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Highfields Charges 'Obfuscation' By Janus Capital

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BOSTON (–Highfields Capital Management LLC, Boston, the largest stockholder of Janus Capital Group Inc., Denver, declared in a filing with the Securities and Exchange Commission that it would cast its votes against two management initiatives, and against three incumbent directors, at Janus’ upcoming annual meeting.

At that meeting, scheduled for May 8, the board will seek approval of its new management incentive plan and of its proposed performance measures under the firm’s 1998 long-term incentive plan as amended.

In the filing, which incorporated a letter faxed to Janus’ Chairman Landon Rowland on April 10, Highfields’ principal Jonathon S. Jacobson said that the hedge fund will oppose those two measures as a means of confronting “the company’s penchant for adopting overly narrow interpretations of disclosure rules as a means to withhold or obfuscate material information.”

Highfields is particularly unhappy that Janus, a mutual funds firm, has not disclosed the compensation or equity awards to two non-executive employees, Helen Hayes and Mark Whiston. Ms. Hayes, now the managing director of investments, and Mr. Whiston, now the chief executive, officially acquired those positions only at the beginning of this year, so Janus maintains that disclosure of their compensation as non-executives as of last year is not required by the securities laws. Highfields responds that they were “openly running the business” through the fourth quarter of last year.

“Good sense points to their compensation being relevant…information for this proxy statement,” Mr. Jacobson wrote. “Good faith dictates that the company disclose it. Your [Mr. Rowland's] failure to do so is both irresponsible and inconsistent with SEC rules….” The company, he contended, is relying on empty formalities to avoid revealing material information.

Mr. Jacobson also charges that Janus’ filings failed to disclose an August 2002 undertaking by the company, then known as Stilwell Financial Inc., to give Ms. Hayes, Mr. Whiston and other Janus employees approval rights over changes in the company’s board of directors.

In an April 14 response, Mr. Rowland said that the decision to keep the 2002 executives in place until Jan. 1, 2003 was driven by the rules governing compensation expense tax deductions. “Thus,” he wrote, “Stilwell executives’ compensation was properly disclosed under the proxy rules, and the company was able to deduct all executives’ compensation expenses.”

Mr. Rowland also denied that Ms. Hayes, Mr. Whiston, or any other Janus employee has approval rights over changes in the board of directors.

Highfields filed a 13-D with the SEC in November that indicated that it was unhappy about the ongoing transformation of Stilwell into Janus. It appears to have sought to settle its differences with management quietly in the interim, Previous HedgeWorld Story.

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