10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2006

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to                       

Commission File Number 001-15253

Janus Capital Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	43-1804048
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
151 Detroit Street, Denver, Colorado	80206
(Address of principal executive offices)	(Zip Code)

(303) 333-3863

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.01 Per Share Par Value	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange
7.785% Public Income Notes (PINES (R)) due 2032	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act  Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Exchange Act Rule 12b-2). Large accelerated filer x  Accelerated filer o  Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of June 30, 2006, the aggregate market value of common equity held by nonaffiliates was $3,701,775,060. As of February 21, 2007, there were 189,731,595 shares of the Company’s common stock, $.01 par value per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated herein by reference into Part of the Form 10-K as indicated:

Document	Part of Form 10-K into Which Incorporated
Company’s Definitive Proxy Statement for the 2007 Annual Meeting of Shareholders		Part III

JANUS CAPITAL GROUP INC.
2006 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	10
Item 3.	Legal Proceedings	10
Item 4.	Submission of Matters to a Vote of Security Holders	10
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	57
Item 9A.	Controls and Procedures	57
Item 9B.	Other Information	57
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	57
Item 11.	Executive Compensation	57
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence	57
Item 14.	Principal Accountant Fees and Services	57
PART IV
Item 15.	Exhibits and Financial Statement Schedules	58
	Signatures	66

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PART I

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, Janus Capital Group Inc. (collectively “Janus” or the “Company”) may make other written and oral communications from time to time (including, without limitation, in the Company’s 2006 Annual Report to Stockholders) that contain such statements. Forward-looking statements include statements as to industry trends and future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in Part I, Item 1A, Risk Factors, and elsewhere in this report. Janus cautions readers to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. Janus undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

ITEM 1. BUSINESS

Janus Capital Group Inc. (collectively, “Janus” or the “Company”) derives substantially all of its revenue and net income from its Investment Management segment, which provides investment management and administrative services to mutual funds, separate accounts and institutional clients in both domestic and international markets. Janus provides investment advisory services through its primary subsidiaries, Janus Capital Management LLC (“JCM” or “Janus ex-INTECH”) and Enhanced Investment Technologies, LLC (“INTECH”). The Company also owns a printing and fulfillment business (the “Printing and Fulfillment segment”), acquired on December 1, 2003. The operations of the Printing and Fulfillment segment, which do not contribute significantly to revenue or net income, are discussed in more detail within Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Revenues are generally based upon a percentage of the market value of assets under management and are calculated as a percentage of the daily average asset balance in accordance with contractual agreements with the Company’s mutual funds, separate accounts and subadvised relationships (collectively referred to herein as “products” or “investment products”). Certain investment products are also subject to performance fees which vary based on the relative performance as compared to the benchmark index and assets subject to such fees. Assets under management primarily consist of domestic and international equity and debt securities. Accordingly, fluctuations in the financial markets, relative investment performance, sales and redemptions of investment products, and changes in the composition of assets under management are all factors that have a direct effect on Janus’ operating results.

Janus’ core competency is in research and investment management. The firm’s objectives are to deliver strong investment performance to mutual fund shareholders and advisory clients, to expand distribution of its investment products in the intermediary and institutional channels, and to broaden global products and increase distribution in target countries outside of the United States. The execution of these objectives will position the Company to continue improving its long-term net flows, particularly in Janus ex-INTECH products. Long-term net flows is defined as gross sales less gross redemptions, excluding the impact of money market flows.

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Janus Capital Management

Janus considers itself a leader in equity investing, beginning with the launch of the Janus Fund more than 35 years ago. Janus’ investment teams are led by its co-Chief Investment Officers (“CIOs”), who are charged with driving investment performance across all disciplines and subsidiaries while maintaining a structured investment approach. Janus’ investment teams seek to identify strong businesses with sustainable competitive advantages and improving returns on capital that sell at a discount to what the teams believe they are worth. Janus believes its depth of research, its experienced portfolio managers and analysts, its willingness to make concentrated investments when Janus believes it has a research edge, and its commitment to delivering strong, long-term results for its investors are what differentiate Janus from its competitors.

For the one- and three-year periods ended December 31, 2006, approximately 63% and 73%, respectively, of the series within Janus Investment Fund (“JIF”), the Company’s primary fund family, were ranked in the top two Lipper Analytics quartiles based upon total returns. On a five-year total return basis, 72% of JIF funds were in the top two Lipper quartiles at December 31, 2006, compared with 57% at the end of 2005. (See Exhibit 99.1 for complete Lipper rankings.)

INTECH

INTECH’s unique investment process is based on a mathematical theorem that attempts to capitalize on the volatility in stock price movements. The goal is to achieve long-term returns that outperform the benchmark index, while controlling risks and trading costs. Acquired by Janus in 2002, INTECH has managed institutional portfolios since 1987, establishing one of the industry’s longest continuous records of mathematically driven equity investing strategies. Risk-managed assets at INTECH have grown from approximately $6.0 billion at acquisition in 2002 to $62.3 billion at the end of 2006. Risk-managed products have primarily been sold through the institutional channel, which generally has lower management fees than products sold through the intermediary, international or retail channels. In 2007, Janus intends to leverage the success of INTECH’s risk-managed process with the launch of several new products in different strategies, including global, international and long/short.

Eight out of nine INTECH strategies have outperformed their respective benchmarks, net of fees, since inception and all strategies have outperformed on a gross fees basis. Additionally, all of INTECH’s investment strategies rank in the top 2 quartiles of their corresponding universes for alpha and information ratio, industry measurements of risk and reward, from inception through December 31, 2006.

Distribution Channels

Janus’ sales organization capabilities are segmented into four distinct distribution channels: retail, U.S. intermediary, U.S. institutional and international. During 2005 and 2006, the Company invested in the expansion of the intermediary and institutional channels by significantly increasing sales and marketing personnel, and plans on further increases in 2007.

Retail Channel

The retail channel serves individual investors who access Janus directly or through supermarket platforms. These investors are served through Janus’ primary fund family, JIF. Assets in the retail channel totaled $49.0 billion, or 29% of total assets under management at December 31, 2006.

U.S. Intermediary Channel

The intermediary channel serves financial intermediaries and retirement plans for the advice-driven market, which includes asset managers, bank/trust officers, broker-dealers, independent planners,

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third-party administrators and insurance companies. Janus has aligned the channel to focus resources on distributor needs rather than product/performance-driven sales, and is targeting product platforms that tend to have high asset retention rates in order to enhance long-term returns and margin. Assets in the domestic intermediary channel totaled $45.3 billion, or 27% of total assets under management at December 31, 2006.

U.S. Institutional Channel

The institutional channel serves endowments, foundations, municipalities, corporations and Taft-Hartley clients and focuses on distribution through consulting relationships and on a direct basis. The current asset base in this channel is weighted heavily toward INTECH’s risk-managed products. Assets in the institutional channel totaled $62.1 billion, or 37% of total assets under management at December 31, 2006.

International Channel

The international channel serves all products sold outside of the United States and includes international retail, intermediary and institutional accounts. International products are offered through Janus Capital Funds Plc, separate accounts and subadvisory relationships. Assets in the international channel totaled $11.3 billion, or 7% of total assets under management at December 31, 2006.

COMPETITION

The investment management industry is relatively mature and saturated with competitors that provide services similar to Janus. As such, Janus encounters significant competition in all areas of its business. Janus competes with other investment managers, mutual fund advisers, brokerage and investment banking firms, insurance companies, hedge funds, banks and other financial institutions, many of which are larger, have proprietary access to distribution, have a broader range of product choices and investment capabilities, and have greater capital resources. Janus’ ability to successfully compete in this market is based on the following factors: its ability to achieve consistently strong investment performance; to maintain and build upon its distribution relationships and continue to build new ones; to develop appropriately priced investment products well suited for its distribution channels and attractive to underlying clients and investors; to offer multiple investment choices; to provide effective shareowner servicing; to retain and strengthen the confidence of its clients; to attract and retain talented portfolio management and sales personnel; and to develop and leverage its brand in existing and new distribution channels. Additionally, Janus’ ability to successfully compete with other investment management companies is highly dependent on its reputation and its relationship with clients.

Competition in the investment management industry continues to increase as a result of greater flexibility afforded to banks and other financial institutions to sponsor and distribute mutual funds. Furthermore, the marketplace for investment products is rapidly changing; investors are becoming more sophisticated; the demand for and access to investment advice and information are becoming more widespread; and more investors are demanding investment vehicles that are customized to their personal situations.

REGULATION

The investment management industry is subject to extensive federal and state laws and regulations intended to benefit or protect the shareholders of funds managed by Janus and advisory clients of Janus. The costs of complying with such laws and regulations have significantly increased and may continue to contribute significantly to the costs of doing business as an investment adviser. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the conduct of Janus’ business and to impose sanctions for failure to comply with the laws and regulations. Possible consequences or sanctions for such failure to comply include, but are not limited to, voiding of

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investment advisory and subadvisory agreements; the suspension of individual employees; limitations on engaging in certain lines of business for specified periods of time; revocation of registrations; disgorgement of profits; and censures and fines. Further, such laws and regulations may provide the basis for litigation that may also result in significant costs to Janus.

The Investment Advisers Act

The Securities and Exchange Commission (“SEC”) is the federal agency generally responsible for administering the federal securities laws. Certain subsidiaries of Janus are registered investment advisers under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”) and, as such, are supervised by the SEC. The Investment Advisers Act requires registered investment advisers to comply with numerous and pervasive obligations, including among other things, record-keeping requirements, operational procedures, registration and reporting and disclosure obligations. Certain subsidiaries of Janus are also registered with regulatory authorities in various states, and thus are subject to the oversight and regulation of such states’ regulatory agencies.

The 1940 Act

Through its subsidiaries, Janus acts as adviser or subadviser to both proprietary and non-proprietary mutual funds, which are registered with the SEC pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”). Janus subsidiaries also serve as adviser or subadviser to separately managed accounts and commingled accounts that are not required to register under the 1940 Act but are governed by the Investment Advisers Act. As an adviser or subadviser to a registered investment company, Janus must comply with the requirements of the 1940 Act and related regulations including among other things, requirements relating to operations, fees charged, sales, accounting, recordkeeping, disclosure and governance. In addition, the adviser or subadviser to a registered investment company generally has obligations with respect to the qualification of the registered investment company under the Internal Revenue Code of 1986, as amended (the “Code”).

Broker-Dealer Regulations

Janus’ broker-dealer subsidiary is registered with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is a member firm of the National Association of Securities Dealers (the “NASD”), the securities industry’s self-regulatory organization. The SEC imposes various requirements on Janus’ limited broker-dealer operations including disclosure, recordkeeping and accounting. The NASD has established conduct rules for all securities transactions among broker-dealers and private investors, trading rules for the over-the-counter markets and operational rules for its member firms. The NASD, and the SEC in some instances, conducts examinations of member firms, investigates possible violations of the federal securities laws and its own rules, and conducts disciplinary proceedings involving member firms and associated individuals. The NASD administers qualification testing for all securities principals and registered representatives.

Registered broker-dealers and members of the NASD are subject to net capital requirements, including those of various federal and state regulatory agencies. The net capital of Janus’ broker-dealer has consistently met or exceeded all minimum requirements. Many of the non-U.S. securities exchanges and regulatory authorities also have imposed rules (and others may impose rules) relating to capital requirements applicable to Janus’ foreign subsidiaries. These rules, which specify minimum capital requirements, are designed to measure general financial integrity and liquidity, and require that a minimum amount of assets be kept in relatively liquid form.

Janus’ limited broker-dealer is also subject to regulation under state law. The federal securities laws prohibit states from imposing substantive requirements on broker-dealers that exceed those under federal

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law. This does not preclude the states from imposing registration requirements on broker-dealers that operate within their jurisdiction or from sanctioning these broker-dealers and their employees for engaging in misconduct.

ERISA

Janus subsidiaries are also subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and related regulations to the extent they are considered “fiduciaries” under ERISA with respect to some of their clients. ERISA, related provisions of the Code and regulations issued by the Department of Labor impose duties on persons who are fiduciaries under ERISA and prohibit some transactions involving the assets of each ERISA plan that is a client of a Janus subsidiary as well as some transactions by the fiduciaries (and several other related parties) to such plans.

International Regulations

Certain Janus subsidiaries are authorized to conduct investment business in international markets and are subject to foreign regulation. Globally, Janus is subject to the regulatory supervision and requirements of various agencies, including the Financial Services Authority in the United Kingdom, the Irish Financial Services Regulatory Authority, the Securities and Futures Commission of Hong Kong, the Financial Services Agency of Japan and Canadian Securities Commissions. These regulatory agencies have broad supervisory and disciplinary powers, including, among others, the power to temporarily or permanently revoke the authorization to carry on regulated business, the suspension of registered employees, censures and fines for both regulated businesses and their registered employees.

Other Regulatory Actions

In 2003, the Office of the New York Attorney General (“NYAG”) and the SEC announced an investigation of trading practices in the mutual fund industry in which Janus was mentioned as having allowed market timing trades that were in contradiction to policies stated in the prospectuses for certain Janus funds (“Mutual Fund Investigation”). In connection with regulatory settlements related to the Mutual Fund Investigation announced in 2004, Janus agreed to engage an independent third party to perform a review of Janus’ supervisory, compliance and other policies and procedures in 2005 and every other year thereafter. Any report issued as a part of these reviews must be provided to Janus and the Janus funds’ trustees.

EMPLOYEES

As of December 31, 2006, Janus had 1,105 full-time employees in the Investment Management segment and 413 full-time employees in the Printing and Fulfillment segment. No Janus employees are represented by a labor union.

AVAILABLE INFORMATION

Copies of Janus’ filings with the SEC can be obtained from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information can be obtained about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Janus makes available free of charge its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments thereto as soon as reasonably practical after such filing has been made with the SEC. Reports may be obtained through the Investor Relations section of Janus’

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website (http://ir.janus.com) or by contacting Janus at (303) 691-3905. The contents of Janus’ website are not incorporated herein for any purpose.

