BlackRock's Fink top earner, proxies show

BlackRock Inc. Chairman and CEO Laurence D. Fink earned $23.9 million last year, the highest-paid executive among publicly traded money management firms that have so far disclosed 2014 compensation information.

An analysis of proxy statements by Pensions & Investments shows Gregory J. Fleming, Morgan Stanley's president of wealth management and investment management, is the second highest paid, at $17.4 million. Mr. Fleming's pay increased 53.3% from thMorgan Stanleyng, Morgan Stanley's president of wealth management and investment management, is the second highest paid, at $17.4 million. Mr. Fleming's pay increased 53.3% from the previous year.

Mr. Fink's compensation jumps to $26 million when stock grants made in January, which will appear in next year's proxy statement, are included.

Mr. Fink, head of the world's largest money management firm, got a raise of either 6% or 8%, depending on which dollar amount is used. He earned a salary of $900,000, a cash bonus of $9.1 million, stock grants of $13.6 million and other compensation of $193,750.

The proxy shows BlackRock changed a key metric in determining Mr. Fink's stock grants. It eliminated stock price as a factor and replaced it with organic asset growth and operating margin.

BlackRock's share price rose 13% in 2014 and assets under management, revenue, operating margin and net profit all were up.

Among money management CEOs, Janus Capital Group CEO Richard Weil got the biggest raise: 72.7% to $8.1 million.

Gregory E. Johnson, Franklin Resources Inc.'s CEO and president, had the third-largest increase in compensation: a 31.1% hike to $15.9 million.

Mr. Johnson's family — his uncle Rupert H. Johnson Jr., the company' vice chairman, and his father, Charles — control about one-third of Franklin's stock.

The compensation increases parallel the strong financial results for the money management industry.

“Compensation tends to track with profit,” said Todd Sirras, a managing director at compensation consulting firm Semler Brossy Consulting Group LLC, Los Angeles. “It was a good year in the asset management industry.”

Globally, publicly traded money managers had a median profit margin of 33% in 2014, the highest in five years, an analysis by money manager consultant Casey, Quirk & Associates showed.

P&I's proxy statement analysis covered 13 publicly traded firms with major money management operations that had filed proxy statements through April 17: BlackRock, Morgan Stanley, Janus, Franklin Resources, Artisan Partners Asset Management Inc., BNY Mellon Investment Management, Federated Investors Inc., Invesco Ltd., T. Rowe Price Group Inc., Waddell & Reed Inc., J.P. Morgan Asset Management, Calamos Asset Management Inc. and Voya Financial IncInvesco, Invesco Ltd., T. Rowe Price Group Inc., Waddell & Reed Inc., J.P. Morgan Asset Management, Calamos Asset Management Inc. and Voya Financial IJ.P. Morgan Asset Managementc., J.P. Morgan Asset Management, Calamos Asset Management Inc. and Voya Financial Inc.

The median compensation of the CEO or top executive of the money management division of the 13 companies was up 4.7% in 2014, the P&I analysis found. The average increase was 17.1%.

Compensation of two CEOs in P&I's analysis — Artisan's Eric Colson and Federated's J. Christopher Donahue — dropped last year. Mr. Colson's was down 22.7%; his total compensation was $6.6 million in 2014. According to Artisan's proxy statement, Mr. Colson's compensation got an unusually large boost in 2013 after completion of an initial public offering.

Mr. Donahue's was down 13.6% to $3.6 million in 2014, but the reduction in compensation came as Federated experienced less robust earnings. Financial statements for 2014 show Federated had a decline of 8% in net income from the previous year.

That drop made Mr. Donahue the lowest paid CEO on the P&I list for 2014. The year before he was third from the bottom.

Of all publicly traded money managers, Janus had the longest explanation in its proxy materials —40 pages — about the compensation of its top executives.

Mr. Weil's pay has been the subject of controversy since he was hired from Pacific Investment Management Co. in 2010 and was given $20.3 million in compensation, including a $10 million signing bonus.

Janus shareholders rejected that pay package in a 2011 say-on-pay advisory vote. Mr. Weil's compensation dropped to $6.1 million in 2011 and to $4.7 million in 2013.

In its 2015 proxy, the board's compensation committee spent page after page justifying Mr. Weil's increase. It said under Mr. Weil's watch, operating income rose in 2014, resulting in an operating margin of 30%, compared to 27% in 2013.

It also cites the hiring of William H. Gross, who left PIMCO in September. Janus' stock shot up 45% by year-end 2014 from its $11.11 price on Sept. 25, the day before Mr. Gross announced he was joining the firm. It closed at $17.75 on April 17.

But one major proxy advisory service, San Francisco-based Glass Lewis & Co. LLC, is recommending shareholders reject the 2014 compensation of Mr. Weil and other top officials.

Glass Lewis officials say in a report that while Janus has linked Mr. Weil's performance with increased compensation, the amounts given were fairly discretionary.

Only $500,000 of Mr. Weil's compensation is salary. The rest is variable compensation, including $2.9 million in a cash bonus and $4.4 million in performance stock units that Mr. Weil would be able to cash out based on company performance, said Eric Hoffmann, vice president, information services and technology solutions of employee compensation specialist Farient Advisors LLC, Los Angeles.

Companies giving raises to their CEOs talked positively in proxy statements about increased financial performance, detailing why their top executives deserved to earn more.

Franklin Resources' proxy statement, for example, says that under Gregory Johnson, the company's net income increased 11% to $2.38 billion for fiscal year 2014, which ended Sept. 30. It also says assets under management were at an all-time fiscal-year-end high of $898 billion, representing a 6% increase from a year ago.

But Glass Lewis, in a separate report, gave Franklin Resources a D for its compensation practices. It noted that Mr. Johnson was paid more than the median at peer companies, while Franklin's performance is about the same as its peers.

Nevertheless, Glass Lewis recommended approval of the 2014 compensation for Gregory Johnson and other top executives; at the company's March 11 annual meeting, 98% of voting shareholders agreed.

Data Editor Timothy Pollard contributed to this story.