Discord on Janus board said to factor into CEO’s departure

Gary Black’s tenure at Janus Capital Group was doomed virtually from the start, due to tension between him and the company’s board of directors, according to industry experts.
Mr. Black was brought in five years ago to help Janus Capital Group of Denver rebuild after the devastating losses its mutual funds incurred after the collapse of the technology bubble in 2000. He was named chief executive in 2006
He resigned on Monday, and was replaced on an interim basis by Tim Armour, a Janus Capital Group director, according to a statement from the company.
“After much consideration, Gary and the board have come to the mutual decision that the time is right to bring new leadership to Janus,” Steve Scheid, chairman of the Janus Capital Group’s board of directors, said yesterday in a statement.
“During Gary’s tenure Janus made significant progress on its goals, including strengthening the firm’s investment performance and risk management, revitalizing the Janus brand, generating positive net flows, and building out the firm’s product and global distribution platforms.”
But Janus didn’t make much progress on what seemed to be a goal of Mr. Black’s: making a deal to sell Janus, or at least to partner with another firm.
“I’m aware of some deals that were on the table that the board basically rejected and he was for,” said Burton Greenwald, a Philadelphia-based mutual fund consultant.
If that was the case, Janus isn’t talking.
“Were not going to comment on rumors or speculation,” said Shelley Peterson, a spokeswoman for Janus.
It seemed clear, however, that there was friction between Mr. Black and the board that may have been building up over time, said Geoff Bobroff, a mutual fund consultant in East Greenwich, R.I.
A former executive with The Goldman Sachs Group Inc. of New York, Mr. Black initially joined Janus as president and chief investment officer.
During his tenure, he was said to ruffle a lot of feathers at Janus by reining in fund manager compensation.
“Janus was an organization dominated and run by portfolio management and for whatever reason Black wanted to shift that to become a more traditional structure,” Mr. Bobroff said.
It may have been a contributing factor to the departure of fund managers, he said.
Managers who left during Mr. Black’s tenure include David Corkins, former manager of the $7.59 billion Janus Fund (JANSX); Dan Kozlowski of the $238 million Janus Long/Short Fund (JALSX); and Minyoung Sohn of the Janus Fundamental Equity Fund, now the $506 million Janus Research Core Fund (JAEIX).
Mr. Black’s attempt to rein in compensation even resulted in a lawsuit that Janus lost.
A Denver district court ruled in May that Janus was to pay Ed Keely, a former portfolio manager, $4.8 million, finding the company guilty of breach of contract.
Despite such setbacks, Mr. Black gave little indication of hard feelings in a statement announcing his departure.
“The firm is in a much stronger place than when I joined, and the time is right for a change,” he said in the statement. “Long-term performance is strong, flows have rebounded, we have a broad diversified product platform, and we’ve built a global distribution footprint across both the intermediary and institutional channels that is gaining market share. I’m proud of the progress Janus has made during the last five years and I am confident that the firm is well positioned to build on that success going forward.”
Attempts to reach Mr. Black for further comment were unsuccessful.

Related Topics: Janus Capital Group