Janus’ Officer Code of Ethics for Principal Executive Officer and Senior Financial Officers (including its chief executive officer, chief financial officer and controller) (the “Officer Code”); Corporate Code of Business Conduct and Ethics for all employees; corporate governance guidelines; and the charters of key committees of the board of directors (including the Audit, Compensation and Nominating and Corporate Governance committees) are available on its website (http://ir.janus.com/governance.cfm), and printed copies are available to any shareholder upon request by calling Janus at (303) 691-3905. Any future amendments to or waivers of the Officer Code will be posted to the Investor Relations section of Janus’ website.

ADDITIONAL FINANCIAL INFORMATION

See additional financial information on segments and geographical areas in Part II, Item 8, Financial Statements and Supplementary Data, Note 19 — Segment and Geographic Information, of this Form 10-K.

ITEM 1A. RISK FACTORS

Janus’ revenues and profits are largely dependent on the value of assets under management.

Almost all of Janus’ revenues are dependent on the total value and composition of assets under management. Any decrease in the value or amount of assets under management will cause a decline in revenues and operating results. Assets under management may decline for various reasons, many of which are not under Janus’ control. For any period in which revenues decline, operating margin may decline by a greater proportion because of the high percentage of fixed costs.

Factors that could cause assets under management and revenues to decline include the following:

·Declines in the equity markets.   Janus’ assets under management are concentrated in the U.S. equity markets and, to a lesser extent, in the international equity markets. As such, declines in the equity markets or the market segments in which Janus’ investment products are concentrated will cause assets under management to decrease.

·Changes in interest rates and defaults.   In the case of money market and other fixed income investment products, which invest in high-quality short-term money market instruments, as well as other fixed income securities, the value of the assets may decline as a result of changes in interest rates, an issuer’s actual or perceived creditworthiness or an issuer’s ability to meet its obligations.

·Redemptions and other withdrawals.   Investors (in response to adverse market conditions, inconsistent investment performance, the pursuit of other investment opportunities, regulatory investigations, civil lawsuits or otherwise) may reduce their investments in specific Janus investment products or in the market segments in which Janus’ investment products are concentrated.

·Political and general economic risks.   The investment products managed by Janus may invest significant funds in international markets that are subject to risk of loss from political or diplomatic developments, government policies, civil unrest, currency fluctuations and changes in legislation related to foreign ownership. International markets, particularly emerging markets, are often smaller, may not have the liquidity of established markets, may lack established regulations and may experience significantly more volatility than established markets.

·A concentration in the growth equity discipline.   Although down from prior years, approximately 40% of Janus’ assets under management were concentrated in the growth equity investment discipline at December 31, 2006. During periods where the general investing public does not favor

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the growth equity discipline, Janus may experience a reduction of gross sales and an increase in gross redemptions.

·Relative investment performance.   Janus’ investment products are often judged on their performance as compared to the benchmark indices, peer groups or on an absolute return basis. Any period of prolonged underperformance of investment products may result in the loss of existing assets and impact our ability to attract new assets.

Janus’ revenues may fluctuate from variability in performance fees.

Certain INTECH institutional accounts are subject to performance fees which vary based on each account’s investment performance as compared to the benchmark index. In addition, certain mutual funds will become subject to performance fees in 2007, which will be determined based on each fund’s performance as compared to the benchmark index. The measurement period for mutual fund performance fees began in 2006 and the first performance adjustment will be recorded in the first quarter 2007.

Janus’ results are dependent on its ability to attract and retain key personnel.

The investment management business is highly dependent on the ability to attract, retain and motivate highly skilled, and often highly specialized, technical, executive, sales and management personnel. The market for investment and sales professionals is extremely competitive and is increasingly characterized by the frequent movement of portfolio managers, analysts and salespersons among different firms. Any cost reduction initiative, changes to management structure, shifts in corporate culture, changes to corporate governance authority, or adjustments or reductions to compensation (including, but not limited to, the implementation of the new portfolio managers’ compensation program that is tied to the Company’s revenue) may result in employee dissatisfaction and could impact Janus’ ability to retain key personnel. If Janus is unable to retain key personnel, it could have an adverse effect on Janus’ results of operations and financial condition. Additionally, portfolio managers and salespersons often maintain relationships with their clients. As such, the departure of a portfolio manager or salesperson may cause the loss of clients, which could have an adverse effect on Janus’ results of operations and financial condition.

Janus is dependent upon third-party distribution channels to access clients and potential clients.

Janus’ ability to market its investment products is significantly dependent on access to the client base of insurance companies, defined contribution plan administrators, securities firms, broker-dealers, banks and other distribution channels. These companies generally offer their clients various investment products in addition to, and in competition with, Janus. Further, the private account business uses referrals from financial planners, professional investment advisers and other professionals. Janus cannot be certain that it will continue to have access to these third-party distribution channels or have an opportunity to offer some or all of its investment products through these channels. The inability to access clients through third-party distribution channels could have a material adverse effect on Janus’ ability to maintain or increase assets under management, its financial condition, results of operations or business prospects.

INTECH’s investment process is highly dependent on key employees and proprietary software.

Over the last two years, INTECH has become a more significant part of Janus’ investment management business, representing 37% of total assets under management and 22% of total Investment Management segment revenue. INTECH’s investment process is based on complex and proprietary mathematical models, which seek to outperform various indices by capitalizing on market volatility while controlling trading costs and overall risk relative to the index. The maintenance of such models for current products and the development of new products are highly dependent on certain key INTECH employees. A succession plan is in place in the event these key employees were unable to perform their current duties or if they terminate employment; however, there is no guarantee that such plan will be successful. If this plan is not successful, or if the mathematical investment strategies fail to produce the intended results,

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INTECH may not be able to maintain the historical level of strong investment performance and clients may redeem assets, which could have an adverse effect on Janus’ results of operations and financial condition.

The regulatory environment in which Janus operates has changed and may continue to change.

Janus may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation or enforcement of existing laws and regulations. Compliance with these and other new reporting and operational requirements and regulations has increased significantly and may continue to increase the cost of operating mutual funds and related investment products, which could have an adverse effect on Janus’ results of operations and financial condition (See Item 1, Business — Regulation).

Janus is named as a defendant in class action lawsuits and other related litigation.

Janus, certain of the Janus funds, the Janus fund’s trustees and certain (past and present) officers of Janus are named as defendants in class action lawsuits and other related litigation (See Item 8, Note 16). These lawsuits seek unspecified compensatory and punitive damages. Janus is unable to estimate the range of potential losses that would be incurred if the plaintiffs in any of these actions were to prevail, or to determine the total potential effect that they may have on Janus’ results of operations, financial position and cash flows. Any settlement or judgment on the merits of these actions could have a material adverse effect on Janus’ liquidity, results of operations and financial condition.

Janus’ business is vulnerable to failures in support systems and customer service functions.

The ability to consistently and reliably obtain securities pricing information, process shareowner transactions and provide reports and other customer service to the shareowners of funds and other investment products managed by Janus is essential to Janus’ operations. Any delays or inaccuracies in obtaining pricing information, processing shareowner transactions or providing reports, and any inadequacies in other customer service could alienate customers and potentially give rise to claims against Janus. Janus’ customer service capabilities, as well as Janus’ ability to obtain prompt and accurate securities pricing information and to process shareowner transactions and reports, is dependent on communication and information systems and services provided by third-party vendors.

Although Janus has established disaster recovery plans, these systems could suffer failures or interruptions due to various natural or man-made causes, and the backup procedures and capabilities may not be adequate to avoid extended interruptions. Additionally, Janus places significant reliance on its automated customer service systems, thereby increasing the related risks if such systems were to fail. A failure of these systems could have an adverse effect on Janus’ results of operations and financial condition.

Janus’ business is dependent on investment advisory agreements that are subject to termination, non-renewal or reductions in fees.

Janus derives substantially all of its revenue and net income from investment advisory agreements with mutual funds and other investment products. The termination of, or failure to renew, one or more of these agreements or the reduction of the fee rates applicable to such agreements, could have a material adverse effect on revenues and profits. With respect to investment advisory agreements with mutual funds, these agreements may be terminated by either party with notice, or terminated in the event of an “assignment” (as defined in the 1940 Act), and must be approved and renewed annually by the independent members of each fund’s board of directors or trustees, or its shareowners, as required by law. In addition, the board of directors or trustees of certain funds and separate accounts generally may terminate these investment advisory agreements upon written notice for any reason and without penalty.

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The Printing and Fulfillment segment operates in a highly competitive industry.

Rapid Solutions Group (“RSG”), the operating business of the Printing and Fulfillment segment, operates in a highly competitive industry. Competitive factors include not only the speed and accuracy with which RSG can meet customer needs, but also the price and quality of such services. Many of RSG’s competitors have an advantage in the fact that they are larger, have greater resources and offer a wider range of services. If RSG is unsuccessful in this market, it may not be able to retain current clients or grow the business through the addition of new clients, which could have an adverse effect on Janus’ results of operations and financial condition.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Janus’ headquarters are located in Denver, Colorado. Janus’ Investment Management segment leases office space from non-affiliated companies for administrative, investment and shareowner servicing operations in Denver and Aurora, Colorado; New York, New York; Princeton, New Jersey; Palm Beach Gardens, Florida; London; Hong Kong; and Tokyo.

The Printing and Fulfillment segment leases office space and equipment from non-affiliated companies for administrative, warehousing and production operations in Melville, New York; Kansas City, Missouri; Chicago, Illinois; and Sacramento, California.

In the opinion of management, the space and equipment owned or leased by the Company are adequate for existing operating needs.

ITEM 3. LEGAL PROCEEDINGS

The information set forth in response to Item 3 of Regulation S-K under “Legal Proceedings” is incorporated by reference from Part II, Item 8, Financial Statements and Supplemental Data, Note 16 — Litigation, of this Annual Report on Form 10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the three-month period ended December 31, 2006.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Janus Common Stock

Janus’ common stock is traded on the New York Stock Exchange (“NYSE”) (symbol: JNS). The following table sets forth the high and low sale and closing prices as reported on the NYSE composite tape for each completed quarter since January 1, 2005.

	2006				2005
Quarter	High		Low		High		Low
First	$	23.28	$	18.24	$	16.96	$	13.42
Second	$	24.20	$	16.41	$	15.99	$	12.75
Third	$	20.14	$	15.50	$	16.10	$	13.87
Fourth	$	21.80	$	19.06	$	20.59	$	14.00

The following graph illustrates the cumulative total shareholder return (rounded to the nearest whole dollar) of our common stock over the five year period ending December 29, 2006, the last trading day of 2006, and compares it to the cumulative total return on the Standard & Poor’s (“S&P”) 500 Index and the S&P Diversified Financial Services Index. The comparison assumes a $100 investment on December 31, 2001, in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. This table is not intended to forecast future performance of our common stock.

On February 21, 2007, there were approximately 3,583 holders of record of Janus’ outstanding common stock.

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Janus declared an annual $0.04 per share dividend in the second quarter of 2006, 2005 and 2004, and anticipates paying an annual $0.04 per share dividend in 2007. The payment of cash dividends is within the discretion of Janus’ Board of Directors and will depend on many other factors, including, but not limited to, Janus’ results of operations, financial condition, capital requirements, restrictions imposed by financing arrangements, general business conditions and legal requirements.

Common Stock Repurchases

The following table presents total 2006 Janus common share repurchases by month:

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid Per Share (or Unit)			(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (End of Month)
January	599,193		$	20.90		450,000		$	114 million
February	3,154,321		$	21.83		3,043,000		$	48 million
March	2,679,586		$	22.19		2,221,600		$	499 million
April	1,721,464		$	20.47		1,657,900		$	465 million
May	3,758,953		$	19.37		3,676,700		$	394 million
June	81,791		$	17.92		-		$	394 million
July	397,100		$	16.56		397,100		$	387 million
August	4,003,200		$	17.00		4,003,200		$	319 million
September	3,285,100		$	19.32		3,285,100		$	256 million
October	1,224,000		$	20.40		1,224,000		$	231 million
November	2,616,955		$	20.04		2,616,955		$	178 million
December	2,392,862		$	21.11		2,253,262		$	131 million
Total	25,914,525		$	19.93		24,828,817

On March 6, 2006, Janus’ Board of Directors authorized the repurchase of up to an additional $500 million of Janus common stock with no expiration date, to take effect when the prior authorization was fully utilized, which occurred on March 17, 2006. On January 23, 2007, Janus’ Board of Directors authorized an additional $500 million stock repurchase program to take effect when the current authorization is utilized. During 2006, Janus repurchased 24.8 million shares at an aggregate cost of $492.9 million under the current and previous authorizations. The Company cautions that there are no assurances that any future repurchases will actually occur.

In addition to this program, for the year ended December 31, 2006, Janus repurchased 688,503 shares from employees as part of a share withholding program (established under Rule 10b5-1 of the Securities Exchange Act of 1934) to satisfy employees’ income tax liabilities attributable to the vesting of restricted stock awards, and 397,205 shares were surrendered to Janus related to the exercise of stock options.

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ITEM 6. SELECTED FINANCIAL DATA

The selected financial data below should be read in conjunction with Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-K and Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K.

