $
32.1
14.4
(6.5)
(3.7)
(1.1)
0.6
(15.3)
4.7
—
(1.6)
1.1
$
24.7 $
21.0
No actuarial gains were amortized from accumulated other comprehensive income during the year ended December 31,
2018 (2017: nil). No actuarial gains are expected to be amortized from accumulated other comprehensive income into
net periodic benefit cost during 2019.
The components of net periodic benefit cost in respect of defined benefit plans for the years ended December 31, 2018,
2017 and 2016, 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
(1.2) $
1.6
(19.2)
20.3
1.5
(7.4)
(5.9) $
2018
(1.2) $
1.6
(17.3)
21.3
4.4
(8.0)
(3.6) $
2016
(1.2)
—
(22.6)
25.6
1.8
(7.5)
(5.7)
$
$
The following key assumptions were used in determining the net periodic benefit cost for the years ended December 31,
2018, 2017 and 2016 (in millions):
December 31,
2018
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 at beginning of the year 11.0
2.6 %
2.5 %
3.1 %
2.0 %
3.0 %
2.1 %
2.5 %
2017
2.9 %
2.5 %
3.2 %
2.1 %
3.0 %
2.1 %
2.6 %
11.0
2016
3.8 %
2.5 %
3.0 %
2.0 %
2.9 %
2.0 %
3.4 %
11.0
Cash flows
Employer contributions of $12.5 million were paid in relation to the Group’s defined benefit pension plans during 2018
(excluding credits to members’ Money purchase accounts). The Group expects to contribute approximately $0.8 million
to the JHGPS (excluding credits to members’ Money purchase accounts) in the year ended December 31, 2019.
The expected future benefit payments for the Group’s pension plan are as follows (in millions):
2019
2020
2021
2022
2023
2024-2028
$
$
$
$
$
$
17.2
18.0
19.7
21.0
23.1
124.9
104
105
Note 16 — Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss, net of tax, for the years ended December 31, 2018 and 2017, are as
follows (in millions):
Year ended December 31,
2018
2017
Foreign
Available-
for-sale
Retirement
benefit
Foreign
Available-
for-sale
Retirement
benefit
currency securities asset, net Total
2.5 $
$ (325.3) $
(2.5)
—
—
(325.3)
—
21.0
(2.5)
(304.3)
currency securities asset, net Total
4.7 $
—
4.7
32.1 $ (434.5)
—
(434.5)
—
(471.3)
—
32.1
21.0 $ (301.8) $ (471.3) $
(124.3)
—
3.7
(120.6)
125.0
1.9
(10.6)
116.3
—
(124.3)
—
—
—
—
(3.9)
(0.5)
(4.4)
3.7
(120.6)
125.0
(2.0)
(11.1)
111.9
Beginning balance
Cumulative-effect adjustment
Adjusted beginning balance
Other comprehensive
income (loss)
Amounts reclassified from
accumulated other
comprehensive income
(loss)
Total other comprehensive
income (loss)
Less: other comprehensive
loss (income) attributable to
noncontrolling interests
Ending balance
$ (448.2) $
1.4
—
— $
—
1.4
24.7 $ (423.5) $ (325.3) $
21.0
(0.2)
2.5 $
—
20.8
21.0 $ (301.8)
The components of other comprehensive income (loss), net of tax for the years ended December 31, 2018, 2017 and
2016, are as follows (in millions):
Year ended December 31, 2018
Foreign currency translation adjustments
Retirement benefit asset, net
Reclassifications to net income
Total other comprehensive loss
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
Pre-tax
amount
(124.3)
4.2
(1.1)
(121.2) $
Tax
expense
Net amount
(124.3)
4.8
(1.1)
(120.6)
—
0.6
—
0.6 $
Pre-tax
amount
Tax
benefit
1.9 $
125.0
(10.2)
(4.4)
112.3 $
Net amount
1.9
125.0
(10.6)
(4.4)
111.9
— $
—
(0.4)
—
(0.4) $
$
$
$
Pre-tax
amount
Tax
expense
Net amount
0.8
(247.1)
15.0
(1.2)
(232.5)
— $
0.3
0.3
—
0.6 $
$
0.8 $
(247.4)
14.7
(1.2)
(233.1) $
$
106
Note 16 — Accumulated Other Comprehensive Loss
Note 17 — Earnings and Dividends Per Share
Changes in accumulated other comprehensive loss, net of tax, for the years ended December 31, 2018 and 2017, are as
Earnings Per Share
The following is a summary of the earnings per share calculation for the years ended December 31, 2018, 2017 and 2016
(in millions, except per share data):
Net income attributable to JHG
Less: Allocation of earnings to participating stock-based awards
Net income attributable to JHG common shareholders
Weighted-average common shares outstanding - basic
Dilutive effect of non -participating stock-based awards
Weighted-average diluted common shares outstanding - diluted
Earnings per share:
Basic
Diluted (two class)
$
$
Year ended December 31,
2017
655.5 $
(17.3)
638.2 $
160.7
1.6
162.3
2018
523.8 $
(12.7)
511.1 $
195.0
0.9
195.9
2016
189.0
(4.5)
184.5
109.1
2.0
111.1
$
$
2.62 $
2.61 $
3.97 $
3.93 $
1.69
1.66
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 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
2018
1.0
—
0.8
10.0
7.8
—
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, 2018, 2017 and 2016,
in GBP and USD:
follows (in millions):
Year ended December 31,
2018
Available-
Retirement
2017
Available-
Retirement
Foreign
for-sale
benefit
Foreign
for-sale
benefit
currency securities asset, net Total
currency securities asset, net Total
Beginning balance
$ (325.3) $
2.5 $
21.0 $ (301.8) $ (471.3) $
4.7 $
32.1 $ (434.5)
Cumulative-effect adjustment
—
Adjusted beginning balance
(325.3)
(2.5)
—
—
(2.5)
—
21.0
(304.3)
(471.3)
—
4.7
—
—
32.1
(434.5)
(124.3)
—
3.7
(120.6)
125.0
1.9
(10.6)
116.3
Other comprehensive
income (loss)
Amounts reclassified from
accumulated other
comprehensive income
(loss)
Total other comprehensive
income (loss)
Less: other comprehensive
loss (income) attributable to
noncontrolling interests
—
—
—
(3.9)
(0.5)
(4.4)
(124.3)
3.7
(120.6)
125.0
(2.0)
(11.1)
111.9
—
—
Ending balance
$ (448.2) $
— $
24.7 $ (423.5) $ (325.3) $
2.5 $
21.0 $ (301.8)
1.4
—
—
1.4
21.0
(0.2)
—
20.8
The components of other comprehensive income (loss), net of tax for the years ended December 31, 2018, 2017 and
2016, are as follows (in millions):
Year ended December 31, 2018
Foreign currency translation adjustments
Retirement benefit asset, net
Reclassifications to net income
Total other comprehensive loss
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
Pre-tax
amount
(124.3)
4.2
(1.1)
Tax
expense
Net amount
—
0.6
—
(124.3)
4.8
(1.1)
$
(121.2) $
0.6 $
(120.6)
Pre-tax
amount
Tax
benefit
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
expense
Net amount
$
0.8 $
— $
0.8
(247.4)
14.7
(1.2)
0.3
0.3
—
(247.1)
15.0
(1.2)
$
(233.1) $
0.6 $
(232.5)
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.
106
107
Dividends paid per share - pre-Merger - in GBP
Dividends paid per share - post-Merger - in USD
£
$
Year ended December 31,
2017
0.0915 £
0.6400 $
— £
1.4000 $
2016
0.1040
—
2018
Note 18 — Commitments and Contingencies
Commitments and contingencies may arise in the normal course of business. Commitments and contingencies as of
December 31, 2018, are discussed below.
Operating and Capital Leases
As of December 31, 2018, future minimum rental commitments under non-cancelable operating and capital leases are as
follows (in millions):
Year ended December 31,
2019
2020
2021
2022
2023
Thereafter
Total
Amount
33.1
$
31.7
29.2
25.1
23.2
63.1
205.4
$
Litigation and Other Regulatory Matters
JHG is periodically involved in various legal proceedings and other regulatory matters.
Richard Pease v. Henderson Administration Limited
The outcome of a court case involving an ex-employee was determined in the first quarter of 2018. The case related to
the fees the Group should receive after a fund was transferred to an ex-employee (the “Fund Transfer Fees”) and the
ex-employee’s entitlement to deferred and forfeited remuneration. The judgment given in the case resulted in the Group
recognizing a $12.2 million charge in general, administrative and occupancy on JHG’s Condensed Consolidated
Statements of Comprehensive Income after the judge held that the ex-employee was not bound to pay the Fund Transfer
Fees and that the ex-employee’s contract gave him an entitlement to deferred and forfeited remuneration. The amount
also includes legal costs relating to the case. Henderson Administration Limited (“HAL”), a wholly owned subsidiary of
JHG, appealed the part of the judgment relating to the Fund Transfer Fees and judgment was handed down by the Court
of Appeal of England and Wales on February 15, 2019 in favor of HAL. As a result, and subject to any further appeal,
the Group will be entitled to the Fund Transfer Fees and related interest of approximately $5.0 million and $0.3 million,
respectively. It will also be entitled to certain costs relating to the appeal and the earlier trial insofar as they relate to the
Fund Transfer Fees claim.
Eisenberg v. Credit Suisse AG and Janus Indices, Halbert v. Credit Suisse AG and Janus Indices, Qiu v. Credit Suisse
AG and Janus Indices and Y-GAR Capital v. Credit Suisse AG and Janus Indices
On March 15, 2018, a class action lawsuit was filed in the United States District Court for the Southern District of New
York (“SDNY”) against Janus Index & Calculation Services LLC, which effective January 1, 2019 was renamed Janus
Henderson Indices LLC (“Janus Indices”), a subsidiary of the Group, on behalf of a class consisting of investors who
purchased VelocityShares Daily Inverse VIX Short-Term ETN (Ticker: XIV) between January 29, 2018, and February
5, 2018 (Eisenberg v. Credit Suisse AG and Janus Indices). Credit Suisse, the issuer of the XIV notes, is also named as a
defendant in the lawsuit. The plaintiffs generally allege statements by Credit Suisse and Janus Indices, including those in
the registration statement, were materially false and misleading based on its discussion of how the intraday indicative
value (“IIV”) is calculated and that the IIV was not an accurate gauge of the economic value of the notes. On April 17,
2018, a second lawsuit was filed against Janus Indices and Credit Suisse in the United States District Court of the
Northern District of Alabama by certain investors in XIV (Halbert v. Credit Suisse AG and Janus Indices). On May 4,
2018, a third lawsuit, styled as a class action on behalf of investors who purchased XIV between January 29, 2018, and
February 5, 2018, was filed against Janus Indices and Credit Suisse AG in the SDNY (Qiu v. Credit Suisse AG and
Janus Indices). The Halbert and Qiu allegations generally copy the allegations in the Eisenberg case. On August 20,
2018, an amended complaint was filed in the Eisenberg and Qiu cases (which have been consolidated in the SDNY
108
Commitments and contingencies may arise in the normal course of business. Commitments and contingencies as of
As of December 31, 2018, future minimum rental commitments under non-cancelable operating and capital leases are as
Note 18 — Commitments and Contingencies
December 31, 2018, are discussed below.
Operating and Capital Leases
follows (in millions):
Year ended December 31,
2019
2020
2021
2022
2023
Thereafter
Total
Amount
$
33.1
31.7
29.2
25.1
23.2
63.1
$
205.4
Litigation and Other Regulatory Matters
JHG is periodically involved in various legal proceedings and other regulatory matters.
Richard Pease v. Henderson Administration Limited
The outcome of a court case involving an ex-employee was determined in the first quarter of 2018. The case related to
the fees the Group should receive after a fund was transferred to an ex-employee (the “Fund Transfer Fees”) and the
ex-employee’s entitlement to deferred and forfeited remuneration. The judgment given in the case resulted in the Group
recognizing a $12.2 million charge in general, administrative and occupancy on JHG’s Condensed Consolidated
Statements of Comprehensive Income after the judge held that the ex-employee was not bound to pay the Fund Transfer
Fees and that the ex-employee’s contract gave him an entitlement to deferred and forfeited remuneration. The amount
also includes legal costs relating to the case. Henderson Administration Limited (“HAL”), a wholly owned subsidiary of
JHG, appealed the part of the judgment relating to the Fund Transfer Fees and judgment was handed down by the Court
of Appeal of England and Wales on February 15, 2019 in favor of HAL. As a result, and subject to any further appeal,
the Group will be entitled to the Fund Transfer Fees and related interest of approximately $5.0 million and $0.3 million,
respectively. It will also be entitled to certain costs relating to the appeal and the earlier trial insofar as they relate to the
Fund Transfer Fees claim.
Eisenberg v. Credit Suisse AG and Janus Indices, Halbert v. Credit Suisse AG and Janus Indices, Qiu v. Credit Suisse
AG and Janus Indices and Y-GAR Capital v. Credit Suisse AG and Janus Indices
On March 15, 2018, a class action lawsuit was filed in the United States District Court for the Southern District of New
York (“SDNY”) against Janus Index & Calculation Services LLC, which effective January 1, 2019 was renamed Janus
Henderson Indices LLC (“Janus Indices”), a subsidiary of the Group, on behalf of a class consisting of investors who
purchased VelocityShares Daily Inverse VIX Short-Term ETN (Ticker: XIV) between January 29, 2018, and February
5, 2018 (Eisenberg v. Credit Suisse AG and Janus Indices). Credit Suisse, the issuer of the XIV notes, is also named as a
defendant in the lawsuit. The plaintiffs generally allege statements by Credit Suisse and Janus Indices, including those in
the registration statement, were materially false and misleading based on its discussion of how the intraday indicative
value (“IIV”) is calculated and that the IIV was not an accurate gauge of the economic value of the notes. On April 17,
2018, a second lawsuit was filed against Janus Indices and Credit Suisse in the United States District Court of the
Northern District of Alabama by certain investors in XIV (Halbert v. Credit Suisse AG and Janus Indices). On May 4,
2018, a third lawsuit, styled as a class action on behalf of investors who purchased XIV between January 29, 2018, and
February 5, 2018, was filed against Janus Indices and Credit Suisse AG in the SDNY (Qiu v. Credit Suisse AG and
Janus Indices). The Halbert and Qiu allegations generally copy the allegations in the Eisenberg case. On August 20,
2018, an amended complaint was filed in the Eisenberg and Qiu cases (which have been consolidated in the SDNY
under the name Set Capital LLC, et al. v. Credit Suisse AG, et al.), adding Janus Distributors LLC, doing business as
Janus Henderson Distributors, and Janus Henderson Group plc as parties, and adding allegations of market manipulation
by all of the defendants.
