Janus Henderson ditches two-head structure as Andrew Formica exits

Janus Henderson has named Dick Weil as its sole chief as AMP contender Andrew Formica exits with a $12m severance package.

23/03/2017: Andrew Formica, soon to be co-head of merged Henderson Global Investors and Janus Capital, in Sydney.Pic by James Croucher

Global funds manager Janus Henderson has named Dick Weil as its sole chief executive officer, ditching its dual leadership structure after just one year in what it labelled “not an easy decision”.

Co-CEO Andrew Formica, who served as CEO of Henderson Group from 2008 until the $US6 billion merger in 2017, resigned effective today but will stay on as an adviser until the end of the year.

“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 company said.

“This decision was made with the full support of the board, and the board believes Dick is most appropriate to take Janus Henderson to the next level,” it said, announcing the news alongside an update on its quarterly earnings.

Janus Henderson (JHG), which boasts assets under management of $US370bn, was created in May 2017 following the “merger of equals”. The unusual dual leadership structure was originally due to be reviewed after a three-year period but the company today said it had brought forward the change as the co-CEO structure had “achieved the objectives established at the time of the merger”. Mr Formica will receive severance pay of $US12 million, which will be reflected in the third quarter results.

Mr Weil served as CEO of Janus from 2010 until the merger. “Dick brings a breadth of skills and experience from prior roles in his career where he successfully led organisations through challenge and change,” Janus Henderson chairman Richard Gillingwater said.

Mr Formica said he was proud of what he had achieved as Henderson CEO and that it had “been a pleasure” to work with Mr Weil on the merger. “Janus Henderson is an outstanding business with a fantastic and talented workforce. I wish Dick and the team the very best going forward,” he said.

The funds manager today reported a $US1.8bn drop in assets under management in the June quarter, driven by $US2.7bn in net outflows and unfavourable foreign currency moves that was partially offset by positive investment performance. Second quarter revenue of $US592.4m was up 49 per cent from the prior corresponding period, while adjusted revenue came in at $US477.7m.

Total operating expenses rose 23 per cent to $417.1m, while net income surged to $140.6m. Adjusted net income rose to $149.9m, or 74c a share, below analyst expectations of 75c a share. The company declared a dividend of US36c per share and announced an on-market share buyback of up to $US100m.

Mr Formica’s exit comes amid speculation that he has been courted by AMP chairman David Murray to take on the CEO role at the beleaguered wealth management giant. AMP and Henderson have a troubled history, witnessed first-hand by Mr Formica. AMP acquired Henderson in 1998 as part of a short-lived disastrous expansion into the UK, before demerging the entity in 2003.

AMP has been on the hunt for a new CEO for months, following Craig Meller’s resignation in April as a result of damning revelations uncovered by the banking royal commission, including that AMP charged customers fees for advice that was never delivered and lied to corporate regulator the Australian Securities and Investments Commission about it. Chairman Catherine Brenner was another casualty of the shock admissions, with Mr Murray appointed to take her place back in May.