	Year Ended December 31,
	2006			2005			2004			2003			2002
	(dollars in millions, except operating data and per share data)
Income Statement:
Revenues (1)	$	1,026.7		$	953.1		$	1,010.8		$	994.7		$	1,123.2
Operating expenses	806.8			779.0			807.3			677.9		(4)	766.8		(4)
Impairments, restructuring and mutual fund investigation charges and recoveries (2)	(3.1		)	16.2			91.6			83.7			59.4
Operating income	223.0			157.9			111.9			233.1			297.0
Interest expense	(32.3		)	(28.6		)	(38.4		)	(60.5		)	(57.5		)
Other, net	39.4			39.3			19.6			11.4			8.7
Loss on early extinguishment of debt	-			-			(55.5		)	-			-
Gain on disposition of DST common shares	-			-			228.0		(3)	631.3		(3)	-
Income tax (provision) benefit	(81.9		)	(67.9		)	(92.2		)	69.7		(3)	(227.2		)
Equity in earnings of unconsolidated affiliates	7.1			7.1			6.1			67.8		(3)	69.1		(3)
Minority interest	(21.7		)	(20.0		)	(10.0		)	(4.2		)	(3.0		)
Income from continuing operations	133.6			87.8			169.5			948.6			87.1
Discontinued operations	-			-			-			(5.9		)	(9.8		)
Net income	$	133.6		$	87.8		$	169.5		$	942.7		$	77.3
Earnings per Share — Basic
Income from continuing operations	$	0.66		$	0.40		$	0.73		$	4.17		$	0.40
Net income per share	$	0.66		$	0.40		$	0.73		$	4.14		$	0.35
Earnings per Share — Diluted
Income from continuing operations	$	0.66		$	0.40		$	0.73		$	4.14		$	0.40
Net income per share	$	0.66		$	0.40		$	0.73		$	4.11		$	0.35
Dividends Declared per Share	$	0.04		$	0.04		$	0.04		$	0.04		$	0.04
Balance Sheet:
Total assets	$	3,537.9		$	3,628.5		$	3,767.6		$	4,332.2		$	3,335.0
Long-term debt obligations	$	537.2		$	262.2		$	377.5		$	768.8		$	856.0
Other long-term liabilities	$	490.9		$	501.5		$	495.9		$	598.2		$	764.9
Operating Data (in billions):
Total assets under management	$	167.7		$	148.5		$	139.0		$	151.5		$	138.4
Average assets under management	$	156.7		$	135.2		$	137.8		$	144.1		$	162.8
Long-term net flows (5)	$	2.3		$	2.0		$	(20.6	)	$	(14.4	)	$	(16.0	)

(1)Revenues generally vary with average assets under management. However, in the years presented, revenue has been impacted by the Mutual Fund Investigation settlement, performance fees and the acquisition of Capital Group Partners, Inc. (“CGP”). As part of the Mutual Fund Investigation settlement, Janus reduced management fees on most of its mutual funds effective July 1, 2004; these fees can only be increased with the approval of the independent fund trustees and shareowners. The fee reduction totaled

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$11.7 million in the second half of 2004. The acquisition of INTECH in 2002 added performance fees which vary with relative investment performance and the amount of assets subject to such fees. The acquisition of CGP in 2003 created the Printing and Fulfillment segment which generates revenues independent of assets under management.

(2)Impairment charges are related to terminated investment management relationships with assigned intangible values and a goodwill write-down for the Printing and Fulfillment segment. Restructuring charges are related to severance and facility closures primarily in the Investment Management segment. Mutual fund investigation charges represent legal fees and settlement costs, net of insurance recoveries for such expense, directly related to the Mutual Fund Investigation.

(3)In December 2003, Janus exchanged 32.3 million common shares of DST Systems, Inc. (“DST”) for 100% of the stock of CGP, a corporation that included a printing and graphics design business with a value of $115.0 million and $999.3 million in cash, in a tax free transaction that resulted in a $631.3 million gain and the reversal of $176.4 million of associated deferred tax expense. Prior to this transaction, DST was accounted for as an equity method investment. In 2004, Janus sold its remaining DST common shares for a gain of $228.0 million in a taxable transaction.

(4)Through 2003, Janus utilized soft dollars to acquire access to third-party investment research databases and reports. Soft dollars are arrangements under which research products and services are obtained by an investment adviser from or through a broker-dealer in exchange for the direction by the adviser of client brokerage transactions to the broker-dealer. Beginning January 1, 2004, such products and services have been paid for by Janus and reflected as operating expenses. In accordance with recently released SEC guidance, and based upon the approval received from the independent fund trustees, Janus expects to use soft dollars to acquire appropriate research products in 2007.

(5)Money market flows have been excluded due to the short-term nature of such investments.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

Janus’ revenues are generally based upon a percentage of the market value of assets under management and are calculated as a percentage of the daily average asset balance in accordance with contractual agreements with the Company’s investment products.

Janus finished 2006 with assets under management of $167.7 billion, an increase of $19.2 billion from the end of 2005.

Janus’ investment product performance remained strong in 2006. As of December 31, 2006, 63%, 73% and 72% of the JIF funds were in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively.

During 2006, Janus launched long/short, global team-managed and asset allocation products managed by JCM as well as global and international products managed by INTECH.

Operating margins in Janus’ Investment Management segment improved by 3.2% to 25.5% in 2006, largely attributable to the increase in revenue compared to 2005.

In 2006, Janus repurchased $492.9 million of common stock at an average price of $19.85 per share, which reduced outstanding common shares by 10.4%.

In February 2006, the Internal Revenue Service accepted Janus’ non-taxable treatment of the 2003 exchange of 32.3 million shares of DST for 100% of the stock of Capital Group Partners, Inc., a corporation that includes RSG, and $999.3 million in cash at the time of the exchange.

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INVESTMENT MANAGEMENT SEGMENT

Assets Under Management and Flows

The following table presents the components of Janus’ assets under management (in billions):

	Year Ended December 31,
	2006			2005
Beginning of period assets	$	148.5		$	139.0
Long-term sales
Janus ex-INTECH	19.0			14.1
INTECH	18.5			17.7
Long-term redemptions
Janus ex-INTECH	(28.7		)	(28.2		)
INTECH	(6.5		)	(1.6		)
Long-term net flows *
Janus ex-INTECH	(9.7		)	(14.1		)
INTECH	12.0			16.1
Total long-term net flows	2.3			2.0
Net money market flows	-			(3.2		)
Dispositions	-			(0.2		)
Market / fund performance	16.9			10.9
End of period assets	$	167.7		$	148.5
Average assets under management	$	156.7		$	135.2

*Excludes money market flows. Sales and redemptions of money market funds are presented net on a separate line due to the short-term nature of the investments.

2006

Janus’ average assets under management totaled $156.7 billion during 2006, an increase of $21.5 billion, or 15.9%, from $135.2 billion in 2005, driven primarily by positive market/fund performance of $16.9 billion combined with long-term net inflows of $2.3 billion.

Janus ex-INTECH’s long-term net outflows improved $4.4 billion to $9.7 billion in 2006, which included over $4.0 billion of legacy subadvised account redemptions. Although still negative, the Company is encouraged by this improving trend, which Janus believes is driven by strong investment performance and the significant investment in Janus’ intermediary and institutional sales channels. Janus is focused on achieving positive long-term net flows for Janus ex-INTECH products by the end of 2007.

INTECH’s net long-term inflows totaled $12.0 billion in 2006, compared to $16.1 billion in 2005. INTECH’s risk-managed investment products have been highly successful winning mandates from institutional investors over the past several years. There can be no assurance that this level of success will continue.

2005

Janus’ assets under management totaled $148.5 billion at December 31, 2005, an increase of $9.5 billion, or 6.8%, from $139.0 billion at the end of 2004 driven by positive market/fund performance of $10.9 billion combined with long-term net inflows of $2.0 billion. As the market and fund performance increase generally occurred during the last half of the year, average assets in 2005 declined 1.9% to $135.2 billion from $137.8 billion in 2004.

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Janus’ long-term net flows improved from $20.6 billion of net outflows in 2004 to $2.0 billion of net inflows in 2005, an increase of $22.6 billion. This improvement was a result of the continuing success of the INTECH risk-managed products and a significant improvement in long-term net outflows from products managed by Janus ex-INTECH.

Long-term net outflows of Janus ex-INTECH products totaled $14.1 billion in 2005 compared to $29.2 billion in 2004. INTECH finished 2005 with $44.7 billion in assets under management, an increase of $18.9 billion, or 73%, from the end of 2004. Net inflows increased to $16.1 billion in 2005 compared to net inflows of $8.6 billion in 2004.

Revenues and Expenses

Revenues are generally based upon a percentage of the market value of assets under management and are calculated as a percentage of the daily average asset balance in accordance with contractual agreements with the Company’s investment products. Certain INTECH institutional accounts (and beginning in 2007, certain mutual funds) are also subject to performance fees which vary based on the amount of assets subject to such fees and the relative performance of each account. Assets under management primarily consist of domestic and international equity and debt securities. Accordingly, fluctuations in the financial markets, relative investment performance, sales and redemptions of investment products, and changes in the composition of assets under management are all factors that have a direct effect on Janus’ operating results. The following graph depicts the direct relationship between average assets under management and investment management revenues:

Excluding distribution expenses, Janus’ operating expense structure is comprised of costs which generally do not vary directly with average assets under management or revenues. As a result, operating margins

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may fluctuate at a higher percentage than changes in revenues. Beginning in January 2007, a new investment team compensation plan went into effect that continues to be driven primarily by individual long-term investment performance, but also ties the aggregate level of compensation to investment management fee revenue. Thus, the Company expects a higher proportion of variable expenses in future years.

Investment Management Results

	Year ended December 31,
	2006			2005			2004
	(Dollars in Millions, Except as Noted)
Revenues:
Investment management fees	$	750.2		$	673.1		$	722.2
Performance fees	14.9			26.8			11.6
Shareowner servicing fees and other	170.7			168.4			188.0
Total	935.8			868.3			921.8
Operating Expenses:
Employee compensation and benefits	315.2			299.5			249.3
Long-term incentive compensation	82.7			75.1			110.5
Marketing and advertising	28.3			30.4			28.6
Distribution	110.2			102.9			125.1
Depreciation and amortization	32.0			35.9			48.9
General, administrative and occupancy	131.6			135.1			139.4
Restructuring and impairments	11.0			5.5			24.4
Mutual fund investigation charges, net of recoveries	(14.1		)	(9.3		)	65.0
Total	696.9			675.1			791.2
Operating Income	238.9			193.2			130.6
Operating margin	25.5		%	22.3		%	14.2		%
Interest expense	(32.3		)	(28.6		)	(38.4		)
Other income, net	37.0			37.9			18.9
Loss on early extinguishment of debt	-			-			(55.5		)
Gain on disposition of DST common shares	-			-			228.0
Income before taxes, equity earnings and minority interest	243.6			202.5			283.6
Income tax provision	(90.1		)	(72.8		)	(99.4		)
Equity in earnings of unconsolidated affiliate	7.1			7.1			6.1
Minority interest in consolidated earnings	(21.7		)	(20.0		)	(10.0		)
Net Income	$	138.9		$	116.8		$	180.3
Average Assets Under Management (in billions)	$	156.7		$	135.2		$	137.8

2006 Compared to 2005

Investment management fees increased $77.1 million, or 11.5%, from a 15.9% increase in average assets under management, partially offset by the impact of the continuing product mix shift toward lower yielding INTECH risk-managed products. INTECH products are largely sold through the institutional channel which generally has lower management fees than products sold through the intermediary or retail channels.

Performance fees are earned on certain INTECH institutional accounts and are based on the performance of each account as compared to the established benchmark and are recognized at the end of the

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performance period, if the established performance criteria are achieved. Performance fee revenue decreased $11.9 million, or 44.4%, primarily as a result of underperformance in 2006 combined with fewer assets subject to a performance-based fee structure.

Beginning in the first quarter 2007, certain mutual funds will convert to a performance-based fee structure, representing $23.5 billion, or 14.0% of total assets under management at December 31, 2006. Mutual fund performance fees will be calculated monthly as a positive or negative adjustment of up to 15 basis points to the base management fee, depending on the relative performance as compared to the benchmark index. The measurement period will begin as a trailing 12-month period and each subsequent month will be added to each successive measurement period until a 36-month period is achieved in the first quarter 2009. At that point, the measurement period will become a rolling 36-month period.

Shareowner servicing fees and other revenue remained consistent year-over-year as an increase in transfer agent servicing fees was partially offset by a decline in distribution revenue. Transfer agent servicing fees are based on a percentage of JIF assets under management which increased 4.9% over the prior year. Distribution revenue is primarily based on average assets in certain share classes of Janus’ offshore fund series, which declined 26.9% over the prior year.

Employee compensation and benefits increased $15.7 million as a result of increases in base and incentive compensation for investment and non-investment personnel, partially offset by $10.6 million of lower executive severance charges. Base compensation increased $4.5 million from normal increases given at the beginning of the year combined with a 7% increase in the number of employees. Incentive compensation for investment personnel increased $5.4 million primarily from strong investment performance. Incentive compensation for non-investment personnel (sales commissions and firm-wide bonuses) increased $12.5 million from higher long-term product sales, more distribution personnel and stronger corporate results.

Long-term incentive compensation increased $7.6 million as a result of the annual grant made in February 2006 combined with the accelerated vesting of the 2005 and 2006 awards based on 2006 financial performance, partially offset by the impact of revising the forfeiture estimate. During 2006, Janus revised its estimate for forfeitures as a result of higher than expected employee departures, which resulted in a $5.0 million decrease to long-term incentive compensation in 2006.

Future long-term incentive compensation will decline in 2007 as a result of the final vesting of a restricted stock grant made in 2002, which totaled $26.7 million during 2006 and will be $6.4 million in 2007. This impact will be partially offset by the February 2007 annual grant totaling $61.0 million, which will be recognized over a four year period, subject to accelerated vesting if certain financial performance criteria are achieved.

Marketing and advertising expenses declined slightly in 2006 as a result of a decrease in advertising expenditures partially offset by mutual fund proxy costs of $4.8 million from proposed fund changes. Janus anticipates spending an incremental $10.0 million in advertising in 2007 to continue promoting awareness of the Janus brand.

Depreciation and amortization decreased primarily as a result an $8.4 million decline in amortization of deferred commissions from lower sales of B shares of the Janus Capital Funds Plc in Europe and Asia, partially offset by an increase in amortization of intangibles related to the February 2006 acquisition of an additional 5% interest in INTECH. The acquisition resulted in the recognition of $32.5 million of intangible assets related to customer contracts and will be amortized over a period of 12 years.

Impairment charges incurred in 2006 represent the loss of certain Janus subadvised relationships. Janus recognizes an impairment charge equal to the unamortized value of the associated intangible asset when formal notification of termination is received.

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Mutual fund investigation recoveries represent insurance recoveries for legal fees incurred as a result of the Mutual Fund Investigation. Future insurance recoveries are possible but are not expected to be material.

2005 Compared to 2004

Investment management fees declined $33.9 million, or 4.6%, as a result of a 1.9% decline in average assets under management, the July 1, 2004, settlement-mandated reduction in management fees and a higher proportion of lower yielding INTECH risk-managed products. As part of the settlement with SEC and NYAG in connection with the Mutual Fund Investigation, Janus agreed to reduce management fees on most of its mutual funds effective July 1, 2004. Such fees can only be increased with the approval of the independent fund trustees and fund shareholders. These declines were partially offset by an increase in performance fees from certain INTECH products of $15.2 million.