On February 7, 2019, a fourth lawsuit was filed against Janus Indices, Janus Distributors LLC, Janus Henderson Group
plc, and Credit Suisse in the United States District Court of the Eastern District of New York by certain investors in XIV
(Y-GAR Capital LLC v. Credit Suisse Group AG, et al.) The allegations in Y-GAR generally copy the allegations in the
Set Capital case.
The Group believes the claims in these lawsuits are without merit and is strongly defending the actions.
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, 2018, 2017 and 2016, the Group recognized revenues of $1,953.2 million,
$1,473.5 million and $885.0 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:
Accrued income
Accounts receivable
As of December 31
2017
2018
261.6
187.2 $
39.8
29.7
$
Dai-ichi is a significant shareholder of the Group. Investment management fees attributable to Dai-ichi separate accounts
for the years ended December 31, 2018 and 2017, were $14.9 million and $11.0 million, respectively.
Seed investments held in managed funds are discussed 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, 2018, 2017 and 2016 (in millions):
Operating revenues
U.S.
UK
Luxembourg
International
Total
2018
$ 1,338.7 $
Year ended December 31,
2017
818.1 $
669.0
280.9
50.3
2016
172.1
536.7
282.7
26.7
$ 2,306.4 $ 1,818.3 $ 1,018.2
649.4
255.9
62.4
108
109
Refer to JHG 2017 Pro Forma Results in Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations of JHG, for pro forma geographic operating revenues for the year ended December 31, 2017.
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
2018
397.0
366.8 $
2,629.8
245.1
3.5
$ 3,192.8 $ 3,275.4
2,604.2
219.3
2.5
Long-lived assets include property, equipment, software and intangible assets.
Note 21 — Selected Quarterly Financial Data (Unaudited)
The Group adopted the new revenue recognition standard, along with the updated principal-versus-agent guidance,
effective January 1, 2018, using the retrospective method, which required adjustments to be reflected as of January 1,
2016. Quarterly 2017 total revenue in the table below has been adjusted for the new revenue recognition standard.
(in millions, except per share amounts)
Total 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)
Total 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
Fourth
Second
2018
Third
First
quarter quarter quarter quarter Full year
$ 587.7 $ 592.4 $ 581.2 $ 545.1 $ 2,306.4
649.8
148.3
499.6
105.1
24.2
6.1
523.8
111.2
150.0
100.8
6.0
106.8
175.3
130.5
10.1
140.6
176.2
163.2
2.0
165.2
$
0.82 $
0.70 $
0.55 $
0.54 $
2.62
$
0.82 $
0.70 $
0.55 $
0.54 $
2.61
Fourth
Second
2017
Third
First
quarter quarter quarter quarter Full year
$ 233.0 $ 396.6 $ 566.9 $ 621.8 $ 1,818.3
442.3
138.2
658.4
102.2
(2.9)
(2.7)
655.5
99.5
196.6
472.1
(0.4)
471.7
50.8
42.6
—
42.6
56.7
41.5
0.2
41.7
$
0.38 $
0.29 $
0.49 $
2.34 $
3.97
$
0.38 $
0.28 $
0.49 $
2.32 $
3.93
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, 2018, 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
110
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,
2018
2017
$
366.8 $
397.0
2,604.2
2,629.8
219.3
2.5
245.1
3.5
$ 3,192.8 $ 3,275.4
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, 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 and Mr. Thompson concluded that as of
the date of their evaluation, JHG’s disclosure controls and procedures were effective.
Long-lived assets include property, equipment, software and intangible assets.
Management’s Report on Internal Control Over Financial Reporting
Note 21 — Selected Quarterly Financial Data (Unaudited)
The Group adopted the new revenue recognition standard, along with the updated principal-versus-agent guidance,
effective January 1, 2018, using the retrospective method, which required adjustments to be reflected as of January 1,
2016. Quarterly 2017 total revenue in the table below has been adjusted for the new revenue recognition standard.
2018
First
Second
Third
Fourth
quarter quarter quarter quarter Full year
$ 587.7 $ 592.4 $ 581.2 $ 545.1 $ 2,306.4
176.2
175.3
148.3
150.0
163.2
130.5
105.1
100.8
2.0
10.1
6.1
6.0
165.2
140.6
111.2
106.8
649.8
499.6
24.2
523.8
$
0.82 $
0.70 $
0.55 $
0.54 $
2.62
$
0.82 $
0.70 $
0.55 $
0.54 $
2.61
2017
First
Second
Third
Fourth
quarter quarter quarter quarter Full year
$ 233.0 $ 396.6 $ 566.9 $ 621.8 $ 1,818.3
50.8
42.6
—
42.6
56.7
41.5
0.2
41.7
138.2
196.6
102.2
472.1
(2.7)
99.5
(0.4)
471.7
442.3
658.4
(2.9)
655.5
$
0.38 $
0.28 $
0.49 $
2.32 $
3.93
(in millions, except per share amounts)
Total revenue
Operating income
Net income
Net income attributable to noncontrolling interests
Net income attributable to JHG
Basic earnings per share attributable to JHG common
Diluted earnings per share attributable to JHG common
shareholders
shareholders
(in millions, except per share amounts)
Total revenue
Operating income
Net income
Net income attributable to noncontrolling interests
Net income attributable to JHG
Basic earnings per share attributable to JHG common
Diluted earnings per share attributable to JHG common
shareholders
shareholders
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
JHG’s Management’s Report on Internal Control over Financial Reporting and the Group’s registered public accounting
firm’s Report of Independent Registered Public Accounting Firm, which contains its attestation on JHG’s internal
control over financial reporting, are incorporated by reference from Part II, Item 8, Financial Statements and
Supplementary Data.
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, 2018 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.
$
0.38 $
0.29 $
0.49 $
2.34 $
3.97
Directors
Richard Gillingwater, Glenn Schafer, Richard Weil, 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 2019 annual general meeting or until their successors are elected and qualify. Ages shown below are as of
February 22, 2019.
Kalpana Desai | Age 51
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.
As of December 31, 2018, 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
110
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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.
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 66
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 65
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.
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Experience
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.
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 66
Experience
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.
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 65
Committee.
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
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 Management in London from 2006 until 2009. Mr Dolan was a Director of Meeschaert Gestion Privée 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 63
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’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.
Richard Gillingwater | Age 62
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
112
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P&O, Debenhams, Tomkins, Qinetiq Group, Kidde, Hiscox Ltd, Helical plc and Wm Morrison Supermarkets plc.
Mr Gillingwater is Chairman of SSE plc and Senior Independent Director of Whitbread 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 62
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 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 69
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.
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P&O, Debenhams, Tomkins, Qinetiq Group, Kidde, Hiscox Ltd, Helical plc and Wm Morrison Supermarkets plc.
Mr Gillingwater is Chairman of SSE plc and Senior Independent Director of Whitbread 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.
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
Lawrence Kochard | Age 62
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 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 69
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.
Angela Seymour-Jackson | Age 52
Independent Non-Executive Director 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 and Page 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 55
Chief Executive Officer and Executive Director since May 2017.
Experience
Richard Weil is Chief Executive Officer and also serves as a member of the Board. In this role, Mr Weil 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 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 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.
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Tatsusaburo Yamamoto | Age 54
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 30 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
Richard Weil
Roger Thompson
Enrique Chang
Title
Age (1)
Chief Executive Officer
Chief Financial Officer
Chief Investment Officer
55
51
56
(1) Ages shown are as of February 22, 2019.
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 Mr. Weil, whose previous experience is described above regarding the
Company’s directors.
Roger Thompson is Chief Financial Officer at JHG, 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 JHG, a position he has held since the Merger. Prior to the Merger,
Mr. Chang was President, Head of Investments at JCG. In his current role, he leads JHG’s global investment team.
Mr. Chang is also a Portfolio Manager on the Janus Henderson Global Allocation strategies and a member of the JHG
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
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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.
Tatsusaburo Yamamoto | Age 54
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 30 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
Richard Weil
Roger Thompson
Enrique Chang
Title
Age (1)
Chief Executive Officer
Chief Financial Officer
Chief Investment Officer
55
51
56
(1) Ages shown are as of February 22, 2019.
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 Mr. Weil, whose previous experience is described above regarding the
Company’s directors.
Roger Thompson is Chief Financial Officer at JHG, 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 JHG, a position he has held since the Merger. Prior to the Merger,
Mr. Chang was President, Head of Investments at JCG. In his current role, he leads JHG’s global investment team.
Mr. Chang is also a Portfolio Manager on the Janus Henderson Global Allocation strategies and a member of the JHG
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.
Officer Code of Ethics
Our Officer Code of Ethics for the CEO and Senior Financial Officers (including our CEO, 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.
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 is 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, Risk 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)
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117
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. 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 member of the Audit Committee serves on an audit
committee of more than two public companies in addition to JHG.
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 JHG stock and units of JHG funds; and
• Ensure that reward-related processes are compliant with industry regulations and legislation, consistent with market
practice and include effective risk management controls.
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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.
The Company’s compensation principles are reinforced through an appropriate balance of the following compensation
elements:
The members of the Audit Committee are Jeffrey Diermeier, Eugene Flood, Jr. 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
Audit Committee
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 member of the Audit Committee serves on an audit
committee of more than two public companies in addition to JHG.
Because the Company is a foreign private issuer, it is responding to this Item 11 as permitted by Item 402(a)-(1) of SEC
Item 11. EXECUTIVE COMPENSATION
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:
• 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;
and individual performance;
• Reinforce a strong performance culture through rewards, which are differentiated based on Company, division, team
• Align management interests with those of the Company’s shareholders and clients by delivering a significant
portion of annual compensation in shares of JHG stock and units of JHG funds; and
• Ensure that reward-related processes are compliant with industry regulations and legislation, consistent with market
practice and include effective risk management controls.
Base Pay
Benefits and
Pension
Variable Incentive
Compensation
Attracts and retains employees with the personal attributes, skills and experience
required to deliver long-term value for shareholders and clients.
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.
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 six 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 three-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 regulations, in shares/units of Janus
Henderson funds;
Under the scorecard framework, an element of total variable incentive is delivered in
performance stock units (PSUs), providing a further link to Company performance
over a forward looking three-year period.
• 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;
2018 Executive Compensation
JHG 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 was uncommon, the Board believed it
was both an appropriate and beneficial structure for JHG following the merger, as it ensured integration risk was
minimized and synergies envisioned at the time of the merger announcement were realized. In July 2018, the Board
determined that the integration efforts were ahead of schedule and had progressed to the point where the co-CEO
structure had achieved its goals and determined to transition to a sole CEO, Mr. Weil. Mr. Formica resigned as co-CEO
and Director effective July 31, 2018, and agreed to stay on in a consulting role through the end of 2018.
The Compensation Committee determined to utilize the scorecard approach to evaluate the performance of each CEO
during the 2018 performance period in order to maintain strong alignment between the compensation of each CEO and
Company performance. Per the terms of his Settlement Agreement, Mr. Formica is entitled to receive an incentive bonus
for the full 2018 performance year as determined using the CEO Scorecard approach. This reflects the Committee’s
belief that variable compensation for the co-CEOs is competitive relative to market given the size and complexity of the
combined group, and would have been aligned in 2018, subject to equivalent performance and contribution.
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Total Compensation
The following table contains information about the compensation earned during 2018 by Messrs. Weil and Formica,
individually, and the non-CEO Executive Officers as a group, for services to JHG during 2018.
Executive Officer (1)
Richard M. Weil, CEO
Andrew Formica, former Co-CEO
Other Executive Officers
Base
Variable
Salary (2) Comp (STI) (3)
($)
650,000
593,319
1,479,976
($)
3,965,000
3,577,000
5,511,743
Funds (5)
($)
1,982,500
4,353,000
5,319,669
Variable Comp (LTI) (4)
Restricted
Shares
($)
—
—
1,038,223
Total 2018 Benefits
PSUs
($)
1,982,500
—
—
and
Variable
Comp
($)
7,930,000
7,930,000
11,869,635
Pension (6) Other (7)
($)
55,599
77,243
138,859
($)
465,480
2,683,956
362,178
All non-USD amounts in this schedule are stated in USD on the basis of the average FX rate for 2018 (GBP to USD = 1.3333).
Notes:
1.
The Other Executive Officers are Roger Thompson (Chief Financial Officer), Enrique Chang (Global Chief Investment Officer) and Phil
Wagstaff (Global Head of Distribution). Mr. Wagstaff stepped down from his role as Global Head of Distribution effective September 30, 2018,
and was on a garden leave through January 31, 2019, when his resignation became effective.
2. Base salary is as of December 31, 2018.
3.
4.
Mr. Weil received a salary increase from $575,000 to $650,000, effective August 1, 2018, at the time of his appointment to sole CEO.
The amount of variable incentive compensation awarded in respect of the 2018 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 compensation awarded in respect of the 2018 performance year that 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 JHG funds, restricted shares
or performance shares. Awards vest and are realized over a three-year deferral period (restricted share and restricted funds) or at the end of a
three-year performance period (performance shares). Amounts shown also include special one-time discretionary awards in the form of restricted
shares as follows: $300,000 each to Messrs. Thompson and Chang.
5. Under internal policy, provided specified JHG shareholding requirements are satisfied, individuals are able to elect for a proportion of deferred
compensation to be delivered in the form of JHG 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. Weil — 100% awarded in JHG funds
— Mr. Formica — 100% awarded in JHG funds
— Mr. Chang — 100% awarded in JHG funds
— Mr. Wagstaff — 75% awarded in JHG funds; 25% awarded in restricted shares
— Mr. Thompson — 75% awarded in JHG funds; 25% awarded in restricted shares
6. Benefits and Pension amounts shown include the following:
a. For Messrs. Formica, Thompson and Wagstaff: 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 2018 and the total pension allowances paid to these individuals during 2018 were £51,175, £32,400 and
£33,750 respectively ($68,232, $43,199 and $44,999 respectively). Also includes Life Assurance amounts of £913, £739 and £770 respectively
($1,217, $985 and $1,027 respectively).
b. For Messrs Weil and Chang: amount includes health benefits and insurance coverage consistent with that provided to all other employees,
401(k) match contributions up to 5% of eligible compensation (capped at $275,000 per the IRS annual compensation limit); $1,982 each for a
one-time ESOP award; and ESOP dividends in the amounts of $643 to Mr. Weil and $104 to Mr. Chang.
7. Amounts shown in Other include:
For Mr. Weil: (i) $300,492 in relocation benefits per Company policy as a result of his 2017 move to the U.K from the U.S.; (ii) $148,479 in
dividends on unvested shares; (iii) $510 in identify theft protection premiums; and (iv) $16,000 in attorney fees.
For Mr. Formica: (i) $2,466,235 in severance payments as more fully described on page 129; (ii) $10,212 in dividends on unvested JHG shares;
and (iii) LTIP dividend equivalent amounts of $175,510, and (iv) $31,999 in attorney fees.
