While the stated reason for Stilwell Financial's decision to buy back Janus employee stock was to redistribute equity within the company and offer existing managers some liquidity, the company's actual motives are a subject of speculation among industry observers.

Stilwell Financial of Kansas City, Mo. announced Feb. 21 a plan that will make it easier for employees at Janus Capital of Denver to sell their company stock to the parent company. Stilwell will purchase 197,000 shares of Janus common stock, valued at

$200 million, according to the company.

The majority of those shares were offered to senior managers in 1995, when Janus first extended equity to employees, according to a Janus spokesperson. In addition, Janus employees will be allowed to sell 50 percent of their eligible shares of common stock, according to a company announcement. The offer covers 143,000 shares of Janus common stock, representing $145 million.

Given Janus' strained history with Stilwell and the recent drop in performance of many of its funds, the move raises many questions, said Roy Weitz, a financial advisor and publisher of FundAlarm.com, a website that tracks manager changes in the fund industry.

"It absolutely makes no sense," he said. "Something is going on. This is probably the biggest smoking gun yet."

Company equity is usually given to employees in order to provide incentives for them to stay at a firm, so it is puzzling that Stilwell would "loosen the golden handcuffs," Weitz said.

"I can't imagine this came from Stilwell, especially with the relationship between Stilwell and Janus," he said. "This isn't the kind of thing that a new owner does. I think they had to do it. I think people from Janus said, Buy our shares or we'll leave.'"

Another possibility is that Janus is converting phantom stock that it distributed to employees years ago into actual stock made available last month when Thomas H. Bailey, chairman, president and CEO of Janus, sold 600,000 shares, said Geoff Bobroff, president of Bobroff Consulting, of East Greenwich, R.I.

"It's possible that what is happening is they are buying people out of their phantom ownership and selling them, if they are so inclined or so designated, some of the stock that Bailey is selling back," he said.

The move may also be a means for Janus to compensate and reward its executives and managers without raising salaries, which would have a negative impact on Stilwell's earnings, Bobroff said.

"Janus had a fabulous year last year," he said. "One might think that they would have increased salaries dramatically because of the fabulous year. Unfortunately, the fabulous year was really two quarters, not four quarters. And so while these people did a lot of hard work, laying on a lot of salaries at this point would not be good for Stilwell's earnings."

And even though that reward in liquidity is coming from Janus employees' own holdings, it is a reward nonetheless, he said.

"They've just seen Jim Craig sell a block of stock and now they are seeing Bailey sell a block of stock," he said. "There could be a bit of, Me too' in there."

Just because there are some employees hoping to divest of Janus, that should not be interpreted as a loss of faith in the company, Bobroff said.

"Say you're worth $10 million and $9.5 million of your wealth is tied up in illiquid securities," he said. "You might, on paper, look quite wealthy, but you don't have the ability to do things that you might otherwise choose to do."

It is true, however, that Janus may be loosening some of the ties that have been designed to retain its managers, but there is no reason to believe that there will be a flight of personnel, Bobroff said. Janus gives its managers considerable freedom in their investment decisions and, by and large, the group is content, he said. Bobroff occasionally consults for Janus. There have been several developments at Janus in the past year that were supposed to precipitate a flight of managers but have not, said Christine Benz, an analyst with Morningstar of Chicago.

"So I've given up joining in the conjecturing," she said.

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