Shareowner servicing fees and other revenue declined $19.6 million to $168.4 million, due primarily to decreases in money market administration fees and transfer agent servicing fees. Money market administration fees, which are calculated based on average assets under management in Janus’ money market funds, declined $4.6 million, or 25.5%, as a direct result of a similar decline in average money market assets under management. Transfer agent fees declined $12.9 million, or 9.4%, due to the same percentage decrease in average JIF assets.

Employee compensation and benefits increased $50.2 million over 2004 due to increases in incentive compensation for both investment and non-investment personnel, partially offset by a decrease in executive severance charges.

Investment team incentive compensation increased $33.1 million due to the effect of a revised compensation plan combined with strong one- and three-year relative investment performance. Effective January 1, 2005, all of Janus’ Denver-based portfolio managers agreed to a revised compensation plan that is primarily tied to one-and three-year relative fund performance, with greater emphasis on three-year results. Effective January 1, 2007, this plan was replaced with a new plan discussed above.

Incentive compensation for non-investment personnel increased $25.5 million as a result of higher sales commissions, primarily from the sales growth at INTECH, combined with increased bonuses at INTECH driven by their 2005 financial performance. The increases in incentive compensation were partially offset by a $15.9 million decrease in severance charges. During 2005, $13.1 million in severance charges were incurred as a result of the separation of two executives and other employees compared to $29.0 million during 2004 related to several senior executives and a portfolio manager.

Long-term incentive compensation declined $35.4 million primarily as a result of a prior stock award becoming fully vested at the end of 2004, a decline in amortization from former employees’ forfeitures of unvested stock-based awards and a vested stock award in the amount of $15.0 million recorded in 2004. In consideration of the portfolio managers’ early adoption of the new compensation plan to replace prior contractual arrangements, the 2004 annual long-term incentive award to portfolio managers, which was scheduled to be granted in early 2005, was awarded in vested Janus common stock on December 31, 2004. This decrease was partially offset by awards granted during 2005. Janus generally grants long-term incentive awards annually based on the prior year’s results of operations.

Distribution expense decreased 17.7%, or $22.2 million, as a result of a 16.3% decline in assets under management subject to third- party concessions. Distribution fees are calculated based on a contractual percentage of the market value of assets under management distributed through third-party intermediaries primarily within the retail and intermediary channels.

Depreciation and amortization expense decreased $13.0 million due to a decline in the amortization of deferred commissions of approximately $6.3 million from lower sales of B shares of the Janus Capital

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Funds Plc in Europe and Asia and a decline in depreciation associated with certain fixed assets becoming fully depreciated. Janus generally amortizes commissions paid to financial intermediaries related to the sale of certain mutual fund shares over four years.

Mutual fund investigation charges for 2005 represent insurance recoveries of $14.4 million, net of $5.1 million of expenses directly associated with the SEC and NYAG settlement orders and ongoing civil litigation (See Item 8, Note 16).

Interest expense declined $9.8 million in 2005 as a result of a debt restructuring and the repayment of notes in 2004.

The increase in other income is primarily attributable to gains of $13.7 million recorded from the sale of certain investments in advised funds.

Minority interest, which represents the share of income attributable to the INTECH minority owners, increased $10.0 million due to higher INTECH earnings.

Janus’ effective tax rate in 2005 was slightly below the combined federal and state rates due to the reversal of a $5.0 million tax contingency.

PRINTING AND FULFILLMENT SEGMENT

RSG, the operating business of the Printing and Fulfillment segment, provides clients with digital and offset printing and fulfillment services. The digital operation focuses on providing clients with communication solutions using leading-edge print-on-demand technology and software applications that support the process of improving the effectiveness of customer communication through personalization and customization. The offset printing operations provide customers with full-service graphic and design solutions through prepress services and high-speed, high-quality offset printing, including direct marketing packages, brochures, preprinted base stock and collateral pieces.

Results of Operations

	Year Ended December 31,
	2006			2005			2004
	(in millions)
Printing and fulfillment revenue	$	71.8		$	69.4		$	70.6
Out-of-pocket reimbursements	19.1			15.4			18.4
Total revenue	90.9			84.8			89.0
Cost of printing and fulfillment	71.5			67.5			69.2
Out-of-pocket expenses	19.1			15.4			18.4
Selling, general and administrative expenses	8.3			9.3			10.2
Depreciation and amortization	7.9			7.9			7.7
Restructuring and impairments	-			20.0			2.2
Total operating expenses	106.8			120.1			107.7
Operating loss	(15.9		)	(35.3		)	(18.7		)
Other income, net	2.4			1.4			0.7
Tax benefit	8.2			4.9			7.2
Net loss	$	(5.3	)	$	(29.0	)	$	(10.8	)

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Print volumes and revenue from fulfillment, digital printing and offset printing were comparable to the prior years. Operating expenses declined in 2006 primarily as a result of a $20.0 million goodwill impairment charge incurred in 2005, partially offset by higher cost of printing and fulfillment in 2006 from increased outsourced production work. Selling, general and administrative expenses have steadily declined due to cost reduction measures and the closure of a nonstrategic facility at the end of 2004, which resulted in a $2.2 million charge in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

A summary of cash flow data for the years ended December 31, is as follows (in millions):

	2006			2005			2004
Cash flows provided by (used for):
Operating activities	$	301.8		$	273.2		$	(10.4	)
Investing activities	45.8			64.8			(45.8		)
Financing activities	(340.5		)	(312.5		)	(639.5		)
Net increase (decrease) in cash and cash equivalents	7.1			25.5			(695.7		)
Balance at beginning of year	552.6			527.1			1,222.8
Balance at end of year	$	559.7		$	552.6		$	527.1

2006 Cash Flows

Janus’ cash flows from operations historically have been positive and sufficient to fund ordinary operations. Operating cash flows in 2006 increased $28.6 million to $301.8 million. Fluctuations in operating cash flows are attributable to changes in net income and working capital items.

Net cash generated from investing activities in 2006 includes proceeds from the maturity and sale of marketable securities, partially offset by a $90.0 million acquisition of an additional 5% interest in INTECH and capital expenditures.

Cash used for financing activities in 2006 consists primarily of common stock repurchases of $516.4 million and repayment of $113.1 million of long-term debt, partially offset by the September 2006 $275.0 million debt issuance.

2005 Cash Flows

Operating cash flows in 2005 increased $283.6 million to $273.2 million. Cash used for operations in 2004 include payments related to the regulatory settlement and income taxes for the sale of DST shares.

Net cash generated from investing activities in 2005 represents proceeds from the maturity and sale of marketable securities, partially offset by capital expenditures.

Cash used for financing activities in 2005 consists primarily of common stock repurchases of $310.4 million and distributions to the minority owners of INTECH.

2004 Cash Flows

The decline in cash from operations in 2004 was driven by payments related to the regulatory settlement and an income tax payment related to the sale of 7.4 million shares of DST in 2004.

Cash used for investing activities in 2004 consists of the purchase of marketable securities and capital expenditures. The use of cash for investing activities was partially offset by the disposition of DST common shares and the sale of certain investments in advised funds.

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Cash used for financing activities in 2004 includes the repayment of $529.0 million of long-term debt and common stock repurchases of $99.7 million.

Short-Term Liquidity and Capital Requirements

Janus believes cash from operations should be sufficient to satisfy its short-term capital requirements. Expected short-term uses of cash include ordinary operations, ongoing common stock repurchases, capital expenditures, income tax payments, and interest and principal payments on outstanding debt.

Common Stock Repurchase Program

On July 20, 2004, the Janus Board of Directors authorized the expenditure of up to $500 million to repurchase shares of Janus common stock, expiring on December 31, 2006. This authorization was fully utilized on March 17, 2006. On March 6, 2006, the Janus Board of Directors authorized a new $500 million stock repurchase program to take effect when the previous authorization is utilized. During 2006 and 2005, the Company repurchased 24.8 million shares for $492.9 million and 20.3 million shares for $292.6 million, respectively, under these authorizations. As of December 31, 2006, $130.9 million is available under the current authorization. On January 23, 2007, the Janus Board of Directors authorized an additional $500 million stock repurchase program to begin when the current authorization is fully utilized.

Long-Term Liquidity and Capital Requirements

Expected long-term commitments at December 31, 2006, include the following (in millions):

	Current			2 to 3 Years			4 to 5 Years			After 5 Years
Debt		$	-		$	22.0		$	275.0		$	240.2
Interest payments		37.8			74.0			66.0			274.4
Operating leases		21.1			37.7			30.4			92.2
Total		$	58.9		$	133.7		$	371.4		$	606.8

The information presented above does not include operating related liabilities or capital expenditures that will be committed to in the normal course of business. Janus expects to fund these obligations from cash generated from normal operations.

Interest payments are determined assuming that all debt is held to maturity.

Operating lease obligations are presented net of estimated sublease income of $4.9 million.

Janus has the right to purchase an additional 14% ownership in Perkins, Wolf, McDonnell and Company, LLC each year at a price equal to the fair market value on each respective call date. The above schedule does not include any estimated payments related to these call rights as Janus is not obligated to exercise its call and the price is unknown at this time.

Certain options to purchase INTECH interests become exercisable when either of the INTECH founders’ employment is terminated. If an INTECH founder terminates his employment for good reason, such founder has the option, ending in 2012, to require the Company to purchase his interests for cash at fair market value, as calculated using a valuation of 18.6 times INTECH’s adjusted net income for the prior four calendar quarters. In the event a founder’s employment is terminated by INTECH for cause or poor performance, or the founder terminates his employment voluntarily without good reason, the Company has the option for three years to purchase such founder’s interest for cash or Janus common stock, using the same fair market value calculation of 18.6 times INTECH’s adjusted net income for the prior four calendar quarters. In the event a founder’s employment is terminated by INTECH (other than for cause, disability or poor performance), such founder has the option, ending in 2012, to require the Company to

23

purchase his interests for cash at a price per share equal to either (i) the fair market value at the time of the option exercise as determined by Janus, or (ii) if the founder disagrees with valuation under (i), then 103% of the fair market value at the time of exercise determined by an investment bank or two investment banks selected by Janus and the applicable INTECH founder. In the event of death or disability, the Company has the option for 90 days to purchase such founder’s interest for cash, using the fair market value calculation of 18.6 times INTECH’s adjusted net income for the prior four calendar quarters.

The long-term commitments schedule above does not include any estimate for the purchase of the outstanding INTECH interests due to the uncertainty of this obligation and the price at which it may occur. INTECH interests in the aggregate would currently be valued at approximately $210.0 million, using the adjusted net income for four calendar quarters methodology. If an INTECH founder terminates his employment under certain circumstances, there may be a dispute as to the correct valuation amount due to ambiguous language in the underlying agreements governing the valuation methodology. Thus, the estimated value noted above could increase or decrease depending on the resolution of such dispute and the date on which the applicable sale or purchase option is exercised.

Other Sources of Liquidity

Credit Facility

On October 19, 2005, the Company entered into a $200 million Three-Year Competitive Advance and Revolving Credit Facility Agreement (the “Facility”) with a syndicate of banks. The facility contains a number of financial covenants such as a specified financing leverage ratio, minimum net worth and interest coverage ratio. At December 31, 2006, Janus was in compliance with all covenants and there were no borrowings under the Credit Facility.

Shelf Registration

The Company has effective a Shelf Registration Statement with the SEC (“Shelf Registration”), under which Janus could issue up to $800 million in aggregate issue price of Janus’ common stock, preferred stock and debt securities. At December 31, 2006, $325 million of securities were available for issuance under the Shelf Registration, subject to the covenant limitations pursuant to the Facility. The Shelf Registration expires on December 31, 2008.

Debt

On September 18, 2006, Janus issued $275.0 million of 5.875% senior notes that are due September 15, 2011, and are not callable by Janus or redeemable at the option of the holders prior to maturity. Interest will be paid semiannually on March 15 and September 15. Of the total proceeds, $113.1 million was used to repay Janus’ 7.000% senior notes which matured on November 1, 2006. The remaining balance of the proceeds may be used to call all or a portion of the 7.875% public income notes or for general corporate purposes. The 7.875% public income notes are callable on or after April 5, 2007.

On May 2, 2006, Janus entered into a pay-fixed receive-variable interest rate swap (the “Swap”) in anticipation of a $272.0 million fixed rate debt issuance with a mandatory termination date of May 4, 2007. The Swap was designated as a cash flow hedge and was designed to hedge the variability in interest payments on the anticipated fixed rate debt as a result of changes in the interest rate between inception of the Swap and the issuance of the debt. On September 18, 2006, the Swap was terminated and Janus incurred a loss of $4.4 million, or $2.7 million net of tax, which has been recorded as a component of other comprehensive income on the consolidated balance sheet and will be amortized to interest expense over the life of the 5.875% senior notes.

24

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Janus’ consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

Janus continually evaluates the accounting policies and estimates used to prepare the consolidated financial statements. In general, management’s estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under current facts and circumstances. Actual results could differ from those estimates made by management. Janus’ critical accounting policies and estimates include accounting for income taxes, accounting for intangible assets and goodwill, and equity compensation.

Accounting for Income Taxes

Significant management judgment is required in developing Janus’ provision for income taxes, including the valuation allowances that might be required against deferred tax assets and the evaluation of various income tax contingencies.

Valuation Allowance

Janus has not recorded a valuation allowance on its deferred tax assets as of December 31, 2006, based on management’s belief that operating income will more likely than not be sufficient to realize the benefit of the Company’s deferred tax assets over time. In the event that actual results differ from these estimates, or if Janus’ historical trend of positive operating income changes, Janus may be required to record a valuation allowance on deferred tax assets, which could have a material adverse effect on Janus’ consolidated financial condition and results of operations.

Income Tax Contingencies

At December 31, 2006, Janus has an accrued liability of $59.5 million related to tax contingencies for issues raised by various taxing authorities. At any one time, tax returns filed in previous years are subject to audit by various taxing authorities. As a result of these audits and negotiations, additional tax assessments may be proposed or tax contingencies recorded in prior years may be reversed. On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (“FIN 48”)”, which sets forth a specific recognition threshold and measurement method for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. The effective date of FIN 48 is the Company’s fiscal year beginning January 1, 2007. Janus has not yet completed its assessment of the impact of FIN 48.