Other Executive Officers include $162,284 in dividends on unvested JHG shares paid to Mr. Chang; $26,105 paid to Mr. Thompson; and $44,096
paid to Mr. Wagstaff; LTIP dividend equivalent amounts of $58,916 paid to Mr. Thompson, and $54,648 paid to Mr. Wagstaff, $16,000 in
attorney fees paid on behalf of Mr. Wagstaff, and an anniversary award of $130 paid to Mr. Chang.
The Scorecard Approach to Co-CEO Compensation
The scorecard approach is designed to align the co-CEOs’ compensation with Company performance, which the
Compensation Committee believes drives long-term value for shareholders and clients. The scorecard for 2018 is based
upon the same factors used by the Company to evaluate its business and is similar to the scorecard utilized for 2017.
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Total Compensation
The performance measures and weighting used are as follows:
The following table contains information about the compensation earned during 2018 by Messrs. Weil and Formica,
individually, and the non-CEO Executive Officers as a group, for services to JHG during 2018.
• Deliver investment excellence for clients (30% weighting, measured based on three-year investment performance
relative to benchmark);
Base
Variable
Restricted
Variable
and
Variable Comp (LTI) (4)
Total 2018 Benefits
Executive Officer (1)
Richard M. Weil, CEO
Andrew Formica, former Co-CEO
Salary (2) Comp (STI) (3)
Funds (5)
($)
650,000
593,319
($)
($)
3,965,000
1,982,500
3,577,000
4,353,000
Other Executive Officers
1,479,976
5,511,743
5,319,669
1,038,223
Shares
($)
PSUs
($)
Comp
Pension (6) Other (7)
($)
($)
($)
—
—
1,982,500
7,930,000
7,930,000
55,599
465,480
77,243
2,683,956
11,869,635
138,859
362,178
—
—
All non-USD amounts in this schedule are stated in USD on the basis of the average FX rate for 2018 (GBP to USD = 1.3333).
Notes:
3.
4.
1.
The Other Executive Officers are Roger Thompson (Chief Financial Officer), Enrique Chang (Global Chief Investment Officer) and Phil
Wagstaff (Global Head of Distribution). Mr. Wagstaff stepped down from his role as Global Head of Distribution effective September 30, 2018,
and was on a garden leave through January 31, 2019, when his resignation became effective.
2. Base salary is as of December 31, 2018.
Mr. Weil received a salary increase from $575,000 to $650,000, effective August 1, 2018, at the time of his appointment to sole CEO.
The amount of variable incentive compensation awarded in respect of the 2018 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 compensation awarded in respect of the 2018 performance year that 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 JHG funds, restricted shares
or performance shares. Awards vest and are realized over a three-year deferral period (restricted share and restricted funds) or at the end of a
three-year performance period (performance shares). Amounts shown also include special one-time discretionary awards in the form of restricted
shares as follows: $300,000 each to Messrs. Thompson and Chang.
5. Under internal policy, provided specified JHG shareholding requirements are satisfied, individuals are able to elect for a proportion of deferred
compensation to be delivered in the form of JHG 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. Weil — 100% awarded in JHG funds
— Mr. Formica — 100% awarded in JHG funds
— Mr. Chang — 100% awarded in JHG funds
— Mr. Wagstaff — 75% awarded in JHG funds; 25% awarded in restricted shares
— Mr. Thompson — 75% awarded in JHG funds; 25% awarded in restricted shares
6. Benefits and Pension amounts shown include the following:
a. For Messrs. Formica, Thompson and Wagstaff: 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 2018 and the total pension allowances paid to these individuals during 2018 were £51,175, £32,400 and
£33,750 respectively ($68,232, $43,199 and $44,999 respectively). Also includes Life Assurance amounts of £913, £739 and £770 respectively
($1,217, $985 and $1,027 respectively).
b. For Messrs Weil and Chang: amount includes health benefits and insurance coverage consistent with that provided to all other employees,
401(k) match contributions up to 5% of eligible compensation (capped at $275,000 per the IRS annual compensation limit); $1,982 each for a
one-time ESOP award; and ESOP dividends in the amounts of $643 to Mr. Weil and $104 to Mr. Chang.
7. Amounts shown in Other include:
For Mr. Weil: (i) $300,492 in relocation benefits per Company policy as a result of his 2017 move to the U.K from the U.S.; (ii) $148,479 in
dividends on unvested shares; (iii) $510 in identify theft protection premiums; and (iv) $16,000 in attorney fees.
For Mr. Formica: (i) $2,466,235 in severance payments as more fully described on page 129; (ii) $10,212 in dividends on unvested JHG shares;
and (iii) LTIP dividend equivalent amounts of $175,510, and (iv) $31,999 in attorney fees.
Other Executive Officers include $162,284 in dividends on unvested JHG shares paid to Mr. Chang; $26,105 paid to Mr. Thompson; and $44,096
paid to Mr. Wagstaff; LTIP dividend equivalent amounts of $58,916 paid to Mr. Thompson, and $54,648 paid to Mr. Wagstaff, $16,000 in
attorney fees paid on behalf of Mr. Wagstaff, and an anniversary award of $130 paid to Mr. Chang.
The Scorecard Approach to Co-CEO Compensation
The scorecard approach 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 for 2018 is based
upon the same factors used by the Company to evaluate its business and is similar to the scorecard utilized for 2017.
• 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
Following the decision to appoint a sole CEO in July 2018, the Compensation Committee determined it was still
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 were to the ongoing integration and performance of JHG during 2018.
Under the agreed compensation framework, the 2018 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 Company’s revenue and total
AUM compared to the revenue and total AUM of a select peer group of companies, as well as relative performance
against the peer group shown below.
JHG’s Public Company Peer Group
Affiliated Managers Group, Inc.
AllianceBernstein Holding L.P.
Ameriprise (Columbia Threadneedle Investments), Inc.
BrightSphere Investment Group plc (formerly OMAM Inc)
Eaton Vance Corp.
Federated Investors, Inc.
Franklin Resources, Inc.
Invesco Ltd.
Legg Mason, Inc.
T. Rowe Price Group, Inc.
Schroders plc
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 2018 target annual incentive opportunity for the co-CEOs of $6.50 million.
Compensation Committee Decisions About Co-CEO Pay
Evaluating Co-CEO and Business Performance
Having established the total variable compensation target amount for the co-CEOs, the Compensation Committee
utilized the scorecard approach to complete an assessment of co-CEO performance relative to the specific 2018
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
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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) using the table below to identify a performance multiplier for each of the performance measures in the
scorecard; and
(ii) determining an overall performance multiplier for each area of evaluation in consideration of actual
performance and the assigned weights.
Performance
Multiplier
Range
0.0 to 0.5
0.5 to 1.0
1.0 to 1.5
1.5 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
2018.
Investment Excellence (30% of Total)
For 2018, 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 three-year basis.
On an AUM-weighted basis, over the three-year investment period (ending December 31, 2018), 61% of the Company’s
total AUM outperformed its respective benchmark, resulting in a performance multiplier range for the co-CEOs in the
range of 1.0 to 1.5.
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Committee then rated co-CEO performance (as a team, and not individually) against each of these factors to determine
Financial Results (40% of Total)
an overall performance multiplier.
The Compensation Committee’s evaluation of co-CEO performance involved:
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%.
(i) using the table below to identify a performance multiplier for each of the performance measures in the
Formulaic (50% of financial results; 20% of total)
scorecard; and
(ii) determining an overall performance multiplier for each area of evaluation in consideration of actual
performance and the assigned weights.
Performance
Multiplier
Range
0.0 to 0.5
0.5 to 1.0
1.0 to 1.5
1.5 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.
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
Evaluation of Results
2018.
Investment Excellence (30% of Total)
For 2018, 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 three-year basis.
On an AUM-weighted basis, over the three-year investment period (ending December 31, 2018), 61% of the Company’s
total AUM outperformed its respective benchmark, resulting in a performance multiplier range for the co-CEOs in the
range of 1.0 to 1.5.
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 2018, the
Compensation Committee reviewed the one-year relative financial results of the Company as compared to the
Public Company Peer Group shown on page 121 and established a performance multiplier for the co-CEOs of
1.0 to 1.5.
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
Merger-related cost
savings versus plan
Balance sheet quality
2018 adjusted operating margin of 39.0% compared to 39.6% in 2017.
2018 adjusted net income attributable to JHG of $550 million is 9% higher than the prior year
due primarily to the lower effective tax rate following U.S. tax reform.
Achieved targeted cost synergies of $125 million as of the end of 2018, significantly ahead of
schedule.
The Company maintains a strong liquidity position; at December 31, 2018, cash and investment
securities totaled $1,491 million compared to outstanding debt of $319 million.
During 2018 the Company repaid the balance of the 2018 Convertible Notes ($95 million), paid
out $275 million in dividends and repurchased $100 million of shares through its inaugural
buyback program.
The co-CEOs received a performance multiplier of 0.6 to 1.0 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:
• Continue to lead the successful integration of JHG;
• Embed and implement the vision and strategy for the firm;
o Emphasize the Company’s active value proposition
o Excel in client experience
o Strengthen foundation for growth
• Drive cultural integration and alignment under one firm, build a team of passionate and empowered colleagues.
122
123
In 2018, the Compensation Committee considered the following outcomes when determining the performance multiplier
for the strategic results area:
Integration
1.
Substantially completed integration efforts nearly 18 months ahead of the original timeline
a. Over the life of the integration program, our efforts spanned 26 workstreams, more than 100 individual
projects, comprising over 1,000 significant deliverables and, along the way, the team managed nearly
200 enterprise-level issues, all of which were closed out during the year.
.
Client Relationships
1. U.S. equity business gaining market share in the U.S. Retail channel
2. Winning new Institutional business across our three major global regions and across a diversified list of
strategies, which is reinforcing the strength and breadth of our investment capabilities
Seeing outpaced growth in our Multi-Asset capability, with 6% organic growth during 2018
3.
4. Early wins in new product areas, including Adaptive Allocation, Multi Sector Bond and Absolute Return
Income
a. Consultants and institutional clients across the globe are taking the firm off of “watch lists”
People and Culture
1. Hired exceptionally talented people, converting the risk of change into a strengthened team – Chief Risk
2.
Officer, Global Head of Investment Risk and Analytics, Head of Asia Distribution and Global Head of
Multi-Asset and Alternatives.
Progressed efforts around building a common culture - gathered employee feedback from the employee
engagement survey and a series of global focus groups, Championed Diversity and Inclusion, implemented
a global mentoring program, supported flexible/agile work arrangements, and improved company-wide
communication through town hall updates , emails, and launched that Janus Henderson Life magazine.
3. Renewed focus on talent development – launched a comprehensive talent review process to improve
succession planning and career development, developed global expectations of leaders and leadership
development program.
4. Renovating/modernizing the Denver office to harmonize the look and feel with current London “open plan.”
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 1.0 to 1.5 for the strategic results area.
124
In 2018, the Compensation Committee considered the following outcomes when determining the performance multiplier
Overall Performance Multiplier (Applied to the Total Variable Compensation Target)
for the strategic results area:
Integration
.
Client Relationships
Income
People and Culture
1.
Substantially completed integration efforts nearly 18 months ahead of the original timeline
a. Over the life of the integration program, our efforts spanned 26 workstreams, more than 100 individual
projects, comprising over 1,000 significant deliverables and, along the way, the team managed nearly
200 enterprise-level issues, all of which were closed out during the year.
1. U.S. equity business gaining market share in the U.S. Retail channel
2. Winning new Institutional business across our three major global regions and across a diversified list of
strategies, which is reinforcing the strength and breadth of our investment capabilities
3.
Seeing outpaced growth in our Multi-Asset capability, with 6% organic growth during 2018
4. Early wins in new product areas, including Adaptive Allocation, Multi Sector Bond and Absolute Return
a. Consultants and institutional clients across the globe are taking the firm off of “watch lists”
1. Hired exceptionally talented people, converting the risk of change into a strengthened team – Chief Risk
Officer, Global Head of Investment Risk and Analytics, Head of Asia Distribution and Global Head of
Multi-Asset and Alternatives.
2.
Progressed efforts around building a common culture - gathered employee feedback from the employee
engagement survey and a series of global focus groups, Championed Diversity and Inclusion, implemented
a global mentoring program, supported flexible/agile work arrangements, and improved company-wide
communication through town hall updates , emails, and launched that Janus Henderson Life magazine.
3. Renewed focus on talent development – launched a comprehensive talent review process to improve
succession planning and career development, developed global expectations of leaders and leadership
development program.
4. Renovating/modernizing the Denver office to harmonize the look and feel with current London “open plan.”
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 1.0 to 1.5 for the strategic results area.
Based on a thorough evaluation of 2018 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 2018
incentive compensation for the co-CEOs.
Scorecard Performance Measures
Investment excellence (30%)
Financial results (40%)
Strategic results (30%)
Overall performance multiplier (100%)
Compensation Elements
Performance
Multiplier Range
1.0 to 1.5
1.0 to 1.5
1.0 to 1.5
1.0 to 1.5
Below is a summary of the compensation elements of executive compensation as seen in the Total Compensation table
on page 120, which provides the specific detail regarding what the Company’s executives were paid in 2018.
Base Salary
Base salary represents a relatively small proportion of the CEOs’ and other executive officers’ compensation. 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. Following a review of the base
salaries paid to CEOs at the Public Company Peer Group, the Committee adjusted Mr. Weil’s base salary to $725,000
from $650,000, effective January 1, 2019.
Variable Compensation
The Compensation Committee emphasizes variable compensation as the primary element of the executive compensation
program. Variable compensation is awarded in the form of cash (short-term incentive) and a mix of equity awards (long
term incentive). For Mr. Weil:
•
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:
o Time-based restricted shares in JHG and/or shares or units in JHG funds, which vest over a three-year
period;
o Performance shares, which vest subject to achievement of relevant performance conditions after a
three-year performance period.
• These elements reinforce a longer-term focus and more directly aligns the interests of the CEO with the
shareholders and with clients.
For Mr. Formica, part of his 2018 variable compensation will be paid in cash and the balance will be subject to
mandatory deferral under the terms of the Company’s current deferral scheme and may be paid in the form of shares in
Janus Henderson Group plc or funds.
124
125
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 2018 variable compensation awards ranged from 44% to 55%, and the restricted shares/restricted
funds portion ranged from 45% to 56%. Further detail on the award types is set out below:
Restricted Stock
Awards (RSAs) and
Restricted Stock Units
(RSUs)
Fund Awards (Funds)
Performance Stock
Units (PSUs)
A substantial portion of variable compensation is deferred into RSAs and RSUs on
an annual basis. These awards are typically subject to three- year vesting schedules.
