Stilwell Financial is converting Janus' corporate structure as part of a move to bind key employees more tightly to the firm. Janus is a unit of Stilwell and has faced key defections as assets have dwindled over the past eighteen months.

The plan calls for the conversion of Janus into a limited liability company. That move will allow shareholders to escape double taxation on dividends paid out by the firm.

That possible tax bite takes on special importance in light of the second prong of the strategy released today.

Stilwell is awarding five percent of Janus' shares to roughly 180 management employees, or about six percent of its workers, in a special one-time award. It will also make annual contributions through Janus' long-term incentive program. Stilwell values the grants at $300 to $350 million. The conversion and grants are expected to take place within 60 days.

"We believe that Stilwell's shareholders benefit from programs that encourage superior investment performance and long-term stability at Janus," said Landon H. Rowland, Stilwell's chairman, president and chief executive officer, in a statement. "These equity awards are part of a compensation plan at Janus that provides tax-efficient incentives for key management employees - that is, those individuals responsible for Janus' growth and success."

Some quick math suggests the awards are worth in excess of $1 million to many, though the bulk of the award is earmarked for 65 portfolio managers and investment professionals. The initial awards will vest over seven years and the annual grants will vest over five years. That wait will shorten if Janus meets investment performance targets set under the plan. In short, there is plenty of motivation for them to stay on board and weather out the storm in the stock market.

The decision to award the equity stake comes amid speculation among competitors that Janus' talent is open to raids. Not only did the firm joining the ranks of its peers by announcing layoffs, most recently 222 this month, it also suffered the loss of it's of its James Craig, its chief investment officer and heir apparent, last year. In January, Janus promoted Helen Young Hayes to head its investment group, filling Craig's shoes.

The announcement of the awards also comes within months of sales by Thomas H. Bailey of a significant part of his stake in the firm he founded. Those shares were purchased by Stilwell. The net effect of the moves has been to transfer a portion of the equity in the firm from Bailey to key executives in the next generation at the firm.

Janus officials added that Bailey is expected to continue as chief executive officer of Janus, and the Janus management team will continue its responsibility for the company's day-to-day operations.  

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