Accounting for Intangible Assets and Goodwill

Intangibles assets and goodwill comprise $2.5 billion, or 69%, of total assets at December 31, 2006. Goodwill and intangible assets require significant management estimates and judgment, including the valuation and life determination in connection with the initial purchase price allocation and the ongoing evaluation for impairment.

In connection with the purchase price allocation of acquisitions, Janus will rely on in-house financial expertise or utilize a third-party expert, if considered necessary. Valuations generally rely on

25

management’s estimates and judgments as to growth rates and operating margins over a range of possible assumptions for various products, distribution channels and business strategies.

In addition, Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets,” requires that goodwill and indefinite-lived intangibles be tested at least annually for impairment. Goodwill is tested by comparing the fair value of the “reporting unit” associated with the goodwill to the reporting unit’s recorded value. If the fair value of the reporting unit is less than its recorded value, it would generally indicate an impairment of goodwill. Indefinite-lived intangible assets are tested for impairment annually by comparing its fair value to the carrying amount of the asset. For purposes of testing goodwill for impairment, the Investment Management segment and the Printing and Fulfillment segment have been identified as reporting units.

To complete the annual test for potential impairment of intangible assets and goodwill, Janus considers the following: performance compared to peers; significant changes in the underlying business and products of the reporting units; material and ongoing negative industry or economic trends; and/or other factors specific to each asset or reporting unit. Due to the significance of the identified intangible assets and goodwill to Janus’ consolidated balance sheet, any impairment charge could have a material adverse effect on the Company’s financial condition and results of operations. At December 31, 2006, the majority of Janus’ goodwill and intangibles related to the purchase of 16% of JCM from minority shareholders in 2001. The goodwill and indefinite-lived intangibles created by the minority JCM purchases are not highly sensitive to impairment as the annual impairment test for goodwill compares the total fair value of the reporting unit, or 100% of JCM, to the net book value of the reporting unit and the total fair value of the intangibles to the carrying value of the intangibles. However, indefinite-lived intangibles include mutual fund advisory contracts, which would be subject to impairment if the mutual fund contract were terminated or not renewed.

Definite-lived intangible assets are tested only when there are indications of impairment. One component of Janus’ definite-lived intangible assets is subadvised contracts. Each subadvised contact has a specific allocation of value and therefore, the loss of an individual contract will cause an impairment charge. Janus recorded impairments of $11.0 million and $14.2 million in 2006 and 2004, respectively, associated with the termination of subadvised contracts. There were no impairments of subadvised contracts in 2005. At December 31, 2006, the net book value of intangible assets related to subadvised contracts was $14.4 million.

In accordance with the annual testing requirement of SFAS No. 142, Janus tested indefinite-lived intangibles and goodwill for potential impairment and an impairment charge of $20.0 million was recorded in 2005 to reduce goodwill associated with RSG. There were no goodwill impairments in 2006.

Equity Compensation

Janus uses the Black-Scholes option pricing model to estimate the fair value of stock options for recording compensation expense. The Black-Scholes model requires management to estimate certain variables, some of which may not be supported by historical activity because of Janus’ short history as a publicly traded company. Such estimates include the lives of options from grant date to exercise date, the volatility of the underlying shares and future dividend rates. The two most significant estimates in the Black-Scholes model are volatility and expected life. An increase in the volatility rate increases the value of stock options and a decrease causes a decline in value. Janus estimated expected volatility using an average of Janus’ historical volatility and industry and market averages, as appropriate. For expected lives, an increase in the expected life of an option increases its value. Janus factored in employee termination rates combined with vesting periods to determine the average expected life used in the model.

SFAS No. 123R (Revised 2004) “Share-Based Payment” (“SFAS No. 123R”) requires that equity compensation be recorded net of estimated forfeitures over the vesting term. Determining this estimate

26

requires significant judgment on the number of actual awards that will ultimately vest over the term of the award. The estimate is reviewed quarterly and any change in actual forfeitures in comparison to estimates may cause an increase or decrease in the ultimate expense recognized in that period. During the third quarter 2006, the forfeiture estimate was adjusted to reflect higher than expected employee departures resulting in a $5.0 million decrease to long-term incentive compensation expense.

Recent Accounting Pronouncements

Information regarding accounting pronouncements that have been issued but not yet adopted by the Company is incorporated by reference from Part II, Item 8, Financial Statements and Supplemental Data, Note 3 — Recent Accounting Pronouncements, of this Annual Report on Form 10-K.

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following information, together with information included in other parts of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, describes the key aspects of certain financial instruments that have market risk to Janus.

Investment Management Fees

Revenues are generally based upon a percentage of the market value of assets under management and are calculated as a percentage of the daily average asset balance in accordance with contractual agreements with the Company’s investment products. Assets under management primarily include domestic and international equity and debt securities. Accordingly, fluctuations in the financial markets have a direct effect on Janus’ operating results. In addition, fluctuations in interest rates may affect the value of assets under management in the money market and other fixed income investment products. The graph in Item 7, Management Discussion and Analysis of Financial Condition and Results of Operations — Investment Management Segment presents the direct relationship between revenue and average assets under management.

Performance Fees

Performance fee revenue is primarily derived from certain institutional accounts within the risk-managed discipline. Such fees specified in client contracts are based on the performance of the client account as compared to the established benchmark over a specified period of time. Performance fees are recognized at the end of the contractual period if the stated performance criteria are achieved. During 2006, 2005 and 2004, $14.9 million, $26.8 million and $11.6 million, respectively, in performance fees were recognized. At December 31, 2006, $8.6 billion of institutional assets were subject to performance fees.

On December 29, 2005, Janus mutual fund shareholders approved a performance-based fee structure for 13 Janus funds, representing $23.5 billion of assets under management at December 31, 2006. Beginning in the first quarter 2007, the investment management fee paid by each fund will be the base management fee plus or minus a performance fee adjustment. The performance fee adjustment generally will be up to 15 basis points, calculated using each fund’s daily net average assets over the performance period. The measurement period will begin as a trailing 12-month period and each subsequent month will be added to each successive measurement period until a 36-month period is achieved in the first quarter 2009. At that point, the measurement period will become a rolling 36-month period.

Available-for-Sale Securities

At December 31, 2006, investments in advised funds totaled $91.9 million. These securities are carried in Janus’ consolidated financial statements at fair market value and are subject to market fluctuations and the performance of the underlying investment products.

27

Held-to-Maturity Securities

At December 31, 2006, Janus’ investments totaled $69.8 million in U.S. government and agency debt and $11.4 million in highly rated corporate debt. Held-to-maturity securities are stated at cost with corresponding premiums or discounts amortized over the life of the investment to other income. These securities are subject to a decline or impairment in value if interest rates increase or if a corporate issuer defaults on payment at maturity. Janus does not consider these risks to be significant as it intends to hold the securities to maturity and the majority of these securities are invested in government guaranteed debt or highly rated corporate debt.

Foreign Exchange Sensitivity

Janus has subsidiaries located in the United Kingdom and Hong Kong which conduct business in other foreign countries. With respect to these operations, matters arise as to financial accounting and reporting for foreign currency transactions and for translating foreign currency financial statements into U.S. dollars. The exposure to foreign currency fluctuations is not material as the majority of the revenue earned by international subsidiaries is denominated in U.S. dollars.

Interest Rate Risk

Janus is not exposed to interest rate risk for its interest payments as all of Janus’ outstanding debt has fixed interest rate terms.

28

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

	Page
Financial Statements:
Reports of Independent Registered Public Accounting Firm — Deloitte & Touche LLP	30
Management Report on Internal Control over Financial Reporting	32
Consolidated Balance Sheets as of December 31, 2006 and 2005	33
Consolidated Statements of Income for the Three Years Ended December 31, 2006	34
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2006	35
Consolidated Statements of Changes in Stockholders’ Equity for the Three Years Ended December 31, 2006	36
Notes to Consolidated Financial Statements	37
Financial Statement Schedules:
All schedules are omitted because they are not applicable or are insignificant, or the required information is shown in the consolidated financial statements or notes thereto.

29

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Janus Capital Group Inc.

We have audited the accompanying consolidated balance sheets of Janus Capital Group Inc. and subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2007 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Denver, CO
February 26, 2007

30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Janus Capital Group Inc.

We have audited management’s assessment, included in the accompanying Management Report on Internal Control over Financial Reporting, that Janus Capital Group Inc. and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated financial statements as of and for the year ended December 31, 2006 of the Company and our report dated February 26, 2007 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

Denver, CO
February 26, 2007

31

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Janus Capital Group Inc. (“Janus”) management is responsible for establishing and maintaining adequate internal control over Janus’ financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Janus’ internal control system was designed to provide reasonable assurance to Janus’ management and board of directors regarding the preparation and fair presentation of published financial statements. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

Janus has assessed the effectiveness of Janus’ internal controls over financial reporting as of December 31, 2006. In making this assessment, Janus used the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.

Based on the assessment using those criteria, Janus believes that, as of December 31, 2006, internal control over financial reporting is effective.

Janus’ independent registered public accounting firm audited the financial statements included in the Annual Report on Form 10-K and have issued an audit report on management’s assessment of Janus’ internal control over financial reporting. This report appears on page 31 of this Annual Report on Form 10-K.

February 26, 2007

32

JANUS CAPITAL GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions, Except Share Data)

	December 31,
	2006		2005
ASSETS
Current assets:
Cash and cash equivalents	$	559.7	$	552.6
Marketable securities	173.1		252.2
Accounts receivable	141.6		145.6
Income taxes receivable	5.4		19.0
Other current assets	45.3		34.3
Total current assets	925.1		1,003.7
Marketable securities	-		81.9
Other assets	99.4		86.6
Property and equipment, net	60.3		64.7
Intangibles, net	1,304.8		1,298.5
Goodwill	1,148.3		1,093.1
Total assets	$	3,537.9	$	3,628.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3.1	$	5.4
Accrued compensation and benefits	105.6		89.6
Current portion of long-term debt	-		114.1
Other accrued liabilities	76.9		58.7
Total current liabilities	185.6		267.8
Other liabilities:
Long-term debt	537.2		262.2
Deferred income taxes	399.3		424.1
Other liabilities	91.6		77.4
Total liabilities	1,213.7		1,031.5
Commitments and contingencies
Minority interest in consolidated subsidiary	17.8		15.8
STOCKHOLDERS’ EQUITY
Preferred stock ($1.00 par, 10,000,000 shares authorized, none issued)	-		-
Common stock ($.01 par, 1,000,000,000 shares authorized; 244,593,306 and 244,978,337 shares issued, respectively; 193,479,528 and 216,035,912 shares outstanding, respectively)	1.9		2.2
Retained earnings	2,293.4		2,569.3
Accumulated other comprehensive income	11.1		9.7
Total stockholders’ equity	2,306.4		2,581.2
Total liabilities and stockholders’ equity	$	3,537.9	$	3,628.5

The accompanying notes are an integral part of these consolidated financial statements.

33

JANUS CAPITAL GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Data)

	For the year ended December 31,
	2006			2005			2004
Revenues:
Investment management fees	$	750.2		$	673.1		$	722.2
Performance fees	14.9			26.8			11.6
Shareowner servicing fees and other	170.7			168.4			188.0
Printing and fulfillment	90.9			84.8			89.0
Total	1,026.7			953.1			1,010.8
Operating Expenses:
Employee compensation and benefits	320.4			305.0			255.2
Long-term incentive compensation	83.0			75.3			110.8
Marketing and advertising	28.3			30.4			28.6
Distribution	110.2			102.9			125.1
Depreciation and amortization	39.9			43.8			56.6
General, administrative and occupancy	134.4			138.7			143.4
Cost of printing and fulfillment	90.6			82.9			87.6
Restructuring and impairments	11.0			25.5			26.6
Mutual fund investigation charges, net of recoveries	(14.1		)	(9.3		)	65.0
Total	803.7			795.2			898.9
Operating Income	223.0			157.9			111.9
Interest expense	(32.3		)	(28.6		)	(38.4		)
Other income, net	39.4			39.3			19.6
Loss on early extinguishment of debt	-			-			(55.5		)
Gain on disposition of DST common shares	-			-			228.0
Income before taxes, equity earnings and minority interest	230.1			168.6			265.6
Income tax provision	(81.9		)	(67.9		)	(92.2		)
Equity in earnings of unconsolidated affiliate	7.1			7.1			6.1
Minority interest in consolidated earnings	(21.7		)	(20.0		)	(10.0		)
Net Income	$	133.6		$	87.8		$	169.5
Earnings per Share:
Basic	$	0.66		$	0.40		$	0.73
Diluted	$	0.66		$	0.40		$	0.73

The accompanying notes are an integral part of these consolidated financial statements.