In some instances, dividends are paid on unvested shares and these are included in
the Total Compensation table on page 120.
Vesting of restricted stock awards and restricted stock units 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.
A substantial portion of variable compensation is also deferred into fund awards on
an annual basis. These awards are typically subject to three-year vesting schedules.
Vesting of fund 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.
PSUs were granted exclusively to Mr. Weil in respect of the 2018 performance
year. These PSU awards vest upon the achievement of the Company’s three-year
total shareholder return being at or above a specific ranking among its peer group as
of the end of the three-year performance period (December 31, 2021, in the case of
the 2018 PSU awards). Further information about the 2018 PSUs is outlined below.
(1) To satisfy regulatory requirements, this includes an element of retained units/shares that are immediately vested but
must be held for a minimum period of six months.
126
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 2018 variable compensation awards ranged from 44% to 55%, and the restricted shares/restricted
funds portion ranged from 45% to 56%. Further detail on the award types is set out below:
Restricted Stock
A substantial portion of variable compensation is deferred into RSAs and RSUs on
Awards (RSAs) and
an annual basis. These awards are typically subject to three- year vesting schedules.
Restricted Stock Units
In some instances, dividends are paid on unvested shares and these are included in
(RSUs)
the Total Compensation table on page 120.
Fund Awards (Funds)
A substantial portion of variable compensation is also deferred into fund awards on
Vesting of restricted stock awards and restricted stock units 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.
an annual basis. These awards are typically subject to three-year vesting schedules.
Vesting of fund 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.
Performance Stock
PSUs were granted exclusively to Mr. Weil in respect of the 2018 performance
Units (PSUs)
year. These PSU awards vest upon the achievement of the Company’s three-year
total shareholder return being at or above a specific ranking among its peer group as
of the end of the three-year performance period (December 31, 2021, in the case of
the 2018 PSU awards). Further information about the 2018 PSUs is outlined below.
(1) To satisfy regulatory requirements, this includes an element of retained units/shares that are immediately vested but
must be held for a minimum period of six months.
Performance Stock Units
For Mr. Weil, 25% of the 2018 variable incentive compensation 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 three-year TSR is at or above the 10th percentile ranking.
• Target payout of 100% is earned if the Company’s three-year TSR is at the 50th percentile.
• Maximum payout is earned if the Company’s three-year TSR is at or above the 90th percentile ranking.
o A payout cannot exceed 400% of the initial grant value.
o Even if the Company’s three-year TSR on a relative basis is above the peer group median, if the
Company’s three-year TSR on an absolute basis is negative, a payout cannot exceed 100% of the
number of units initially granted.
• The 2018 PSU award has a one-year holding period following vesting, and dividends are not paid on unvested PSU
awards.
• The vesting of these awards may accelerate under certain circumstances, such as if the executive dies or becomes
disabled.
126
127
LTI Awards Granted in Consideration of 2018 Performance
In February 2019, the following LTI awards will be granted to the CEO, former CEO and other executive officers:
Executive Officer
Richard Weil, CEO
Andrew Formica, former Co-CEO
Other Executive Officers(4)
Type of
award
PSU (1)
Funds(2)
Funds(2)
RSUs/RSAs (2)
Funds (2)
Basis of
award
(% of salary)
Share
price ($) (3)(4)
Number
of units
granted
Face value
of award
($’000)
305 %
305 %
733 %
70 %
359 %
—
—
24.25 81,753 1,982,500
— 1,982,500
— 4,353,000
24.25 42,814 1,038,223
— 5,319,669
—
(1) 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 CEO receives an element of his variable pay in this form. Vesting determined by
performance over 3 years.
(2) Executives are able to elect for a certain proportion of their LTI to be delivered in the form of JHG fund shares/units
or in JHG shares, subject to minimum JHG shareholding requirements.
(3) Represents the Fair Market Value of $24.25 (calculated as the average high of $24.49 and low $24.01 on February
22, 2019). The Actual FMV will be determined on the grant date of February 28, 2019 as required by ASC Topic
718.
(4) Other Executive Officers are Roger Thompson (Chief Financial Officer), Enrique Chang (Global Chief Investment
Officer) and Phil Wagstaff (Global Head of Distribution). Mr. Wagstaff stepped down from his role as Global Head
of Distribution effective September 30, 2018, and was on a garden leave through January 31, 2019 when his
resignation became effective.
LTI Awards Vested in 2018
The table below shows the details of awards that vested during 2018 or had performance criteria measured during 2018:
Name
Andrew Formica
Richard Weil
Other Executive Officers
Award type
LTIP 2015 (tranche 2)(1)(2)
LTIP 2016 (tranche 1)(1)(2)
Funds(4)
Restricted Shares
PSU 2015(5)
LTIP 2015 (tranche 2)(1)(2)
LTIP 2016 (tranche 1)(1)(2)
Funds(4)
Restricted Shares
No. of
shares
acquired
on
vesting (#)
7,306
17,103
—
48,097
38,236
6,046
13,885
—
79,912
Value
realized
on
vesting ($)
— (3)
— (3)
1,222,638
990,978
870,251
— (3)
— (3)
2,278,840
2,952,434
(1) The LTIP 2015 Tranche 2 and LTIP 2016 Tranche 1 pre-merger awards vesting at 25% were based on measurement
criteria as of December 31, 2018.
(2) The LTIP 2015 Tranche 2 and LTIP 2016 Tranche 1 post-merger awards vesting at 35.5% were based on
measurement criteria as of December 31, 2018.
(3) LTIP vested but value cannot be determined until the award is exercised.
(4) These are from awards invested into JHG funds/products.
(5) Mr. Weil’s PSU granted in 2015 measured as of December 31, 2018 reflects 58% vesting based on a TSR percentile
rank of 33%. Value realized on vesting disclosed in the table above was significantly lower as compared to the grant
date value of $1.946 million.
128
LTI Awards Granted in Consideration of 2018 Performance
Service Agreements and Settlement Arrangements with Executive Officers
The Company entered into a service agreement with Mr. Weil effective August 1, 2018, at the time of his appointment as
the Company’s sole CEO, and which supersedes the change in control agreement that Mr. Weil was previously subject
to. The Company also remains party to a service agreement with Mr. Thompson that was entered into prior to the
Merger. These agreements make provisions for certain payments in lieu of 12 months’ notice upon termination and other
benefits. The foregoing is a summary only and does not propose to be a complete description of the terms and provisions
of these service agreements. This description is subject to and qualified in its entirety by reference to the full text of the
previously filed service agreements with Mr. Weil and Mr. Thompson.
As of July 31, 2018, the Company entered into a Settlement Agreement with Mr. Formica in connection with his
resignation from the Board and as co-CEO. Following his separation date, which was defined in the Settlement
Agreement as December 31, 2018 (“Separation Date”), and subject to the execution of a release of claims, Mr. Formica
received a redundancy payment of £436,000 for loss of employment, an additional payment of £496,175 in lieu of his
contractual notice period, his 2018 annual bonus based on the attainment of the applicable performance metrics (as
described herein), and a special bonus of $750,000. A portion of Mr. Formica’s 2018 annual bonus and the special
bonus will be subject to mandatory deferral in accordance with JHG’s deferral scheme and subject to the malus and/or
clawback provisions that apply under the plan. As of the Separation Date, Mr. Formica is entitled to a cash amount
equal to the reasonable cost of continuation of substantially similar medical, dental and vision insurance benefits for up
to two years (or a cash payment in lieu), valued at £31,000. Mr. Formica’s entitlement to any long-term incentive awards
or equity awards under any JHG equity plans will be treated in accordance with the applicable equity plans and award
agreements, except that his unvested performance share units will vest based on attainment of the applicable
performance metrics as of the Separation Date, provided that the performance vesting percentage will be no less than
52%, and will be deferred until the end of the original performance period. In addition, the Committee determined
on February 25, 2019, to make a supplemental redundancy payment to Mr. Formica in the amount of $432,034, subject
to mandatory deferral in accordance with JHG’s deferral scheme and subject to the malus and/or clawback provisions
that apply under the plan. This payment is due to be paid on February 27, 2019.
As of September 25, 2018, the Company entered into a Settlement Agreement with Mr. Wagstaff, who served out his
contractual notice period from October 1, 2018, through January 31, 2019 (“Termination Date”). Following the
Termination Date, and subject to the execution of a release of claims, Mr. Wagstaff will receive a 2018 annual bonus in
the amount of £1,504,800. A portion of this bonus will be subject to mandatory deferral in accordance with JHG’s
deferral scheme.
Non-Executive Director Compensation
The following chart shows the compensation that each non-executive director was paid for his or her services in calendar
year 2018:
In February 2019, the following LTI awards will be granted to the CEO, former CEO and other executive officers:
Executive Officer
Richard Weil, CEO
Andrew Formica, former Co-CEO
Other Executive Officers(4)
Type of
award
PSU (1)
Funds(2)
Funds(2)
RSUs/RSAs (2)
Funds (2)
Basis of
award
(% of salary)
Number
Face value
Share
price ($) (3)(4)
of units
granted
of award
($’000)
305 %
305 %
733 %
70 %
359 %
24.25 81,753 1,982,500
—
—
— 1,982,500
— 4,353,000
24.25 42,814 1,038,223
—
— 5,319,669
(1) 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 CEO receives an element of his variable pay in this form. Vesting determined by
performance over 3 years.
(2) Executives are able to elect for a certain proportion of their LTI to be delivered in the form of JHG fund shares/units
or in JHG shares, subject to minimum JHG shareholding requirements.
(3) Represents the Fair Market Value of $24.25 (calculated as the average high of $24.49 and low $24.01 on February
22, 2019). The Actual FMV will be determined on the grant date of February 28, 2019 as required by ASC Topic
718.
(4) Other Executive Officers are Roger Thompson (Chief Financial Officer), Enrique Chang (Global Chief Investment
Officer) and Phil Wagstaff (Global Head of Distribution). Mr. Wagstaff stepped down from his role as Global Head
of Distribution effective September 30, 2018, and was on a garden leave through January 31, 2019 when his
resignation became effective.
LTI Awards Vested in 2018
The table below shows the details of awards that vested during 2018 or had performance criteria measured during 2018:
Name
Andrew Formica
Richard Weil
Other Executive Officers
Award type
LTIP 2015 (tranche 2)(1)(2)
LTIP 2016 (tranche 1)(1)(2)
Funds(4)
Restricted Shares
PSU 2015(5)
LTIP 2015 (tranche 2)(1)(2)
LTIP 2016 (tranche 1)(1)(2)
Funds(4)
Restricted Shares
No. of
shares
acquired
on
vesting (#)
7,306
17,103
—
48,097
38,236
6,046
13,885
—
79,912
Value
realized
on
vesting ($)
1,222,638
990,978
870,251
— (3)
— (3)
— (3)
— (3)
2,278,840
2,952,434
(1) The LTIP 2015 Tranche 2 and LTIP 2016 Tranche 1 pre-merger awards vesting at 25% were based on measurement
criteria as of December 31, 2018.
(2) The LTIP 2015 Tranche 2 and LTIP 2016 Tranche 1 post-merger awards vesting at 35.5% were based on
measurement criteria as of December 31, 2018.
(3) LTIP vested but value cannot be determined until the award is exercised.
(4) These are from awards invested into JHG funds/products.
(5) Mr. Weil’s PSU granted in 2015 measured as of December 31, 2018 reflects 58% vesting based on a TSR percentile
rank of 33%. Value realized on vesting disclosed in the table above was significantly lower as compared to the grant
date value of $1.946 million.
Name
Richard Gillingwater
Glenn S. Schafer
Sarah Arkle(3)
Kalpana Desai
Jeffrey J. Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence E. Kochard
Angela Seymour-Jackson(3)
Tatsusaburo Yamamoto
128
129
Fees
Earned or
Paid in
Cash ($) (1)
240,000 100,000
225,000 100,000
145,000 100,000
120,000 100,000
155,000 100,000
120,000 100,000
120,000 100,000
135,000 100,000
120,000 100,000
—
Total ($)
— 340,000
22,974 347,974
— 245,000
— 220,000
12,759 267,759
— 220,000
1,750 221,750
53,447 288,447
— 220,000
—
—
All Other
Compensation
($) (4)
Stock
Awards
—
($) (2)
(1) Amounts represent the annual cash fees for serving as members of the JHG Board of Directors, including non-executive Chairman and committee
membership fees. Mr. Lawrence Kochard deferred all his cash fees in 2018 under the Director Deferred Compensation Plan.
(2) Amounts represent the value of the annual 2018/2019 stock award. JHG shares were awarded (after applicable taxes were deducted) using the
close price on May 11, 2018, of $33.88. Mr. Glenn Schafer and Mr. Eugene Flood received the value of their stock award in cash.
(3) These Directors also earn an additional annual board fee of $40,000 for serving on the JH Group Holdings Asset Management Ltd board.
(4) “All Other Compensation” includes the following in the table below:
Name
Richard Gillingwater
Glenn S. Schafer
Sarah Arkle
Kalpana Desai
Jeffrey J. Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence E. Kochard
Angela Seymour-Jackson
Tatsusaburo Yamamoto
Dividends on
unvested
restricted
stock units ($) (2) Total
Other (1)
—
2,260
—
—
1,750
—
1,750
1,750
—
—
—
20,714
—
—
11,009
—
—
51,697
—
—
—
22,974
—
—
12,759
—
1,750
53,447
—
—
(1) The amount includes the company funded UK tax preparation fees for U.S. board members plus the membership fees for identity theft protection
services paid by the Company on behalf of the director. The Company also reimburses travel expenses for board meetings which are not included
in the above table.
(2) This amount represents the value of dividend equivalents awarded in the form of RSUs in 2018 on all grants deferred under the Director Deferred
Fee Plan. The restricted stock units held by each independent director as of December 31, 2018, are as follows: Mr. Diermeier holds 8,070
restricted stock units; Mr. Kochard holds 38,135 restricted stock units; and Mr. Schafer holds 15,225 restricted stock units.
130
(1) Amounts represent the annual cash fees for serving as members of the JHG Board of Directors, including non-executive Chairman and committee
membership fees. Mr. Lawrence Kochard deferred all his cash fees in 2018 under the Director Deferred Compensation Plan.
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 these
holdings during 2018:
(2) Amounts represent the value of the annual 2018/2019 stock award. JHG shares were awarded (after applicable taxes were deducted) using the
close price on May 11, 2018, of $33.88. Mr. Glenn Schafer and Mr. Eugene Flood received the value of their stock award in cash.
(3) These Directors also earn an additional annual board fee of $40,000 for serving on the JH Group Holdings Asset Management Ltd board.
(4) “All Other Compensation” includes the following in the table below:
Name
Richard Gillingwater
Glenn S. Schafer
Sarah Arkle
Kalpana Desai
Jeffrey J. Diermeier
Kevin Dolan
Eugene Flood Jr.
Lawrence E. Kochard
Angela Seymour-Jackson
Tatsusaburo Yamamoto
in the above table.
Dividends on
unvested
restricted
Other (1)
stock units ($) (2) Total
—
2,260
—
—
1,750
—
1,750
1,750
—
—
20,714
22,974
11,009
12,759
51,697
1,750
53,447
—
—
—
—
—
—
—
—
—
—
—
—
—
Andrew Formica
Total outstanding interests in JHG share schemes
Total shares held outright outside JHG share
schemes
Total interests in JHG
Richard Weil
Total outstanding interests in JHG share schemes
Total shares held outright outside JHG share
schemes
Total interests in JHG
Roger Thompson
Total outstanding interests in JHG share schemes
Total shares held outright outside JHG share
schemes
Total interests in JHG
(1) The amount includes the company funded UK tax preparation fees for U.S. board members plus the membership fees for identity theft protection
services paid by the Company on behalf of the director. The Company also reimburses travel expenses for board meetings which are not included
(2) This amount represents the value of dividend equivalents awarded in the form of RSUs in 2018 on all grants deferred under the Director Deferred
Fee Plan. The restricted stock units held by each independent director as of December 31, 2018, are as follows: Mr. Diermeier holds 8,070
restricted stock units; Mr. Kochard holds 38,135 restricted stock units; and Mr. Schafer holds 15,225 restricted stock units.
Interest at
December 31,
2017 (1)(2)
Vested
Vested in
Vested
previous
2018 not 2018 and years and
Awarded exercised exercised exercised Vested
396
—
—
— (1)
—
—
—
—
—
—
—
—
—
—
18,133
—
—
—
—
—
—
—
885
7,234
—
39,580
116,610
—
446
631
—
26,309
—
57
28,041
—
Plan
Type
Options
SAYE
BAYE
Shares
DEP/ESOP Shares
Shares
LTI/PSU
Options
LTIP
Shares
RSP
Interest at
December 31,
2018
RSA
PSU
ESOP
Shares
Shares
Shares
95,686
129,097
409
13,443
57,590
78
—
—
—
—
—
—
—
—
—
48,097
— (2)
—
SAYE
Options
Shares
BAYE
DEP/ESOP Shares
Options
LTIP
Shares
RSP
978
1,053
9,758
90,289
19,185
—
476
12,116
—
5,895
—
—
—
8,548
—
—
—
4,732
—
—
—
—
—
—
—
—
—
—
13,221
—
Enrique Chang
RSA
ESOP
Shares
Shares
152,694
30
25,912
60
—
—
—
—
—
—
56,766
—
Total outstanding interests in JHG share schemes
Total shares held outright outside JHG share
schemes
Total interests in JHG
Phil Wagstaff
Total outstanding interests in JHG share schemes
Total shares held outright outside JHG share
schemes
Total interests in JHG
Options
SAYE
BAYE
Shares
DEP/ESOP Shares
Options
LTIP
Shares
RSP
925
2,666
23,648
41,994
79,432
—
351
5,976
—
57
—
—
—
6,177
—
—
—
10,593
330
5,112
—
—
—
—
—
—
—
—
11,560
15,336
(1) Per Mr. Formica's settlement agreement, the amount included at December 31, 2018 reflects the share reduction from 100% to a minimum
performance vesting percentage of 52% for his PSU award granted in 2018.
(2) For Mr. Weil, the total amount included reflects the number of units vesting (58%) on December 31, 2018 based on TSR performance measures
for his PSU award granted in 2015.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of JHG comprised 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 2018, 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 2018, none of the executive officers of the Company served on the board of
130
131
935
7,865
—
65,889
70,436
57
145,182
241,311
386,493
61,032
159,375
487
220,894
863,159
1,084,053
978
1,529
17,142
77,068
25,080
121,797
23,342
145,139
121,840
90
121,930
230,181
352,111
925
3,017
19,031
30,104
59,041
112,118
22,771
134,889
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, 2019, or as otherwise noted, by (i) beneficial owners of more than 5% 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.
Shares of Common Stock
Beneficially Owned (1)
Name
Dai-ichi Life Holdings, Inc.(2)
Silchester International Investors LLP(3)
The Vanguard Group Inc.(4)
BlackRock, Inc.(5)
Richard Gillingwater, Chairman of the Board of Directors
Glenn S. Schafer, Deputy Chairman of the Board of Directors(6)
Richard Weil, CEO and Director
Sarah Arkle, Director
Kalpana Desai, Director
Jeffrey Diermeier, Director(6)
Kevin Dolan, Director
Eugene Flood Jr., Director
Lawrence Kochard, Director(6)
Angela Seymour-Jackson, Director
Tatsusaburo Yamamoto, Director
Roger Thompson, Chief Financial Officer
Enrique Chang, Chief Investment Officer
All Directors and Executive Officers as a Group (13 persons)
*
Less than 1% of the outstanding shares.
Number
30,668,922
16,833,086
16,048,918
12,671,455
7,835
33,542
951,771
4,972
6,139
35,964
3,611
79
43,157
3,985
—
23,342
345,389
1,459,786
Percentage
15.61
8.57
8.17
6.45
*
*
*
*
*
*
*
*
*
*
*
*
*
*
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, 2019,
including unvested RSUs and DEP shares that will vest within 60 days of February 22, 2019 and any shares that
may be acquired upon the exercise of options within 60 days of February 22, 2019.
132
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, 2019, or as otherwise noted, by (i) beneficial owners of more than 5% 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)
Silchester International Investors LLP(3)
The Vanguard Group Inc.(4)
BlackRock, Inc.(5)
Richard Gillingwater, Chairman of the Board of Directors
Glenn S. Schafer, Deputy Chairman of the Board of Directors(6)
Richard Weil, CEO and Director
Sarah Arkle, Director
Kalpana Desai, Director
Jeffrey Diermeier, Director(6)
Kevin Dolan, Director
Eugene Flood Jr., Director
Lawrence Kochard, Director(6)
Angela Seymour-Jackson, Director
Tatsusaburo Yamamoto, Director
Roger Thompson, Chief Financial Officer
Enrique Chang, Chief Investment Officer
All Directors and Executive Officers as a Group (13 persons)
*
Less than 1% of the outstanding shares.
Shares of Common Stock
Beneficially Owned (1)
Number
Percentage
30,668,922
16,833,086
16,048,918
12,671,455
7,835
33,542
951,771
4,972
6,139
35,964
3,611
79
43,157
3,985
—
23,342
345,389
1,459,786
15.61
8.57
8.17
6.45
*
*
*
*
*
*
*
*
*
*
*
*
*
*
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, 2019,
including unvested RSUs and DEP shares that will vest within 60 days of February 22, 2019 and any shares that
may be acquired upon the exercise of options within 60 days of February 22, 2019.
(2) Information regarding beneficial ownership of the shares by Dai-ichi Life Holdings, Inc. (“Dai-ichi”) is based
on a Schedule 13F filed with the SEC on February 14, 2019, relating to such shares beneficially owned as of
December 31, 2018. Such report provides that Dai-ichi is the beneficial owner, has sole dispositive power and
has sole voting power with respect to all shares. The address of Dai-ichi Life is 13-1, Yurakucho 1-Chome,
Chiyoda-ku, Tokyo, 100-8411 Japan.
(3) Information regarding beneficial ownership of the shares by Silchester International Investors LLP
(“Silchester”) is based on a Schedule 13F filed with the SEC on February 8, 2019, relating to such shares
beneficially owned as of December 31, 2018. Such report provides that Silchester is the beneficial owner, has
sole dispositive power and has sole voting power with respect to all shares. Silchester’s address is 1 Bruton
Street London, W1J6TL, United Kingdom.
(4) 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 13, 2019, relating to such shares beneficially owned as of
December 31, 2018. Such report provides that Vanguard is the beneficial owner, has sole dispositive power
with respect to 15,989,522 shares and shared dispositive power with respect to 59,396 shares. Such report
provided that Vanguard has sole voting power with respect to 52,618 shares and shared voting power with
respect to 22,707 shares. Vanguard’s address is 100 Vanguard Blvd. Malvern, PA 19355.
(5) Information regarding beneficial ownership of the shares by BlackRock, Inc. (“BlackRock”) is based on a
Schedule 13G filed with the SEC on February 6, 2019, relating to such shares beneficially owned as of
December 31, 2018. Such report provides that BlackRock is the beneficial owner of and has sole dispositive
power with respect to all the shares. Such report provides that BlackRock has sole voting power with respect to
12,187,713 shares and shared voting power with respect to zero shares. BlackRock’s address is 55 East 52nd
Street, New York, NY 10055.
(6) 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 - 8,070 units; Mr. Kochard - 38,135 units; and Mr. Schafer - 15,225 units.
Equity Compensation Plan Information
The following table presents information, determined as of February 22, 2019, about outstanding awards and shares
remaining available for issuance under the Company’s equity-based LTI plans:
Plan Category
Equity comp plans approved by shareholders (1)
Equity comp plans not approved by shareholders (3)
Total(4)
132
133
Number of
securities
to be
issued
upon
exercise of
outstanding Weighted-average
exercise price of
outstanding
options,
warrants
and rights
(a)(#)
601,039 $
— $
601,039 $
options, warrants
and rights ($) (b)
20.71 (2)
—
20.71
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)(#)
4,613,327
372,345
4,985,672
(1) Includes the legacy Henderson Group plc Long Term Incentive Plan (“LTIP”); however, the Company does not
intend to issue any further awards under this compensation plan.
(2) There is no exercise price associated with the outstanding LTIP. This exercise price is from the outstanding stock
options granted under the Amended and Restated Janus Henderson Group plc 2005 Long Term Incentive Plan. The
weighted average remaining term for outstanding stock options as of February 22, 2019 was .94 years.
(3) Includes outstanding awards granted under the Janus Henderson Group plc 2012 Employment Inducement Award
Plan. This plan did not previously have shareholder approval; however, this plan was approved by shareholders with
all other equity plans in 2018.
(4) Consists of the following ongoing plans assumed by the Company pursuant to the Merger that may result in new
awards:
Equity Plan Summary
Introduction: The Company awards equity-based grants from several plans, last approved by shareholders on May
3, 2018. The plans are intended to allow employees 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 in attracting new employees, and in retaining existing employees. The plans
are also intended to optimize the profitability and growth of the Company through incentives that are consistent with
the Company’s goals, to provide employees an incentive for excellence in individual performance and to promote
teamwork among employees. Equity awards are made from the following plans:
Janus Henderson Group plc Deferred Equity Plan (“DEP”):
The DEP is the Company’s deferral mechanism in which participants can elect to receive (“voluntary deferral”) or
can be required to receive (“mandatory deferral”), on a deferred basis, all or a portion of their annual cash bonus in
the form of JHG shares and/or an interest in an investment fund managed by the Company (“Fund Interest”). The
deferral period can be between one and five years and participants are entitled to receive their shares or Fund
Interest, at the end of a specified restricted period subject to remaining in employment with the Company during
that time.
Janus Henderson Group 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 and four years to exercise their
options following the three and four year vesting period. In addition there is a two and one year holding period from
the date of vesting. The Company does not currently issue awards from this plan.
Henderson Group Plc Restricted Share Plan (“RSP”):
The RSP is a discretionary share plan under which participants receive an award of shares which is released at the
end of a restricted period. The RSP is often used by the Company as a mechanism to compensate new hires for the
forfeiture of awards from their previous employer and to provide an incentive to existing staff that may be subject to
the achievement of material performance
Janus Henderson Group plc Second Amended and Restated 2010 Long Term Incentive Stock Plan (“2010
LTI Plan”):
The 2010 LTI Plan is the Company’s deferral mechanism in which employees, directors, and consultants
performing services for the Company or its subsidiaries may be issued common stock subject to restrictions on
transfer and vesting requirements. The recipient has the same rights as a JHG shareholder and the shares are subject
134
(1) Includes the legacy Henderson Group plc Long Term Incentive Plan (“LTIP”); however, the Company does not
intend to issue any further awards under this compensation plan.
to a minimum vesting period of at least 12 months. Under the 2010 LTI Plan, the Company may award Restricted
Stock, Restricted Stock Units, Performance Share Units, Stock Options, and Stock Appreciation Rights.
(2) There is no exercise price associated with the outstanding LTIP. This exercise price is from the outstanding stock
options granted under the Amended and Restated Janus Henderson Group plc 2005 Long Term Incentive Plan. The
weighted average remaining term for outstanding stock options as of February 22, 2019 was .94 years.
(3) Includes outstanding awards granted under the Janus Henderson Group plc 2012 Employment Inducement Award
Plan. This plan did not previously have shareholder approval; however, this plan was approved by shareholders with
(4) Consists of the following ongoing plans assumed by the Company pursuant to the Merger that may result in new
all other equity plans in 2018.
awards:
Equity Plan Summary
Introduction: The Company awards equity-based grants from several plans, last approved by shareholders on May
3, 2018. The plans are intended to allow employees 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 in attracting new employees, and in retaining existing employees. The plans
are also intended to optimize the profitability and growth of the Company through incentives that are consistent with
the Company’s goals, to provide employees an incentive for excellence in individual performance and to promote
teamwork among employees. Equity awards are made from the following plans:
Janus Henderson Group plc Deferred Equity Plan (“DEP”):
The DEP is the Company’s deferral mechanism in which participants can elect to receive (“voluntary deferral”) or
can be required to receive (“mandatory deferral”), on a deferred basis, all or a portion of their annual cash bonus in
the form of JHG shares and/or an interest in an investment fund managed by the Company (“Fund Interest”). The
deferral period can be between one and five years and participants are entitled to receive their shares or Fund
Interest, at the end of a specified restricted period subject to remaining in employment with the Company during
that time.
Janus Henderson Group 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 and four years to exercise their
options following the three and four year vesting period. In addition there is a two and one year holding period from
the date of vesting. The Company does not currently issue awards from this plan.
Henderson Group Plc Restricted Share Plan (“RSP”):
The RSP is a discretionary share plan under which participants receive an award of shares which is released at the
end of a restricted period. The RSP is often used by the Company as a mechanism to compensate new hires for the
forfeiture of awards from their previous employer and to provide an incentive to existing staff that may be subject to
the achievement of material performance
Janus Henderson Group plc Second Amended and Restated 2010 Long Term Incentive Stock Plan (“2010
LTI Plan”):
The 2010 LTI Plan is the Company’s deferral mechanism in which employees, directors, and consultants
performing services for the Company or its subsidiaries may be issued common stock subject to restrictions on
transfer and vesting requirements. The recipient has the same rights as a JHG shareholder and the shares are subject
Janus Henderson Group plc 2012 Employment Inducement Award Plan (“2012 EIA”):
The 2012 EIA Plan 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. In accordance
with the NYSE rules, the 2012 EIA only permits awards to newly hired employees of the Company. Awards made
under this plan require 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. Under the 2012 EIA Plan, the Company may
award Restricted Stock, Restricted Stock Units, Performance Share Units, Stock Options, and Stock Appreciation
Rights under substantially the same terms as the 2010 LTI Plan, except there is no minimum vesting period.