34

JANUS CAPITAL GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)

	For the year ended December 31,
	2006			2005			2004
CASH FLOWS PROVIDED BY (USED FOR):
Operating Activities:
Net income	$	133.6		$	87.8		$	169.5
Adjustments to net income:
Depreciation and amortization	47.1			50.1			60.4
Deferred income taxes	(29.5		)	14.1			(90.3		)
Minority interest in consolidated earnings	21.7			20.0			10.0
Restructuring and impairment charges	11.0			25.5			14.3
Amortization of stock-based compensation	73.0			74.1			88.2
Realized gain on the sale of investments	(10.5		)	(12.4		)	(1.3		)
Gain on disposition of DST common shares	-			-			(228.0		)
Loss on early extinguishment of debt	-			-			55.5
Payment of deferred commissions, net	2.1			(1.6		)	(12.4		)
Other, net	(5.0		)	6.1			6.1
Changes in working capital items:
Accounts receivable	4.0			(20.4		)	(1.8		)
Other current assets	1.1			(2.1		)	3.6
Accounts payable and accrued compensation payable	13.7			14.1			21.0
Other accrued liabilities	39.5			17.9			(105.2		)
Net operating	301.8			273.2			(10.4		)
Investing Activities:
Purchase of property and equipment	(17.0		)	(23.6		)	(26.5		)
Acquisition and payments for business previously acquired (INTECH)	(90.0		)	(5.8		)	(5.8		)
Purchase of marketable securities	(65.3		)	(163.0		)	(366.7		)
Proceeds from sales and maturities of marketable securities	218.1			253.6			15.2
Proceeds from disposition of DST common shares	-			-			336.2
Other, net	-			3.6			1.8
Net investing	45.8			64.8			(45.8		)
Financing Activities:
Proceeds from issuance of long-term debt	275.0			-			-
Repayment of long-term debt	(113.1		)	-			(529.0		)
Proceeds from stock plans	41.9			20.9			9.8
Excess tax benefit from equity-based compensation	4.4			2.0			1.3
Repurchase of common stock	(516.4		)	(310.4		)	(99.7		)
Distributions to minority interest	(21.8		)	(12.8		)	(8.0		)
Dividends paid to shareholders	(8.3		)	(9.1		)	(9.6		)
Other, net	(2.2		)	(3.1		)	(4.3		)
Net financing	(340.5		)	(312.5		)	(639.5		)
Cash and Cash Equivalents:
Net increase (decrease)	7.1			25.5			(695.7		)
At beginning of period	552.6			527.1			1,222.8
At end of period	$	559.7		$	552.6		$	527.1
Supplemental cash flow information:
Cash paid for interest	$	32.5		$	27.1		$	51.1
Cash paid for income taxes	$	81.7		$	77.7		$	212.7

The accompanying notes are an integral part of these consolidated financial statements.

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JANUS CAPITAL GROUP INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in Millions, except per share)

															Accumulated
								Additional							Other				Total
				Common				Paid-in				Retained			Comprehensive				Stockholders’
	Shares			Stock				Capital				Earnings			Income				Equity
Balance at December 31, 2003		239.2			$	2.4			$	137.0		$	2,403.8			$	135.1			$	2,678.3
Comprehensive income:
Net income												169.5								169.5
Net unrealized gain on marketable securities																21.9				21.9
Reclassification for gains included in net income																(141.4		)		(141.4		)
Foreign currency translation adjustment																0.1				0.1
Comprehensive income																				50.1
Amortization of stock-based compensation									87.2											87.2
Issuance and forfeitures of restricted stock awards		0.4							13.5											13.5
Tax impact of stock-based compensation									3.2											3.2
Stock option exercises		1.4							11.2											11.2
Common stock repurchased		(6.6	)		(0.1		)		(99.6		)									(99.7		)
Change of interest in subsidiary									0.3											0.3
Common stock dividends ($0.04 per share)												(9.6		)						(9.6		)
Balance at December 31, 2004		234.4			2.3				152.8			2,563.7				15.7				2,734.5
Comprehensive income:
Net income												87.8								87.8
Net unrealized gain on marketable securities																3.6				3.6
Reclassification for gains included in net income																(7.7		)		(7.7		)
Foreign currency translation adjustment																(1.9		)		(1.9		)
Comprehensive income																				81.8
Amortization of stock-based compensation									54.9			18.7								73.6
Issuance and forfeitures of restricted stock awards		0.9							2.3											2.3
Tax impact of stock-based compensation									(12.7		)	(0.2		)						(12.9		)
Stock option exercises		2.2							7.4			13.8								21.2
Common stock repurchased		(21.5	)		(0.1		)		(205.0		)	(105.3		)						(310.4		)
Change of interest in subsidiary									0.3			(0.1		)						0.2
Common stock dividends ($0.04 per share)												(9.1		)						(9.1		)
Balance at December 31, 2005		216.0			2.2				-			2,569.3				9.7				2,581.2
Comprehensive income:
Net income												133.6								133.6
Net unrealized gain on marketable securities																15.4				15.4
Net loss on cash flow hedge																(2.4		)		(2.4		)
Reclassification for gains included in net income																(6.5		)		(6.5		)
Foreign currency translation adjustment																(5.1		)		(5.1		)
Comprehensive income																				135.0
Amortization of stock-based compensation												72.4								72.4
Issuance and forfeitures of restricted stock awards		0.3																		-
Stock option exercises		3.1										42.1								42.1
Common stock repurchased		(25.9	)		(0.3		)					(516.1		)						(516.4		)
Change of interest in subsidiary												0.4								0.4
Common stock dividends ($0.04 per share)												(8.3		)						(8.3		)
Balance at December 31, 2006		193.5			$	1.9			$	-		$	2,293.4			$	11.1			$	2,306.4

The accompanying notes are an integral part of these consolidated financial statements.

36

JANUS CAPITAL GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF THE BUSINESS

Janus Capital Group Inc. and its subsidiaries (collectively, “Janus” or the “Company”) primarily derive revenue and net income from providing investment management, administration, distribution and related services to individual and institutional investors through the Janus series of mutual funds, subadvised relationships and separate accounts (collectively referred to herein as “investment products”) in both domestic and international markets. Revenue is largely dependent on the total value and composition of assets under management, which include domestic equity, international equity and debt securities. Accordingly, fluctuations in the financial markets and in the composition of assets under management affect revenue and operating results. A significant portion of Janus’ revenue is derived from contracts to manage mutual funds which are subject to annual review and approval by each fund’s Board of Trustees and/or its shareholders.

Janus’ significant subsidiaries and one equity method investment at December 31, 2006, include:

·Janus Capital Management LLC (“JCM”) (wholly-owned subsidiary). JCM offers growth equity, core and international equity funds, as well as balanced, specialty fixed-income and money market funds.

·Enhanced Investment Technologies, LLC (“INTECH”) (approximate 83% owned subsidiary). INTECH offers risk-managed investment products that are based on a mathematical theorem which attempts to capitalize on the volatility in stock price movements. INTECH’s goal is to achieve long-term returns that outperform a passive index, while controlling risks and trading costs. INTECH manages institutional and private accounts and subadvises certain Janus mutual funds.

·Perkins, Wolf, McDonnell and Company, LLC (“PWM”) (approximate 30% ownership, accounted for under the equity method). PWM subadvises certain of Janus’ small- and mid-cap value mutual funds.

·Capital Group Partners, Inc. (“CGP”) (wholly-owned subsidiary). The operating business of CGP, Rapid Solutions Group (“RSG”) provides printing and fulfillment services and graphic design capabilities, with a client concentration in the financial services industry.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements include all majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. The equity method of accounting is used for PWM as Janus has significant influence but does not have the ability to exercise control. Certain prior year amounts have been reclassified to conform to the current year presentation. On the Consolidated Statements of Income, performance fee revenue, which was previously included in management fees, is now disclosed as a separate line item for all years presented.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Janus’ significant estimates relate to income taxes, intangible assets and goodwill, and equity compensation.

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Segment Information

Janus has two segments at December 31, 2006: Investment Management, representing businesses that derive the majority of their revenues from providing investment management services under investment advisory agreements; and Printing and Fulfillment, comprising the graphics design, commercial printing and fulfillment operations.

Cash and Cash Equivalents

Short-term liquid investments with an initial maturity of generally three months or less, including investments in money market funds, are considered cash equivalents.

Property and Equipment

Property and equipment is recorded at cost. Depreciation and amortization is recorded using the straight-line method over the estimated useful life of the related assets (or the lease term, if shorter). Depreciation and amortization expense totaled $21.4 million, $20.1 million and $23.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. Of the total expense, $7.2 million, $6.3 million and $3.8 million is included within cost of printing and fulfillment for the years ended December 31, 2006, 2005 and 2004, respectively. Property and equipment is summarized as follows (in millions):

	Depreciation and
	Amortization		December 31,
	Period		2006			2005
Furniture, fixtures and equipment, including computer equipment and systems		3-7 years	$	177.6		$	168.9
Leasehold improvements		3-24 years	33.6			31.0
Subtotal			211.2			199.9
Less accumulated depreciation			(150.9		)	(135.2		)
Property and equipment, net			$	60.3		$	64.7

Janus evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The evaluation is based on an estimate of the future cash flows expected to result from the use of the asset and its eventual disposition. If expected future undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value.

Software

Purchased software is recorded at cost and amortized over its estimated useful life. Computer software and development costs incurred in the preliminary project stage, as well as training and maintenance costs, are expensed as incurred. Direct and indirect costs associated with the application development stage of internal use software are capitalized until such time that the software is substantially complete and ready for its intended use. Capitalized costs are amortized on a straight-line basis over the estimated useful life of the software.

Deferred Commissions

Sales commissions paid to financial intermediaries on sales of certain mutual fund shares are deferred and amortized over various periods, not exceeding four years, based on the estimated recoverability of the asset through distribution fee payments or contingent deferred sales charges. Contingent deferred sales charges received from early withdrawal charges reduce the unamortized deferred commissions balance. Amortization expense for the years ended December 31, 2006, 2005 and 2004 totaled $7.8 million,

38

$16.2 million and $22.4 million, respectively. Deferred commissions, which are recorded as a component of other assets, are summarized as follows (in millions):

	December 31,
	2006		2005
Deferred commissions — current	$	1.6	$	8.7
Deferred commissions — long term	0.7		3.3
Total	$	2.3	$	12.0

Income Taxes

Deferred income tax assets and liabilities are recorded for the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted income tax rates that may be in effect when these differences reverse. Significant management judgment is required in developing Janus’ provision for income taxes, including the valuation allowances that might be required against deferred tax assets and the evaluation of various income tax contingencies.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of the identifiable net assets of acquired companies. Goodwill is tested annually for impairment and is not amortized. Janus’ identifiable intangible assets generally represent the cost of client relationships and management contracts acquired. Indefinite-lived intangibles are tested for impairment annually, or more frequently if events or circumstances indicate that the asset might be impaired. Intangibles subject to amortization are tested for impairment whenever events or circumstances indicate that the asset might be impaired. Goodwill and intangible assets require significant management estimates and judgment, including the valuation and life determination in connection with the initial purchase price allocation and the ongoing evaluation for impairment.

Fair Value of Financial Instruments

The carrying value of Janus’ cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The fair values of Janus’ marketable securities and long-term debt have been disclosed in Notes 5 and 11, respectively.

Revenue Recognition

Investment management and shareholder servicing fees are recognized as services are provided. These revenues are generally determined in accordance with contracts based upon a percentage of assets under management.

Performance fees are based on the performance of certain investment products as compared to the established benchmark over a specified period of time and are recognized at the end of the period if the stated performance criteria are achieved.

Printing and fulfillment revenue is recognized upon the completion of services provided. Estimated allowances for billing adjustments are recorded as a reduction of revenue. Reimbursements for out-of-pocket expenses are accounted for in accordance with Emerging Issues Task Force Issue 01-14 “Income Statement Characterization of Reimbursements Received for Out-of-Pocket Expenses Incurred”, and are recorded as revenue with a corresponding expense included within cost of printing and fulfillment.

Marketing

Marketing and promotional costs are expensed as incurred.

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Stock-Based Compensation

Janus adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R (revised 2004) “Share-Based Payment” effective October 1, 2004, using the modified retrospective method. Under the provisions of SFAS No. 123R, stock-based compensation cost is based on the grant date fair value of awards expected to vest at the end of the stated service period, comprised of the total value of the awards less an estimate for forfeitures. The grant date fair value of stock options is determined using the Black-Scholes option pricing model and the grant date fair value of restricted stock is determined from a quoted market price. The Black-Scholes model requires significant management estimates including volatility and expected life.

Other Income

The components of other income represent income and gains, net of losses, attributable to marketable securities as follows (in millions):

	2006		2005		2004
Gains, net of losses	$	11.7	$	13.2	$	0.9
Dividend income	12.6		12.8		16.5
Interest income	15.1		13.3		2.2
Total	$	39.4	$	39.3	$	19.6

Other Comprehensive Income

The components of other comprehensive income include the change in fair market value of available-for-sale investments owned by Janus as well as foreign currency translation adjustments, as follows (in millions):

				Tax
	Pre-tax			(expense)				Net
Year ended December 31, 2006	amount			benefit				amount
Unrealized gain on available-for-sale securities	$	22.3			$	(6.9	)	$	15.4
Reclassification for gains included in net income	(10.5		)		4.0			(6.5		)
Foreign currency translation adjustment	(8.2		)		3.1			(5.1		)
Realized loss on interest rate swap	(4.0		)		1.6			(2.4		)
Total	$	(0.4	)		$	1.8		$	1.4

				Tax
	Pre-tax			(expense)				Net
Year ended December 31, 2005	amount			benefit				amount
Unrealized gain on available-for-sale securities	$	5.8			$	(2.2	)	$	3.6
Reclassification for gains included in net income	(12.4		)		4.7			(7.7		)
Foreign currency translation adjustment	(3.0		)		1.1			(1.9		)
Total	$	(9.6	)		$	3.6		$	(6.0	)

				Tax
	Pre-tax			(expense)				Net
Year ended December 31, 2004	amount			benefit				amount
Unrealized gain on available-for-sale securities	$	35.5			$	(13.6	)	$	21.9
Reclassification for gains included in net income	(229.5		)		88.1			(141.4		)
Foreign currency translation adjustment	0.1				—			0.1
Total	$	(193.9	)		$	74.5		$	(119.4	)

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NOTE 3 — RECENT ACCOUNTING PRONOUNCEMENTS

On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (“FIN 48”)”, which sets forth a specific recognition threshold and measurement method for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. The effective date of FIN 48 is the Company’s fiscal year beginning January 1, 2007. Janus has not yet completed its assessment of the impact of FIN 48.

On September 13, 2006, the Staff of the Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), which sets forth the staff’s views on assessing the impact of prior period misstatements in quantifying current year misstatements. Application of SAB 108 did not have a material impact on current year results of operations.

On September 15, 2006, the FASB issued Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“SFAS 157”), which defines and establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. The effective date of SFAS 157 is the Company’s fiscal year beginning January 1, 2008. The adoption of SFAS 157 is expected to result in additional disclosures regarding Janus’ fair value measurements.

On February 15, 2007, the FASB issued Statement of Financial Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which permits an entity to measure certain financial assets and financial liabilities at fair value. The effective date of SFAS 159 is the Company’s fiscal year beginning January 1, 2008. Janus has not yet completed an assessment of the impact of SFAS 159.