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, “Governance Policies and Statements.”
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 funds on substantially the same terms and conditions as other similarly situated investors in
these funds who are neither directors nor employees of JHG.
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.
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.
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
134
135
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 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
136
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.
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 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.
Transfer Restrictions
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 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 (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, UK, 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 were 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
was terminated in accordance with its provisions in October 2018.
As of February 22, 2019, 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.
136
137
For a discussion of related party transactions as defined in U.S. GAAP, see Item 8, Financial Statements and
Supplementary Data, Note 19 – Related Party Transactions.
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 the “About Janus Henderson” link, “Governance Policies and Statements.”
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 criteria, the Board affirmatively determined that all directors are independent directors except for
Mr. Weil, our CEO. 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 JHG 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, 2018 and 2017, respectively:
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total
2018 ($)
3,028,000
922,100
13,500
514,371
4,477,971
2017 ($)
2,748,000
696,200
198,800
1,642,310
5,285,310
(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.
For fiscal year ended December 31, 2018, audit services include attestation work required by Section 404 of the
Sarbanes-Oxley Act of 2002 needed to issue an opinion on the effectiveness of internal control over financial
reporting.
(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) All other fees in 2018 represent other non-audit related fees. All other fees in 2017 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
138
For a discussion of related party transactions as defined in U.S. GAAP, see Item 8, Financial Statements and
Supplementary Data, Note 19 – Related Party Transactions.
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 the “About Janus Henderson” link, “Governance Policies and Statements.”
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 criteria, the Board affirmatively determined that all directors are independent directors except for
Mr. Weil, our CEO. 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 JHG for PricewaterhouseCoopers
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total
2018 ($)
2017 ($)
3,028,000
2,748,000
922,100
13,500
696,200
198,800
514,371
1,642,310
4,477,971
5,285,310
(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.
For fiscal year ended December 31, 2018, audit services include attestation work required by Section 404 of the
Sarbanes-Oxley Act of 2002 needed to issue an opinion on the effectiveness of internal control over financial
reporting.
(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) All other fees in 2018 represent other non-audit related fees. All other fees in 2017 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.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
List of Documents Filed as Part of This Report
PART IV
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, 2018 and 2017, respectively:
(1) Financial Statements
The financial statements and related notes, together with the report of PricewaterhouseCoopers LLP dated February 26,
2019, 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
(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)
138
139
4.1.2
4.1.3
4.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
Officer's Certificate pursuant to the Base Indenture establishing the terms of the 2025 Senior Notes is hereby
incorporated by reference from Exhibit 4.1 to JCG's Current Report on Form 8-K, dated July 28, 2015 (File
No. 001-15253)
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
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)*
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)*
140
4.1.2
Officer's Certificate pursuant to the Base Indenture establishing the terms of the 2025 Senior Notes is hereby
incorporated by reference from Exhibit 4.1 to JCG's Current Report on Form 8-K, dated July 28, 2015 (File
No. 001-15253)
4.1.3
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
4.2
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
10.1
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
10.2
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)
10.3
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,
10.4
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)*
2017 (File No. 333-218365)*
10.5
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)*
10.6
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)
10.7
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)*
10.8
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)*
10.9
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
10.10
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)*
(File No. 001-38103)*
10.11
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)*
10.12
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)*
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.19.1
10.19.2
10.19.3
10.19.4
10.19.5
10.19.6
10.19.7
10.19.8
10.20.1
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)
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)
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)
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)
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)
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)
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)
Amendment No. 7 to Janus 401(k) Plan, effective July 1, 2017, is hereby incorporated by reference from
Exhibit 10.19.7 to JHG’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No.
001-38103)
Amendment No. 8 to Janus 401(k) Plan, effective December 28, 2017, is hereby incorporated by reference
from Exhibit 10.19.8 to JHG’s Annual Report on Form 10-K for the year ended December 31, 2017 (File
No. 001-38103)
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)*
140
141
10.20.2
10.20.3
10.20.4
10.20.5
10.20.6
10.20.7
10.20.8
10.20.9
10.21
10.22
10.23
10.24
10.25
10.29
10.30
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 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)*
Form of Performance Share Unit Award, effective for awards granted to the Company’s co-Chief Executive
Officers Richard M. Weil and Andrew Formica, is attached to this Form 10-K as Exhibit 10.20.09*
Service agreement between Janus Henderson Group and Richard Weil, effective from August 1, 2018, is
hereby incorporated by reference from Exhibit 10.33 to JHG’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018 (File No. 001-38103)*
Settlement agreement between Janus Henderson Group and Andrew Formica, effective from July 31, 2018,
is hereby incorporated by reference from Exhibit 10.34 to JHG’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018 (File No. 001-38103)*
Summary of Janus Henderson Group plc Non-Executive Director Compensation Program effective May 30,
2017, is hereby incorporated by reference from Exhibit 10.24 to JHG’s Annual Report on Form 10-K for the
year ended December 31, 2017 (File No. 001-38103)*
Janus Henderson Group Global Remuneration Policy Statement, is attached to this Annual Report on
Form 10-K as Exhibit 10.24*
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)
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)*
142
10.20.2
Form of Long-Term Incentive Acceptance Form with Appendix A (Restricted Stock), effective for awards
10.31
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)*
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 hereby incorporated by reference from Exhibit 10.32 to JHG’s Annual Report
on Form 10-K for the year ended December 31, 2017 (File No. 001-38103)*
* Compensatory plan or agreement.
(21) Subsidiaries of the Company
21.1
23.1
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
(23) Consents of Experts and Counsel
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) Power of Attorney
24.1
Power of Attorney (included as a part of the Signature pages to this report).
31.1
31.2
32.1
32.2
(31) Rule 13a-14(a)/15d-14(a) Certifications
Certification of Richard M. Weil, 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, 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
10.20.3
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)*
10.20.4
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)*
10.20.5
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)*
10.20.6
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)*
10.20.7
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)*
10.20.8
Form of Performance Share Unit Award, effective for awards granted to 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)*
10.20.9
Form of Performance Share Unit Award, effective for awards granted to the Company’s co-Chief Executive
Officers Richard M. Weil and Andrew Formica, is attached to this Form 10-K as Exhibit 10.20.09*
10.21
Service agreement between Janus Henderson Group and Richard Weil, effective from August 1, 2018, is
hereby incorporated by reference from Exhibit 10.33 to JHG’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018 (File No. 001-38103)*
10.22
Settlement agreement between Janus Henderson Group and Andrew Formica, effective from July 31, 2018,
is hereby incorporated by reference from Exhibit 10.34 to JHG’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018 (File No. 001-38103)*
10.23
Summary of Janus Henderson Group plc Non-Executive Director Compensation Program effective May 30,
2017, is hereby incorporated by reference from Exhibit 10.24 to JHG’s Annual Report on Form 10-K for the
year ended December 31, 2017 (File No. 001-38103)*
10.24
Janus Henderson Group Global Remuneration Policy Statement, is attached to this Annual Report on
Form 10-K as Exhibit 10.24*
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)
10.29
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)*
10.30
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)*
142
143
Regulation S-K
Item 601(b)
Exhibit No.
10
10
21
23
24
31
31
32
32
101
101
101
101
101
101
(c)
Exhibits
JANUS HENDERSON GROUP
2018 FORM 10-K ANNUAL REPORT
INDEX TO EXHIBITS
Exhibit No.
10.20.9
10.24
21.1
23.1
Document
Form of Performance Share Unit Award, effective for awards granted to the Company’s
co-Chief Executive Officers Richard M. Weil and Andrew Formica
Janus Henderson Group Global Remuneration Policy Statement
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
24.1 Power of Attorney (included as a part of the Signature pages to this report)
31.1 Certification of Richard M. Weil, Chief Executive Officer of Registrant
31.2 Certification of Roger Thompson, Chief Financial Officer of Registrant
32.1
Certification of Richard M. Weil, 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, 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
32.2
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
ITEM 16. FORM 10-K SUMMARY
None.
144
(c)
Exhibits
Signatures
JANUS HENDERSON GROUP
2018 FORM 10-K ANNUAL REPORT
INDEX TO EXHIBITS
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.
Exhibit No.
Document
10.20.9
Form of Performance Share Unit Award, effective for awards granted to the Company’s
10.24
21.1
co-Chief Executive Officers Richard M. Weil and Andrew Formica
Janus Henderson Group Global Remuneration Policy Statement
The List of the Subsidiaries of the Company prepared pursuant to Item 601(b)(21) of
23.1
The Consent of Independent Registered Public Accounting Firm —
Regulation S-K
PricewaterhouseCoopers LLP
24.1 Power of Attorney (included as a part of the Signature pages to this report)
31.1 Certification of Richard M. Weil, Chief Executive Officer of Registrant
31.2 Certification of Roger Thompson, Chief Financial Officer of Registrant
32.1
Certification of Richard M. Weil, 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
32.2
Certification of Roger Thompson, 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
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.
10
10
21
23
24
31
31
32
32
101
101
101
101
101
101
ITEM 16. FORM 10-K SUMMARY
None.
Janus Henderson Group plc
By:
/s/ RICHARD WEIL
Richard Weil
Chief Executive Officer
February 26, 2019
Known all persons by these presents, that each person whose signatures appear below, hereby constitute and appoint
Richard Weil and Michelle Rosenberg, 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, 2018, 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 26, 2019.
Signature/Name
/s/ RICHARD GILLINGWATER
Richard Gillingwater
/s/ GLENN SCHAFER
Glenn Schafer
/s/ RICHARD WEIL
Richard Weil
/s/ ROGER THOMPSON
Roger Thompson
/s/ BRENNAN HUGHES
Brennan Hughes
/s/ KALPANA DESAI
Kalpana Desai
/s/ JEFFREY DIERMEIER
Jeffrey Diermeier
/s/ KEVIN DOLAN
Kevin Dolan
Title
Chairman of the Board
Deputy Chairman of the Board
Director and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Senior Vice President, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
Director
Director
Director
144
145
Signature/Name
/s/ EUGENE FLOOD JR
Eugene Flood Jr
/s/ LAWRENCE KOCHARD
Lawrence Kochard
/s/ ANGELA SEYMOUR-JACKSON
Angela Seymour-Jackson
/s/ TATSUSABURO YAMAMOTO
Tatsusaburo Yamamoto
Title
Director
Director
Director
Director
146
Signature/Name
/s/ EUGENE FLOOD JR
Eugene Flood Jr
/s/ LAWRENCE KOCHARD
Lawrence Kochard
/s/ ANGELA SEYMOUR-JACKSON
Angela Seymour-Jackson
/s/ TATSUSABURO YAMAMOTO
Tatsusaburo Yamamoto
Title
Director
Director
Director
Director
146
Exhibit 10.24
Global Remuneration Policy Statement (GRPS)
Summary of Janus Henderson Group Plc Remuneration Policy
Janus Henderson Group plc (‘the Company’) operates a single Remuneration Policy which applies in its entirety to all
entities and employees including the executives, unless local laws or regulations set more rigorous requirements for any
aspect, in which case the higher standards apply.
A successful remuneration policy should be sufficiently flexible to take account of future changes in the Company’s
business environment and remuneration practice and therefore the GRPS 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.
Remuneration Principles
Our remuneration practices aim to link pay with performance and drive long-term shareholder returns, while appropriately
managing risk. In doing so, the Compensation Committee and the Board recognize that our remuneration policies and
practices must enable us to attract, motivate and retain exceptional people, while aligning their interests with those of
shareholders.
The key drivers of our remuneration philosophy are:
• Attract and retain employees by providing total reward opportunities which, subject to performance, are competitive
within our defined markets,
• Maintain an appropriate balance between fixed and variable pay, and short and long-term elements of remuneration,
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, department and
individual performance,
• Align management interests with those of the Company’s shareholders and clients by delivering a material portion of
annual remuneration 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.
The Company’s remuneration principles are reinforced through an appropriate balance of the following elements of
remuneration:
Base Pay
Benefits
Attract and retain employees with the personal attributes, skills and experience
required to deliver long-term value for clients and shareholders.
Provide health benefits to support our employees and their families, geared toward
employee wellbeing, competitive within each of our local markets, and cost-effective
and tax-efficient whenever possible.
Offer competitive retirement and/or pension arrangements that allow employees to
build wealth, are aligned with the Company’s risk appetite, and cost- and tax-efficient
for employees and the Company.
The Company operates voluntary all employee share plans including Buy As You
Earn (BAYE), Sharesave (SAYE), and an Employee Stock Purchase Plan (ESPP) in
which staff can participate within approved contribution guidelines to encourage
employees to become shareholders in the Company.
Global Remuneration Policy Statement (GRPS)
Variable Incentive Awards
Employees are eligible to receive annual discretionary incentive awards based on
Company, department, and individual performance and contributions. These awards
are funded from a Profit Pool (more fully described below).
Variable incentives are paid in the form of cash and/or deferred awards. Deferrals are
delivered in shares of Janus Henderson Group plc or interests in Janus Henderson
funds. In some cases deferrals are made in funds for regulatory reasons. Employees
who meet certain ownership thresholds (in Janus Henderson stock) are given the
opportunity to elect to have some or all of their deferral delivered in funds. Individual
awards, if any, are discretionary and determined based on Company, department and
individual performance.
Under the CEO Scorecard framework, a portion of the deferral is delivered in
performance shares that vest based on relative total shareholder return, over a
forward looking three-year period, providing a further link to Company performance.
The Company does not operate specific ratios (maxima or minima) in regard to the mix of fixed and variable pay, opting
instead for managing fixed and variable remuneration in line with market practice and by reference to the employee‘s
unique role and individual performance.
Variable Incentive Awards
Profit Pools
The Company pays annual variable incentive remuneration for 99% of employees from pools funded by Company profits
(“Profit Pools”). The Profit Pools fund employee variable incentive awards, as well as performance fee remuneration
(where applicable). Employees participate in one of three separately funded pools, depending on their role in the
organisation: (i) the Investments Pool, (ii) the Core Pool, or (iii) the Intech Pool. Each pool has a specific Pre Incentive
Operating Income (PIOI) calculation and a corresponding funding percentage, effectively creating a ‘profit share’
arrangement between our employees and our shareholders.
1. The Investments Pool: Covers employees contributing to the investment management functions at Janus
Henderson and include; portfolio managers, research analysts, research associates, traders, client portfolio
managers, the exchange-traded product team, portfolio analytics, investment risk employees and the investment
team’s administrative support.
2. The Core Pool: Covers employees contributing to the executive, distribution, administrative, and operational
support of Janus Henderson and its subsidiaries.
3. The Intech Pool: Covers all employees of the Janus Henderson subsidiary Intech Investment Management LLC,
including investments, distribution, and support employees.
PIOI is generally considered as operating income before the deduction of incentive remuneration and overhead. The
indicative funding percentages are subject to oversight and approval by the Compensation Committee (the “Committee”)
of the Janus Henderson Board of Directors. The Committee retains the discretion to modify or terminate remuneration
plans and programmes without prior notice.
Profit Pool funding levels are directly linked to profits generated in the current year, reflecting the firm’s ability to pay and
thereby strengthening its capital base. The Committee may adjust the profit pools (even to zero);
Company, department, and individual performance and contributions. These awards
are funded from a Profit Pool (more fully described below).
Variable incentives are paid in the form of cash and/or deferred awards. Deferrals are
delivered in shares of Janus Henderson Group plc or interests in Janus Henderson
funds. In some cases deferrals are made in funds for regulatory reasons. Employees
who meet certain ownership thresholds (in Janus Henderson stock) are given the
opportunity to elect to have some or all of their deferral delivered in funds. Individual
awards, if any, are discretionary and determined based on Company, department and
individual performance.
Under the CEO Scorecard framework, a portion of the deferral is delivered in
performance shares that vest based on relative total shareholder return, over a
forward looking three-year period, providing a further link to Company performance.
The Company does not operate specific ratios (maxima or minima) in regard to the mix of fixed and variable pay, opting
instead for managing fixed and variable remuneration in line with market practice and by reference to the employee‘s
unique role and individual performance.
Variable Incentive Awards
Profit Pools
The Company pays annual variable incentive remuneration for 99% of employees from pools funded by Company profits
(“Profit Pools”). The Profit Pools fund employee variable incentive awards, as well as performance fee remuneration
(where applicable). Employees participate in one of three separately funded pools, depending on their role in the
organisation: (i) the Investments Pool, (ii) the Core Pool, or (iii) the Intech Pool. Each pool has a specific Pre Incentive
Operating Income (PIOI) calculation and a corresponding funding percentage, effectively creating a ‘profit share’
arrangement between our employees and our shareholders.
1. The Investments Pool: Covers employees contributing to the investment management functions at Janus
Henderson and include; portfolio managers, research analysts, research associates, traders, client portfolio
managers, the exchange-traded product team, portfolio analytics, investment risk employees and the investment
team’s administrative support.
2. The Core Pool: Covers employees contributing to the executive, distribution, administrative, and operational
support of Janus Henderson and its subsidiaries.
3. The Intech Pool: Covers all employees of the Janus Henderson subsidiary Intech Investment Management LLC,
including investments, distribution, and support employees.
PIOI is generally considered as operating income before the deduction of incentive remuneration and overhead. The
indicative funding percentages are subject to oversight and approval by the Compensation Committee (the “Committee”)
of the Janus Henderson Board of Directors. The Committee retains the discretion to modify or terminate remuneration
plans and programmes without prior notice.
Profit Pool funding levels are directly linked to profits generated in the current year, reflecting the firm’s ability to pay and
thereby strengthening its capital base. The Committee may adjust the profit pools (even to zero);
Global Remuneration Policy Statement (GRPS)
Global Remuneration Policy Statement (GRPS)
Variable Incentive Awards
Employees are eligible to receive annual discretionary incentive awards based on
o
If the Committee believes an adjustment, either up or down, better aligns the Pool with Company performance, or
in consideration of any non-financial objectives or factors as appropriate,
in consideration of the annual risk assessment, and/or
o
o based on independent guidance or advice from the Janus Henderson Board Risk Committee or the Henderson
Group Holdings Asset Management Limited (“HGHAML”) Board.
Once the Profit Pools are calculated in aggregate, allocations are cascaded to department leadership through a process
initiated by the CEO, in collaboration with members of the Executive Committee and the CEO of Intech. During this
allocation process, department performance and contribution toward Company results are taken into account, and
consideration is given to financial and non-financial key performance indicators as determined for each department. This
group may review relevant department level information gathered from the annual risk assessment, the review of errors
and breaches, and any conduct or behaviour issues.
Employees receive variable incentive awards from the profit pools on a discretionary basis, based on the
recommendations of line managers and in consideration of individual performance appraisals. Under the Company’s
performance appraisal framework, employees;
•
set individual objectives (jointly with line management), aligned to the Company’s overall strategic objectives, yet
unique to their individual role and department, and
• are expected to exhibit certain behavioural competencies, aligned with the Company’s purpose and guiding
principles:
o
‘we put our clients first’ – strong and enduring client relationships built on strong investment performance
and a first class experience will enable us to grow our business and increase profit;
‘we act like an owner’ – focus on both revenues and costs increases profitability which is then shared in a
defined way with our shareholders;
‘we succeed as a team’ – a discretionary allocation process in which partnership is a key component
means the whole will be greater than the sum of its parts.
o
o
In respect of individual incentive awards from the Profit Pools, employees are measured against;
• achievement of their individual objectives, and
• demonstration of the above behavioural competencies.
This is a ‘guidance based’ approach with no specific rules constraining line manager discretion. Final decision-making
and approval of individual awards is held by department leadership. The CEO and co-Heads of HR review department
outcomes, including a gender pay view, and provide oversight and direction as needed.
o The Remuneration Review Committee (the “RRC”) reviews individual incentive remuneration in the context of
errors, breaches, conduct and behaviours and may adjust individual awards based on this review,
o A subcommittee of the RRC, the Code Staff Compensation Committee (the “CSCC”) reviews remuneration
proposals relating to individuals identified as Code Staff under the CRD, AIFMD and UCITS Remuneration
Codes.
Profit Pool eligibility does not guarantee that variable incentives will be paid to an employee, and the payment of no
variable incentive is a possibility should performance of the firm and/or the individual require this. Employees must be
actively employed by Janus Henderson on the day that Profit Pool incentives are distributed in order to receive these
awards.
o Employees paid outside the Profit Pools: Employees in the following positions are not eligible to participate in the
Profit Pools and may receive variable incentives that are directionally consistent with the profit pool outcomes, in
consideration of individual performance as determined by the Committee for the CEO or as recommended by the
CEO for the Executive Committee. The Compensation Committee retains decision-making and approval of
Executive Committee remuneration including the following roles paid outside the Profit Pool: the Chief Executive
Officer (CEO), Chief Risk Officer (CRO), Chief Financial Officer (CFO), Chief Investment Officer (CIO) and
General Counsel.
Global Remuneration Policy Statement (GRPS)
Monthly and quarterly commission arrangements
Direct front line sales professionals located in the US participate in market-standard Sales Variable Pay Plans that include
formulaic commissions. The Plans are intended to reward salespeople directly for both individually generated sales and
the performance of the broader team. Monthly commissions generally are a set percentage (‘basis points’) of individual
gross sales, or an ‘attainment’ framework that pays employees based on achievement of a sales goal. Quarterly
discretionary awards are funded by team gross sales. The Plan also includes a Net Sales incentive that adjusts the
monthly basis point or attainment rate. Individual payments from these plans may be adjusted at the discretion of line
management, and in consideration of personal conduct and behaviours.
Performance fee incentives
The Company receives performance fees in relation to certain funds depending on outperformance of each relevant fund
against pre-determined benchmarks and shares these performance fees, on a discretionary basis, with fund managers of
these funds. Performance Fee incentives are funded from within the Profit Pools and subject to the same risk adjustment,
review and deferral principles that apply to the discretionary funding frameworks.
The Company operates a small number of legacy contractual and formulaic arrangements which predominantly relate
back to historic acquisitions. These arrangements, which do include the payment of direct performance fee sharing
arrangements, are not funded from within the Profit Pools, but are subject to risk adjustment processes and the
Company’s standard deferral arrangements (and where appropriate, deferral arrangements mandated by relevant
regulation).
CEO Scorecard
CEO variable incentive awards are determined through the use of a ‘scorecard’. The scorecard approach is designed to
align CEO remuneration with Company performance, which the Committee believes will drive long-term value for clients
and shareholders. The scorecard is based on the same factors used by the Company to evaluate business results. The
performance measures and weightings used are as follows:
o Deliver investment excellence for clients (30% weighting, measured based on 3-year investment performance
relative to a benchmark);
o Drive financial results for shareholders (40% weighting, measured based on revenue growth, net flows, and
growth in net income before taxes); and
o Drive strategic results for long-term success for clients and shareholders (30% weighting, measured based on
execution of strategic initiatives)
Performance against these elements creates a performance ‘multiplier’ between 0.0 and 2.0, which is then applied to a
target incentive award to determine the actual incentive award. The target incentive award is established annually by
comparing the Company’s revenue and total assets under management, as well as business complexity, to a select peer
group of companies evaluated annually by the Committee and its external remuneration consultants.
Deferral arrangements
All staff at the Company are subject to mandatory deferral arrangements which apply to variable incentive awards
(excluding the sales commission arrangement for distribution staff in the US), in excess of specified thresholds, or as
appropriate as mandated by the Alternative Investment Fund Managers Directive (AIFMD) or Undertakings for Collective
Investment in Transferable Securities (UCITS) regulations. Deferred awards are delivered under the Deferred Equity Plan
(DEP), Long Term Incentive (LTI) or Mutual Fund Award (MFA) plans in the form of Janus Henderson Group plc 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 Company, other than in prescribed circumstances, during the vesting period.
Furthermore, malus and/or clawback provisions apply under the majority of these plans, under which the Committee has
discretion 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, with associated post vesting holding periods in line with
regulatory requirements.
Global Remuneration Policy Statement (GRPS)
Deferral arrangements are reviewed periodically to ensure they remain aligned with:
•
the Company’s business strategy, associated time horizons and risk appetite;
•
competitive practice in the sectors and jurisdictions in which the Company operates; and
• emerging regulatory practice.
Performance Appraisals
The Company operates an annual performance appraisal process on a global basis. Line Managers must undertake
reviews of individual performance at least annually. In conjunction with department heads, Human Resources analyse
and calibrate performance appraisal results and consider a number of outcomes, including but not limited to; the
consistent application of ratings, the degree of performance differentiation, gender pay effects, and the alignment between
pay and performance.
Remuneration Governance Framework
Oversight, decision-making and management activities in relation to remuneration related matters are conducted through
a number of governing bodies.
Compensation Committee of the Janus Henderson Group Board of Directors
The independent non-executive Directors of the Committee are responsible for;
o oversight and approval regarding CEO and Executive Committee remuneration,
o decision-making regarding the Company’s remuneration practices and variable incentive plans, including;
o
review of the annual risk assessment and approval of any adjustments to the global profit pools, and
o periodic review of incentive plans in respect of conflicts of interest and/or mitigation of excessive risk
taking behaviours.
Henderson Group Holdings Asset Management Limited Board
The independent non-executive Directors of the HGHAML Board, the parent financial holding company for Janus
Henderson’s European operations, is responsible for;
o
reviewing application of global remuneration practices and variable incentive plans to the Company’s European
Economic Area (“EEA”) regulated subsidiaries, escalating (as the HGHAML board deems necessary) to the Janus
Henderson Board of Directors where regulatory or other requirements impact the application of these plans to
employees in the EEA; and
o decision-making in relation to the application of governance practices across the EEA regulated subsidiaries,
including regarding remuneration setting (and risk adjustment) processes and regulatory capital levels for the EEA
regulated subsidiaries.
Global Remuneration Policy Statement (GRPS)
Monthly and quarterly commission arrangements
Direct front line sales professionals located in the US participate in market-standard Sales Variable Pay Plans that include
formulaic commissions. The Plans are intended to reward salespeople directly for both individually generated sales and
the performance of the broader team. Monthly commissions generally are a set percentage (‘basis points’) of individual
gross sales, or an ‘attainment’ framework that pays employees based on achievement of a sales goal. Quarterly
discretionary awards are funded by team gross sales. The Plan also includes a Net Sales incentive that adjusts the
monthly basis point or attainment rate. Individual payments from these plans may be adjusted at the discretion of line
management, and in consideration of personal conduct and behaviours.
Performance fee incentives
The Company receives performance fees in relation to certain funds depending on outperformance of each relevant fund
against pre-determined benchmarks and shares these performance fees, on a discretionary basis, with fund managers of
these funds. Performance Fee incentives are funded from within the Profit Pools and subject to the same risk adjustment,
review and deferral principles that apply to the discretionary funding frameworks.
The Company operates a small number of legacy contractual and formulaic arrangements which predominantly relate
back to historic acquisitions. These arrangements, which do include the payment of direct performance fee sharing
arrangements, are not funded from within the Profit Pools, but are subject to risk adjustment processes and the
Company’s standard deferral arrangements (and where appropriate, deferral arrangements mandated by relevant
regulation).
CEO Scorecard
CEO variable incentive awards are determined through the use of a ‘scorecard’. The scorecard approach is designed to
align CEO remuneration with Company performance, which the Committee believes will drive long-term value for clients
and shareholders. The scorecard is based on the same factors used by the Company to evaluate business results. The
performance measures and weightings used are as follows:
o Deliver investment excellence for clients (30% weighting, measured based on 3-year investment performance
relative to a benchmark);
o Drive financial results for shareholders (40% weighting, measured based on revenue growth, net flows, and
growth in net income before taxes); and
o Drive strategic results for long-term success for clients and shareholders (30% weighting, measured based on
execution of strategic initiatives)
Performance against these elements creates a performance ‘multiplier’ between 0.0 and 2.0, which is then applied to a
target incentive award to determine the actual incentive award. The target incentive award is established annually by
comparing the Company’s revenue and total assets under management, as well as business complexity, to a select peer
group of companies evaluated annually by the Committee and its external remuneration consultants.
Deferral arrangements
All staff at the Company are subject to mandatory deferral arrangements which apply to variable incentive awards
(excluding the sales commission arrangement for distribution staff in the US), in excess of specified thresholds, or as
appropriate as mandated by the Alternative Investment Fund Managers Directive (AIFMD) or Undertakings for Collective
Investment in Transferable Securities (UCITS) regulations. Deferred awards are delivered under the Deferred Equity Plan
(DEP), Long Term Incentive (LTI) or Mutual Fund Award (MFA) plans in the form of Janus Henderson Group plc 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 Company, other than in prescribed circumstances, during the vesting period.
Furthermore, malus and/or clawback provisions apply under the majority of these plans, under which the Committee has
discretion 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, with associated post vesting holding periods in line with
regulatory requirements.