NOTE 4 — EARNINGS PER SHARE

Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share adjusts the weighted average shares outstanding by the dilutive impact of shares underlying stock options and unvested restricted stock awards. The following is a summary of the earnings per share calculation (in millions, except per share data):

	For the year ended December 31,
	2006		2005		2004
Net income	$	133.6	$	87.8	$	169.5
Basic earnings per share:
Weighted average common shares outstanding	202.4		218.6		230.8
Basic earnings per share	$	0.66	$	0.40	$	0.73
Diluted earnings per share:
Weighted average common shares outstanding	202.4		218.6		230.8
Dilutive effect of stock options and unvested restricted stock	1.1		0.5		1.1
Weighted average diluted common shares outstanding	203.5		219.1		231.9
Diluted earnings per share	$	0.66	$	0.40	$	0.73
Excluded from diluted shares outstanding calculation:
Stock options	3.5		14.3		13.9
Unvested restricted stock	1.0		3.2		4.9

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The stock options and unvested restricted stock excluded are not included in the weighted average diluted shares outstanding calculation as their inclusion would be anti-dilutive.

All shares held in the Janus Employee Stock Ownership Plan (the “ESOP”) are treated as outstanding for purposes of computing basic earnings per share.

NOTE 5 — MARKETABLE SECURITIES

Janus classifies marketable securities as trading, available-for-sale or held-to-maturity at the time of purchase and periodically re-evaluates such classifications. There were no securities classified as trading at December 31, 2006 or 2005. Securities are classified as held-to-maturity when Janus has the intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at cost with corresponding premiums or discounts amortized over the life of the investment to other income. At December 31, 2006 and 2005, $0 and $81.9 million of held-to-maturity securities were classified as long-term, respectively. Securities classified as available-for-sale are reported at fair value with unrealized gains and losses reported in accumulated other comprehensive income, net of deferred income taxes. Realized gains, losses and declines in value judged to be other-than-temporary, are included in other income.

Janus’ marketable securities at December 31, 2006 and 2005, are summarized as follows (in millions):

	December 31, 2006				December 31, 2005
		Gross	Gross	Estimated		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value	Cost	Gains	Losses	Value
Held-to-maturity securities (carried at amortized cost)

U.S. treasury and government agency securities	$	69.8	$	-	$	(0.2	)	$	69.6	$	211.9	$	-	$	(2.6	)	$	209.3
Corporate debt securities	11.4		-		-			11.4		22.4		-		(0.3		)	22.1
Available-for-sale securities (carried at fair value)
Investments in advised funds	76.4		15.8		(0.3		)	91.9		86.4		13.5		(0.1		)	99.8
	$	157.6	$	15.8	$	(0.5	)	$	172.9	$	320.7	$	13.5	$	(3.0	)	$	331.2

Investments in advised funds represent shares of mutual funds and separate accounts managed by JCM and INTECH. Realized gains and losses are determined using the first-in, first-out method. Proceeds from the sale of available-for-sale securities totaled $59.9 million, $67.7 million and $343.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.

NOTE 6 — ACQUISITION

On February 1, 2006, Janus increased its ownership of Enhanced Investment Technologies, LLC (“INTECH”) to approximately 82.5% with the purchase of an additional 5% ownership interest from the INTECH founders for $90.0 million in cash. The pro forma results of operations have not been presented as they would not have been materially different from reported amounts. The final purchase price allocation has resulted in the recognition of $35.2 million of intangible assets and $54.8 million of tax deductible goodwill. Intangible assets acquired represent customer relationships which are amortized over 12 years.

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NOTE 7 — DISPOSITIONS

On December 1, 2003, Janus exchanged 32.3 million common shares of DST for 100% of the stock of CGP, a corporation that included a printing and graphics design business with a value of $115.0 million, and $999.3 million in cash. The share disposition resulted in a $631.3 million gain and the reversal of previously recorded deferred income taxes of $176.4 million, as the transaction was implemented in reliance on opinions from Janus’ tax advisers that the transaction should qualify as a tax-free exchange under Section 355 of the Internal Revenue Code of 1986, as amended. On February 16, 2006, the IRS advised Janus that they have accepted Janus’ nontaxable treatment of this exchange.

On June 16, 2004, Janus sold the remaining 7.4 million shares of DST in a taxable transaction to an unrelated third party for a pretax gain of $228.0 million and cash proceeds of $336.2 million.

NOTE 8 — GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill are as follows (in millions):

	Investment				Printing and
	Management				Fulfillment				Total
Balance as of December 31, 2004		$	1,008.2			$	75.0		$	1,083.2
Additions		26.0				3.9			29.9
Impairment		-				(20.0		)	(20.0		)
Balance as of December 31, 2005		1,034.2				58.9			1,093.1
Additions		60.4				-			60.4
Adjustment to purchase price allocation		(4.1		)		(1.1		)	(5.2		)
Balance as of December 31, 2006		$	1,090.5			$	57.8		$	1,148.3

The following is a summary of identified intangible assets (in millions):

	December 31,
	2006			2005
Non-amortized intangible assets
Mutual fund advisory contracts	$	943.1		$	943.1
Brand name and trademark	270.5			270.5
Amortized intangible assets
Client relationships	144.9			122.7
Accumulated amortization	(53.7		)	(37.8		)
Net intangible assets	$	1,304.8		$	1,298.5

Client relationships are amortized over their estimated lives of five to 25 years using the straight-line method. Amortization expense was $17.9 million and $13.8 million for the years ended December 31, 2006 and 2005, respectively. Amortization expense over the next five years is expected to be $16.2 million in 2007 and 2008, $7.5 million in 2009, and $7.2 million in 2010 and 2011.

The majority of goodwill and intangible assets within the Investment Management segment were generated from transactions  in 2001 to buyout the minority interest of JCM and resulted in the recognition of $803.8 million of goodwill and $1,164.6 million of intangible assets, representing mutual fund advisory contracts, brand name, trademark, and client relationships.

Acquisitions of interests in INTECH resulted in goodwill of $134.4 million and intangible assets of $77.8 million, representing client relationships.

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NOTE 9 — RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

The following items comprise Janus’ restructuring and impairment charges (in millions):

	Year ended December 31,
	2006		2005		2004
Intangibles impairment	$	11.0	$	-	$	14.2
RSG goodwill impairment	-		20.0		-
Bay Isle Financial LLC	-		5.5		2.0
2001 Restructuring	-		-		8.2
Other	-		-		2.2
Total	$	11.0	$	25.5	$	26.6

Intangibles Impairment

Within client relationships, Janus has subadvised contracts that have an allocated intangible value. To the extent such subadvised contracts are terminated, Janus recognizes an impairment charge equal to the unamortized value of the intangible asset recorded for such contract.

RSG Goodwill Impairment

Janus performs an annual test of its goodwill and intangible assets in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets.” As a result of the 2005 test, Janus determined that the goodwill at RSG was impaired. The value of RSG was determined using the present value of future cash flows, which is dependent on a number of significant estimates including long-term revenue growth, RSG’s ability to manage operating expenses, expected operating margin of current and future products, and the discount rate used to calculate the present value of the cash flows.

Bay Isle Financial LLC (“Bay Isle”)

In two separate transactions, Janus closed the California operations of Bay Isle, an asset management firm that focused on value and real estate investment trust investing.

On September 14, 2004, Janus completed the sale of Bay Isle’s Private Client Asset Management division for cash proceeds of $8.0 million. The division managed $0.6 billion of assets at the date of disposition. The transaction resulted in a pretax loss of $2.0 million, primarily due to the write-off of $3.7 million of goodwill and $4.8 million of intangible assets assigned to the division.

During the first quarter 2005, Janus relocated the operations of Bay Isle from Oakland, California, to Janus’ headquarters in Denver, Colorado. This relocation resulted in the closure of the Bay Isle facility and the termination of Bay Isle’s existing four-person support staff. The facility closure resulted in a charge of $1.6 million, representing lease termination costs, severance payments and fixed assets impairments. In addition, at the time of its acquisition in 2003, Bay Isle managed certain institutional accounts that were assigned an intangible asset value. As a result of the transition, such institutional accounts were terminated and Janus recorded an intangible asset impairment of $3.9 million.

2001 Restructuring

During 2001, due to decreased shareholder transaction volume combined with increased functionality of the Janus.com website, Janus closed its call center in Austin, Texas. At the time of closure, Janus recorded a charge of $36.6 million, representing the projected shortfall of sublease income compared to Janus’ contractual rent payments through 2010. In 2004, a change in the market conditions in Austin resulted in a decrease of the projected future sublease income that Janus may receive through the end of its lease term. This change in assumptions resulted in an additional accrual of $8.2 million.

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The following table summarizes the activity of the 2001 Restructuring (included in other liabilities in the consolidated balance sheet) (in millions):

	Lease Obligation
	Beginning of										End of		Current			Long-Term
	Period			Additions			Reductions				Period		Portion			Portion
2006		$	10.7		$	-		$	(7.0	)	$	3.7		$	0.7		$	3.0
2005		$	13.1		$	-		$	(2.4	)	$	10.7		$	3.8		$	6.9

During 2006, Janus paid $3.1 million to terminate a lease for a facility included in the 2001 restructuring.

Other

Other restructuring and impairment charges consist of costs associated with the closure of a non-strategic facility at RSG in 2004.

NOTE 10 — OTHER BALANCE SHEET CAPTIONS

Other current accrued liabilities are composed of the following (in millions):

	December 31,
	2006		2005
Accrued marketing and distribution	$	19.7	$	13.1
Deferred compensation	13.3		3.3
Other accrued liabilities	43.9		42.3
Total	$	76.9	$	58.7

NOTE 11 — LONG-TERM DEBT

Long-term debt at December 31, 2006 and 2005, consisted of the following (in millions):

	2006				2005
	Carrying Value		Fair Value		Carrying Value			Fair Value
5.875% Senior Notes due 2011	$	275.0	$	277.3	$	-		$	-
6.119% Senior Notes due 2014	82.1		83.8		82.1			83.6
7.000% Senior Notes due 2006	-		-		114.1			114.7
7.750% Senior Notes due 2009	22.0		23.1		22.0			23.5
7.875% Senior Notes due 2032	158.1		160.5		158.1			161.9
Total	537.2		544.7		376.3			383.7
Less: current maturities	-		-		(114.1		)	(114.7		)
Total long-term debt	$	537.2	$	544.7	$	262.2		$	269.0

Fair Value of Long-Term Debt

The fair value of long-term debt was calculated using market quotes or, if market quotes were not available, by discounting future cash flows using market interest rates for debt with similar terms and maturities.

5.875% Senior Notes Due 2011

On September 18, 2006, Janus issued $275.0 million of 5.875% senior notes that are due September 15, 2011, and are not callable by Janus or redeemable at the option of the holders prior to maturity. Interest will be paid semiannually on March 15 and September 15.

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On May 2, 2006, Janus entered into a pay-fixed receive-variable interest rate swap (the “Swap”) in anticipation of a $272.0 million fixed rate debt issuance with a mandatory termination date of May 4, 2007. The Swap was designated and accounted for as a cash flow hedge under SFAS No. 133 (as amended and interpreted) “Accounting for Derivatives and Hedging Activities” (“SFAS 133”), and was designed to hedge the variability in interest payments on the anticipated fixed rate debt as a result of changes in the interest rate between inception of the Swap and the issuance of the debt. On September 18, 2006, the Swap was terminated and Janus incurred a loss of $4.4 million, or $2.7 million net of tax, which has been recorded in accumulated other comprehensive income on the consolidated balance sheet and will be amortized to interest expense over the life of the 5.875% senior notes.

6.119% Senior Notes Due 2014

On April 26, 2004, Janus issued $527.4 million of 6.119% senior notes that are due April 15, 2014, in exchange for $465.1 million of senior notes (composed of $286.9 million of the 7.000% senior notes and $178.2 million of the 7.750% senior notes). The 6.119% senior notes pay interest semiannually on April 15 and October 15. On May 19, 2004, Janus’ wholly-owned subsidiary, CGP, exercised its right to repurchase $445.0 million aggregate principal amount of the 6.119% senior notes. This transaction resulted in a non-operating charge of $55.5 million, primarily related to the premium paid to exchange the old notes for the new notes given declines in interest rates. As CGP owns the $445.0 million of repurchased notes, Janus makes regular interest payments to CGP. Such payments are eliminated in consolidation.

7.750% Senior Notes Due 2009

On July 2, 2002, Janus issued 7.750% senior notes that are due June 15, 2009, and are not callable by Janus or redeemable by the holders prior to maturity. Interest is paid semiannually on June 15 and December 15.

7.875% Senior Notes (“Retail Notes”)

On April 5, 2002, Janus issued 7.875% senior notes that are due April 15, 2032, which are not callable by Janus until April 2007; thereafter, the Retail Notes are callable at any time, in whole or in part, at par plus accrued and unpaid interest. Interest is paid quarterly. The Retail Notes are listed on the New York Stock Exchange (“NYSE”) under the symbol “SVQ” and were offered in $25 increments to individual investors.

Credit Facility

On October 19, 2005, the Company entered into a $200 million Three-Year Competitive Advance and Revolving Credit Facility Agreement with a syndicate of banks (the “Facility”). The Facility contains a number of financial covenants such as a specified financing leverage ratio, minimum net worth and interest coverage ratio. Janus was in compliance with the provisions of the Facility, including the financial covenants, as of December 31, 2006. Janus had no borrowings under the Facility during 2006.