Global Remuneration Policy Statement (GRPS)
Compensation Management Forum (“CMF”)
The CMF includes the CEO, co-Heads of Human Resources, Chief Financial Officer, Chief Risk Officer and General
Counsel. This group provides oversight and direction in regard to global remuneration practices, variable incentive plans,
and ensures management information is available to the appropriate governing bodies in order to support a strong
remuneration oversight and governance practice.
o
o
Remuneration Review Committee
The RRC includes the co-Heads of Human Resources, Chief Risk Officer and General Counsel. This group considers
guidance and feedback from relevant department heads where appropriate and is responsible for;
reviewing material changes to global remuneration practices and variable incentive plans,
reviewing variable incentive plans in respect of conflicts of interest and/or mitigation of excessive risk taking
behaviours,
identification of Code Staff and individual remuneration decisions related to this employee population,
o
o adjustments to individual remuneration following an assessment of errors, breaches, conduct and behaviours, and
o
review and consideration of any special remuneration arrangements for individuals and/or teams.
The Company identifies Code Staff in accordance with applicable regulatory requirements. Regulatory requirements and
any Company criteria applied to Code Staff are reviewed on an annual basis.
Additional Remuneration Policies and Practices
Anti-avoidance and anti-hedging
Identified Code Staff are required to complete an annual attestation certifying that they;
o understand that they must act and make decisions within the risk appetite and agreed policies of Janus
Henderson, and
o will adhere to the Company’s share trading policy which includes a prohibition of personal hedging transactions.
Guaranteed bonus and buy out awards
The Company 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.
Global Remuneration Policy Statement (GRPS)
Compensation Management Forum (“CMF”)
remuneration oversight and governance practice.
Remuneration Review Committee
The CMF includes the CEO, co-Heads of Human Resources, Chief Financial Officer, Chief Risk Officer and General
Counsel. This group provides oversight and direction in regard to global remuneration practices, variable incentive plans,
and ensures management information is available to the appropriate governing bodies in order to support a strong
The RRC includes the co-Heads of Human Resources, Chief Risk Officer and General Counsel. This group considers
guidance and feedback from relevant department heads where appropriate and is responsible for;
reviewing material changes to global remuneration practices and variable incentive plans,
reviewing variable incentive plans in respect of conflicts of interest and/or mitigation of excessive risk taking
identification of Code Staff and individual remuneration decisions related to this employee population,
o adjustments to individual remuneration following an assessment of errors, breaches, conduct and behaviours, and
review and consideration of any special remuneration arrangements for individuals and/or teams.
The Company identifies Code Staff in accordance with applicable regulatory requirements. Regulatory requirements and
any Company criteria applied to Code Staff are reviewed on an annual basis.
behaviours,
o
o
o
o
Additional Remuneration Policies and Practices
Anti-avoidance and anti-hedging
Identified Code Staff are required to complete an annual attestation certifying that they;
o understand that they must act and make decisions within the risk appetite and agreed policies of Janus
Henderson, and
o will adhere to the Company’s share trading policy which includes a prohibition of personal hedging transactions.
The Company 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:
Guaranteed bonus and buy out awards
•
•
•
•
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.
Exhibit 31.1
I, Richard M. Weil, certify that:
1. I have reviewed this annual report on Form 10-K of Janus Henderson Group plc;
CERTIFICATION
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 officer 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 internal controls over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) 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
d) 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 officer 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 that 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.
Date: February 26, 2019
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.
/s/ RICHARD M. WEIL
Richard M. Weil
Chief Executive Officer
Exhibit 31.2
I, Roger Thompson, certify that:
1. I have reviewed this annual report on Form 10-K of Janus Henderson Group plc;
CERTIFICATION
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 officer 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 internal controls over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) 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
d) 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 officer 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 that 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.
Date: February 26, 2019
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.
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
Exhibit 31.2
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 (the “Company”) on Form 10-K for the year ended December 31,
2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard M. Weil, Chief Executive
Officer of the Company, 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 the Company.
/s/ RICHARD M. WEIL
Richard M. Weil
Chief Executive Officer
Date: February 26, 2019
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.
I, Roger Thompson, certify that:
1. I have reviewed this annual report on Form 10-K of Janus Henderson Group plc;
CERTIFICATION
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 officer 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 internal controls over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
is being prepared;
principles;
c) 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
d) 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 officer 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 that 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.
Date: February 26, 2019
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.
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
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 (the “Company”) on Form 10-K for the year ended December 31,
2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roger Thompson, Chief Financial
Officer of the Company, 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 the Company.
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
Date: February 26, 2019
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.
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 (the “Company”) on Form 10-K for the year ended December 31,
2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roger Thompson, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
Exhibit 32.2
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
2002, that:
and
/s/ ROGER THOMPSON
Roger Thompson
Chief Financial Officer
Date: February 26, 2019
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]
178
OTHER INFORMATION
Shareholder information
As at 22 February 2019
Total number of holders of shares, CDIs, UK DIs and their voting rights
The issued share capital of Janus Henderson Group plc consisted of 196,412,764 shares held by 48,144 security holders. This included: 61,300,999
shares, held by CHESS Depositary Nominees Pty Limited (CDN), quoted on the ASX in the form of CHESS Depositary Interests (CDIs) and held by
42,380 CDI holders; and, 3,774,262 UK depositary interests (UK DIs), each representing an entitlement to one underlying Janus Henderson ordinary
share and held by 3,770 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
30,668,992 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 Pty Limited
3
4 National Nominees Limited
5 Citicorp Nominees Pty Limited
6 BNP Paribas Nominees Pty Limited
7 BNP Paribas Nominees Pty Limited
8 HSBC Custody Nominees (Australia) Limited
9 Hargreaves Lansdown (Nominees) Limited
10 Citicorp Nominees Pty Limited
11 BNP Paribas Nominees (NZ) Limited
12 Deutsche Bank AG
13 UBS Nominees Pty Limited
14 Bond Street Custodians Limited
15 HSBC Global Custody Nominee (UK) Limited
16 IOOF Investment Management Limited
17 Apollo Nominees Limited
18 Milton Corporation Limited
19 BNP Paribas Nominees Pty Limited
20 EQT Wealth Services Limited
Top 20 total
Total shares
Distribution of share/CDI/UK DI holdings
Categories
1–1,000
1,001– 5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Shares/CDIs/ UK DIs
128,826,826
11,543,137
% of issued capital
65.59
5.88
11,161,527
5,157,950
4,061,055
3,728,739
2,440,910
2,041,008
944,928
799,220
357,749
350,000
313,500
306,800
277,620
252,642
237,439
229,500
216,000
193,757
5.68
2.63
2.07
1.90
1.24
1.04
0.48
0.41
0.18
0.18
0.16
0.16
0.14
0.13
0.12
0.12
0.11
0.10
173,440,307
196,412,764
88.30
100.00
Number of holders
44,278
3,383
256
197
30
48,144
2,589 share/CDI/UK DI holders held less than a marketable parcel (being A$500 worth) of shares/CDIs/UK DIs i.e. fewer than 15 shares/CDIs/UK DIs.
Janus Henderson Group plc Annual Report 2018
Company Secretary
Michelle Rosenberg
Principal place of business in the
United Kingdom
201 Bishopsgate, London EC2M 3AE
Phone: +44 (0) 20 7818 1818
Registered office in Jersey
47 Esplanade, St Helier, Jersey JE1 0BD
Registered office in Australia
Level 5, Deutsche Bank Place,
126 Phillip Street, Sydney NSW 2000
Phone: +61 (0) 2 9230 4000
Stock exchange listings
Janus Henderson Group plc ordinary shares
are listed on the NYSE and its CDIs are quoted
on the ASX.
Substantial shareholders
Details of the Company’s substantial shareholders
are set out in the ‘Stock Ownership of Certain
Beneficial Owners and Management’ section,
Item 12 Part III on Form 10-K, on page 132.
Total number of options over
unissued shares
There were 1,566,449 options over unissued
ordinary shares in the Company held by 671
option holders.
Restricted securities
None of the shares/CDIs on issue are
‘restricted securities’ as defined in the
ASX Listing Rules.
Buyback
On 4 February 2019, the Board approved
a new on-market share buyback programme.
The Company intends to spend up to
US$200 million to buy its ordinary shares
on the NYSE and CDIs on the ASX over
12 months. Commencement of that programme
is subject to the Company appointing a corporate
broker and lodgement of an Appendix 3C with
the ASX.
During 2018, the Company had authority to buy
back ordinary shares and CDIs and completed
its inaugural share buyback programme,
repurchasing a total of 3,993,374 ordinary shares
for US$99.8 million, of which 1,415,787 were
CDIs. All repurchased securities were cancelled.
Additional information regarding shares acquired
on-market in satisfaction of employee awards
and entitlements is set out on page 27 of Item
5 Part II on Form 10-K.
179
Locations of share registries
Australia
Janus Henderson Group Share Registry,
GPO Box 4578, Melbourne VIC 3001
Phone: 1300 137 981
or +61 (0) 3 9415 4081
Fax: +61 (0) 3 9473 2500
Jersey
Janus Henderson Group Share Registry,
Queensway House, Hilgrove Street,
St Helier, Jersey JE1 1ES
Phone: +44 (0) 1534 281842
Fax: +44 (0) 370 873 5851
New Zealand
Janus Henderson Group Share Registry,
Private Bag 92119, Auckland 1142
Phone: 0800 888 017
Fax: +64 (0) 9 488 8787
United States
Janus Henderson Group Transfer Agent,
P.O. Box 43078, Providence, RI, 02940-3078
Phone: +1 866 638 5573
or +1 781 575 2374
Email
Shareholders:
webqueries@computershare.com
CDI holders:
webqueries@computershare.com.au
DI/CSN holders:
webqueries@computershare.co.uk
Website
www.janushenderson.com/ir
Janus Henderson Group plc Annual Report 2018
180
Two-year financial and performance summary
(FY18 adjusted and FY17 pro forma adjusted; unaudited)
Revenue
Management fees
Performance fees
Shareowner servicing fees
Other revenue
Distribution expenses
Total adjusted revenue
Operating expenses
Employee compensation and benefits
Long-term incentive plans
Investment administration
Marketing
General, administrative and occupancy
Depreciation and amortisation
Total adjusted operating expenses
Adjusted operating income
Interest expense
Investment gains (losses), net
Other non-operating income (expenses), net
Adjusted income before taxes
Income tax provision
Adjusted net income
FY18
US$m
FY17
US$m
1,947.4
7.1
154.2
197.7
(446.7)
1,859.7
591.6
178.0
46.2
37.9
246.9
33.1
1,133.7
726.0
(12.6)
(40.9)
22.6
695.1
1,869.3
84.7
144.5
197.4
(447.8)
1,848.1
644.2
165.2
43.8
33.9
198.7
30.4
1,116.2
731.9
(16.0)
6.3
2.2
724.4
(169.7)
525.4
(214.5)
509.9
(5.5)
504.4
(14.2)
490.2
24.2
549.6
(13.4)
536.2
Net loss (income) attributable to non-controlling interests
Adjusted net income attributable to JHG
Less: allocation of earnings to participating stock-based awards
Adjusted net income attributable to JHG common shareholders
Key Performance Indicators
Adjusted operating margin (%)
Adjusted compensation ratio (%)
Number of full-time employees and equivalents
Assets under management (AUM) at year end (US$bn)
Average AUM (US$bn)
Net management fee margin (bps)
Basic and diluted earnings per share (EPS)
Basic weighted-average shares outstanding (m)
Diluted weighted-average shares outstanding (m)
Adjusted basic earnings per share (US$)
Adjusted diluted earnings per share (US$)
Dividend per share (US$)1
Investment performance2
Percentage of AUM outperforming benchmark over one year (%)
Percentage of AUM outperforming benchmark over three years (%)
Percentage of AUM outperforming benchmark over five years (%)
Notes
• FY17 data presents pro forma net flows, assets under management, and results of Janus Henderson Group as if the merger had occurred at the beginning of the period shown.
• FY17 reflects the reclassification of certain revenue amounts from ‘Other revenue’ to ‘Shareowner servicing fees’ and is updated to reflect the adoption of the new revenue recognition standard.
• See adjusted financial measures reconciliation on Form 10-K pages 40 and 41 for additional information.
39.6
43.8
2,356
370.8
346.5
44.7
39.0
41.4
2,301
328.5
367.7
44.3
196.3
197.9
2.50
2.48
1.20
195.0
195.9
2.75
2.74
1.40
76
66
79
55
61
72
1. 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$20.3 million and for legacy Henderson that was US$26.9 million), divided by the number of shares outstanding as at 30 May 2017 (approximately
200.4 million). USD/GBP 1.3017.
2. Outperformance is measured based on composite performance gross of fees vs primary benchmark, except where a strategy has no benchmark index or corresponding composite in which
case the most relevant metric is used: (1) composite gross of fees vs zero for absolute return strategies, (2) fund net of fees vs primary index or (3) fund net of fees vs Morningstar peer group
average or median. Non-discretionary and separately managed account assets are included with a corresponding composite where applicable. Cash management vehicles, ETFs, Managed
CDOs, Private Equity funds and custom non-discretionary accounts with no corresponding composite are excluded from the analysis. Excluded assets represent 3% of AUM as at
31 December 2017 and 5% of AUM as at 31 December 2018. Capabilities defined by Janus Henderson.
Janus Henderson Group plc Annual Report 2018
OTHER INFORMATION
Past performance is no guarantee of future results. Investing involves
risk, including the possible loss of principal and fluctuation of value.
Forward-looking information
This presentation includes statements concerning potential future events
involving Janus Henderson Group plc that could differ materially from the
events that actually occur. The differences could be caused by a number
of factors including those factors identified in Janus Henderson Group’s
2018 Annual Report on Form 10-K, on file with the Securities and
Exchange Commission (Commission file no. 001-38103), including those
that appear under headings such as ‘Risk Factors’ and ‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations.’
Many of these factors are beyond the control of the company and its
management. Any forward-looking statements contained in this
presentation are as of the date on which such statements were made.
The company assumes no duty to update them, even if experience,
unexpected events, or future changes make it clear that any projected
results expressed or implied therein will not be realised.
Annualised, pro forma, projected and estimated numbers are used for
illustrative purposes only, are not forecasts and may not reflect actual results.
No public offer
The information, statements and opinions contained in this presentation
do not constitute a public offer under any applicable legislation or an
offer to sell or solicitation of any offer to buy any securities or financial
instruments or any advice or recommendation with respect to such
securities or other financial instruments.
Not all products or services are available in all jurisdictions.
Mutual funds in the US are distributed by Janus Henderson Distributors.
Please consider the charges, risks, expenses and investment
objectives carefully before investing. For a US fund prospectus
or, if available, a summary prospectus containing this and other
information, please contact your investment professional or call
800.668.0434. Read it carefully before you invest or send money.
Janus Henderson, Janus, Henderson, Perkins, Intech, AlphaGen,
Knowledge. Shared and Knowledge Labs are trademarks of Janus
Henderson Group plc or one of its subsidiaries.
© Janus Henderson Group plc.
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