Aggregate Maturities of Indebtedness

The aggregate amounts of debt maturing in the next five years are as follow (in millions):

2007	$	-
2008	-
2009	22.0
2010	-
2011	275.0
Thereafter	240.2
Total	$	537.2

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NOTE 12 — INCOME TAXES

Janus’ provision for income taxes is summarized as follows (in millions):

	December 31,
	2006			2005		2004
Current:
Federal	$	93.0		$	43.2	$	159.6
State and local	12.4			7.3		22.5
International	5.9			3.3		0.5
Total current	111.3			53.8		182.6
Deferred:
Federal	(25.7		)	12.8		(79.1		)
State and local	(3.2		)	1.3		(11.3		)
International	(0.5		)	—		—
Total deferred	(29.4		)	14.1		(90.4		)
Total income tax expense	$	81.9		$	67.9	$	92.2

Janus’ deferred income tax liabilities (assets) are summarized as follows (in millions):

	December 31,
	2006			2005
Income Tax Liabilities:
Intangible assets	$	466.1		$	474.1
Investments	6.1			10.2
Other	12.6			26.7
Gross deferred tax liabilities	484.8			511.0
Income Tax Assets:
Compensation and benefits	(58.8		)	(48.5		)
Accrued liabilities	(15.8		)	(15.1		)
Debt issue costs	(18.7		)	(20.8		)
Other	(4.7		)	(5.2		)
Gross deferred tax assets	(98.0		)	(89.6		)
Net deferred income tax liabilities	$	386.8		$	421.4

The current deferred income tax amounts at December 31, 2006 and 2005, are included within other current assets. Deferred tax assets and liabilities are reflected on the balance sheet as follows (in millions):

	December 31,
	2006			2005
Current deferred income tax asset, net	$	(12.5	)	$	(2.7	)
Long-term deferred income tax liability, net	399.3			424.1
Net deferred income tax liabilities	$	386.8		$	421.4

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Janus’ effective income tax rate differs from the statutory federal income tax rate as follows:

	December 31,
	2006		2005		2004
Federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes	2.9	%	3.2	%	2.7	%
INTECH minority interest	-3.2	%	-4.0	%	-1.4	%
Impairment of goodwill	0.0	%	4.0	%	0.0	%
Non-deductible penalties	0.0	%	0.0	%	4.6	%
Tax adjustments	-0.2	%	-3.2	%	-7.5	%
Other	0.0	%	3.7	%	0.5	%
Total effective income tax rate	34.5	%	38.7	%	33.9	%

NOTE 13 — LONG-TERM INCENTIVE COMPENSATION

The components of Janus’ long-term incentive compensation expense are summarized as follows (in millions):

	December 31,
	2006		2005		2004
Stock options	$	24.4	$	22.2	$	21.0
Restricted stock awards	47.3		50.8		74.2
Vested stock award	-		-		15.0
Mutual fund units	11.1		2.1		-
Employee stock purchase plan	0.2		0.2		0.6
Total long-term incentive compensation	$	83.0	$	75.3	$	110.8

Historical long-term incentive awards have been granted with ratable vesting schedules of between three and five years. The majority of awards granted in 2006 and 2005, were granted with a four-year ratable vesting schedule, subject to accelerated vesting up to 50% if certain financial performance criteria are achieved. Based on such criteria, the 2006 and 2005 awards qualified for accelerated vesting of 40% on February 1, 2007. At December 31, 2006, unrecognized compensation, net of estimated forfeitures, and the weighted-average years over which the compensation cost will be recognized are summarized as follows (assuming no further accelerated vesting):

	Unrecognized Compensation			Weighted - Average Years
Stock options		$	10.6		2.5
Restricted stock awards		23.9			1.9
Mutual fund units		16.0			2.9
Total		$	50.5		2.3

Janus generally grants annual long-term incentive awards in February of each year. The 2007 annual grant, not included in the table above, totaled $61.0 million and will be recognized over a four year period, subject to accelerated vesting if certain financial performance criteria are achieved.

Stock Options

The fair value of stock options granted to Janus employees was estimated on the date of each grant using the Black-Scholes option pricing model using the following assumptions. Expected volatility was determined using an average of Janus’ historical volatility and industry and market averages, as appropriate. Janus factored in employee termination rates combined with vesting periods to determine the

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average expected life. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of each grant. Stock options granted prior to February 2005, have a maximum contractual term of 10 years and 7 years for options granted thereafter.

	2006	2005	2004
Dividend yield	0.20% to 0.27%	0.25% to 0.31%	0.24% to 0.29%
Expected volatility	27% to 30%	30%	40%
Risk-free interest rate	4.55% to 4.89%	3.71% to 4.45%	2.32% to 3.83%
Expected life	5 years	5 to 6 years	6 to 8 years

The table below summarizes Janus’ outstanding options:

	2006						2005						2004
										Weighted						Weighted
				Weighted						Average						Average
				Average						Exercise						Exercise
				Exercise						Weighted						Weighted
	Shares			Price			Shares			Price			Shares			Price
Outstanding at January 1	15,678,666				$	17.97	16,926,585				$	17.19	12,200,687				$	16.78
Granted	1,721,951				21.54		1,518,387				14.48		6,676,584				15.94
Exercised	(3,045,261		)		13.35		(1,969,066		)		9.08		(1,446,437		)		7.51
Expired	(608,927		)		18.55		(797,240		)		16.64		(504,249		)		18.56
Outstanding at December 31	13,746,429				$	19.42	15,678,666				$	17.97	16,926,585				$	17.19
Exercisable	10,281,666				$	19.79	10,334,948				$	19.18	9,359,573				$	18.15
Vested or expected to vest	13,631,760				$	19.42
Weighted average fair value of options granted during the year	$	6.45					$	5.33					$	6.61
Intrinsic value of options(in millions):
Exercised	$	22.3					$	13.5					$	13.2
Outstanding	$	56.0					$	46.6					$	37.7
Exercisable	$	44.7					$	28.6					$	27.7

The following table summarizes the information about stock options that were outstanding at December 31, 2006:

	Outstanding						Exercisable
		Weighted						Weighted
		Average		Weighted				Average		Weighted
		Remaining		Average				Remaining		Average
Range of	Number	Contractual		Exercise			Number	Contractual		Exercise
Exercise Prices	Outstanding	Life (years)		Price			Exercisable	Life (years)		Price
$6 to $10	87,724		0.17		$	8.05	87,724		0.17		$	8.05
$10 to $20	8,520,394		6.97		15.33		6,812,153		6.79		15.48
$20 to $30	3,545,941		4.64		22.38		1,789,419		3.25		22.93
$30 to $47	1,592,370		3.30		35.30		1,592,370		3.30		35.30
$6 to $47	13,746,429		5.90		19.42		10,281,666		5.57		19.79

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Restricted Stock Awards

The table below summarizes unvested restricted stock awards for the years ended December 31, 2006 and 2005:

	2006					2005
			Weighted					Weighted
			Average					Average
			Grant-Date					Grant-Date
	Shares		Fair Value			Shares		Fair Value
Unvested at January 1	4,500,158			$	21.22	5,979,654			$	22.95
Granted	839,878			21.52		943,865			14.54
Vested	(1,983,068	)		22.41		(2,225,724	)		23.14
Forfeited	(536,623	)		23.02		(197,637	)		19.77
Unvested at December 31	2,820,345			$	19.07	4,500,158			$	21.22

The total fair value of restricted stock that vested during the years ended December 31, 2006, 2005 and 2004, was $44.3 million, $33.5 million and $46.9 million, respectively.

Vested Stock Award

In consideration of the portfolio managers’ early adoption of a new compensation plan to replace prior contractual arrangements, the 2004 annual long-term incentive award to portfolio managers, which was scheduled to be granted in early 2005, was awarded in vested Janus common stock on December 31, 2004. A total of 902,340 shares were granted at a weighted average fair value of $16.57 per share, for a total value of $15.0 million.

Mutual Fund Units

During 2006 and 2005, Janus granted $21.3 million and $11.4 million, respectively, in awards that are indexed to certain mutual funds managed by the Company. Upon vesting, participants receive the value of the award adjusted for earnings or losses attributable to the mutual funds to which the award was indexed. At the time of grant, the Company creates a fair value hedge accounted for in accordance with SFAS 133 to protect against the market variability of the mutual funds to which the awards are indexed by making investments equal to the amount of the awards in the mutual funds selected by the participants. Subsequent changes in market value are recorded against the Company’s asset with the offset to the mutual fund share award liability. Any hedge ineffectiveness will result in an increase or decrease in long-term incentive compensation expense. Hedge effectiveness is assessed quarterly and has been 100% effective since inception and therefore, no gain or loss has been recognized. At December 31, 2006, the notional amount of the fair value hedge is $28.0 million and represents the cost basis of unvested awards.

Forfeiture Estimate

Janus estimates, at the time of grant, the amount of awards that are not expected to vest based on historical forfeiture rates. As a result of higher than expected employee departures prior to vesting during the third quarter 2006, Janus revised the estimate of forfeitures related to long-term incentive compensation. The effect of increasing the forfeiture estimate was recorded as a $5.0 million decrease in long-term incentive compensation expense ($3.1 million net of tax) for the year ended December 31, 2006.

Long-Term Incentive Stock Plans

On May 10, 2005, Janus shareholders approved the 2005 Long-Term Incentive Stock Plan (“2005 Plan”) which allows the Board of Directors to grant up to 15.0 million shares of equity based awards, including stock options and restricted stock. The 2005 Plan will replace the 1998 Long-Term Incentive Plan (“1998

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Plan”) once the approximately 1.7 million shares remaining under the 1998 Plan are depleted. On January 25, 2007, Janus registered 15.0 million shares to be granted as equity awards under the 2005 Plan.

NOTE 14 — EMPLOYEE BENEFIT PLANS

Substantially all full-time employees of Janus are eligible to participate in a company-sponsored 401(k) and profit-sharing plan. Employees in the Investment Management segment also participate in an ESOP. Janus matches a maximum of 3% of employee compensation in the 401(k) plan. Contributions to the ESOP and the profit-sharing plan are made at the discretion of the Board of Directors. Participants vest ratably in the ESOP and profit-sharing contributions over a five-year period. Expense related to the 401(k) plan, ESOP and profit-sharing plan was $11.9 million, $10.0 million and $9.7 million in 2006, 2005 and 2004, respectively.

The Company also has a deferred compensation plan for certain highly compensated employees. Eligible participants may defer a portion of their compensation and have the ability to earn a return by indexing their deferrals to mutual funds managed by the Company. The Company makes no contributions to the plan and is liable to the participants for the amount of the deferrals as adjusted for changes in market value. To protect against market variability of the liability, the Company creates a fair value hedge accounted for in accordance with SFAS 133 by investing in mutual funds that are consistent with the deferred amounts and mutual fund elections of the participants. Changes in market value are recorded to the investment asset held by the Company with the offset recorded to the liability to the participants. Any hedge ineffectiveness will result in increases or decreases in employee compensation and benefits expense. Hedge effectiveness is assessed quarterly and has been 100% effective since inception and therefore, no gain or loss has been recognized. At December 31, 2006, the notional amount of the fair value hedge is $7.7 million and represents total payroll deferrals.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Operating Leases

Janus rents office space and equipment under the terms of various operating lease agreements. As of December 31, 2006, future minimum rental commitments under non-cancelable operating leases are as follows (in millions):

2007	$	21.1
2008	20.0
2009	17.7
2010	16.2
2011	14.2
Thereafter	92.2
Total	$	181.4

Rent expense was $19.1 million, $19.3 million and $21.6 million in 2006, 2005 and 2004, respectively.

Investment Management Contracts

Most of Janus’ revenues are derived pursuant to investment advisory agreements with its investment products. Investment advisory agreements with mutual funds may be terminated by either party with notice, or terminated in the event of an “assignment” (as defined in the Investment Company Act of 1940 as amended (the “1940 Act”)), and must be approved and renewed annually by the disinterested members of each fund’s trustees, or its shareowners, as required by law. Generally, any change in control of Janus

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would constitute an “assignment” under the 1940 Act. In addition, the Board of Trustees may terminate these investment advisory agreements upon written notice for any reason.

Tax Contingencies

At any one time, tax returns filed in previous years are subject to audit by various taxing authorities. As a result of these audits and negotiations, additional tax assessments may be proposed. At December 31, 2006 and 2005, Janus had an accrued liability of $59.5 million and $44.6 million, respectively, related to tax contingencies for issues raised by various taxing authorities. In 2006 and 2005, Janus made payments totaling $1.7 million and $2.0 million, respectively, to resolve outstanding tax matters and reversed $5.0 million of previously accrued income taxes as a result of the favorable resolution of audits and negotiations with taxing authorities in 2005. Janus increased the reserves for tax contingencies by $16.6 million during 2006 for additional reserves and interest.

NOTE 16 — LITIGATION

Janus is subject to various legal proceedings arising from normal business operations. Although there can be no assurances, based on information currently available, management believes that it is probable that the ultimate outcome of each of the actions will not have a material adverse effect on the consolidated financial condition of Janus. However, an adverse outcome in any of the actions could have a material adverse effect on the financial results of the Company in the period in which it is recorded. The Company’s litigation reserves increased $0.8 million in the fourth quarter 2006 to $7.8 million. Management believes that current legal reserves are adequate to cover probable estimated contingencies with respect to the actions described below.

Market Timing Litigation

Following the market timing investigations by the New York Attorney General (“NYAG”) and the Securities and Exchange Commission, Janus and certain affiliates were named as defendants in a consolidated lawsuit in the U.S. District Court in Baltimore, Maryland (Case Number MDL No. 1586, 04-MD-15863). Five amended complaints were filed in these coordinated proceedings, including: (i) claims by a putative class of Janus fund investors asserting claims on behalf of the investor class (Marini, et al. v. Janus Investment Fund, et al., U.S. District Court, District of Maryland, Case No. 04-CV-00497);  (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds (Steinberg et al. v. Janus Capital Management, LLC et al., U.S. District Court, District of Maryland, Case No. 04-CV-00518); (iii) claims on behalf of participants in the Janus 401(k) plan (Wangberger v. Janus Capital Group Inc., 401(k) Advisory Committee, et al., U.S. District Court, District of Maryland, Case No. JFM-05-2711); (iv) claims brought on behalf of shareholders of Janus on a derivative basis against Janus’ Board of Directors (Chasen v. Whiston, et al., U.S. District Court, District of Maryland, Case No. 04-MD-00855); and (v) claims by a putative class of Janus shareholders asserting claims on behalf of the shareholders (Wiggins, et al. v. Janus Capital Group Inc., et al., U.S. District Court, District of Maryland, Case No. 04-CV-00818).

In August 2005, the U.S. District Court entered orders dismissing most of the claims asserted against the Company and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. The U.S. District Court also entered an order dismissing all claims on behalf of Janus corporate shareholders (action (v) above), but in June 2006 the plaintiffs in that action filed an amended complaint which asserts similar claims to the initial complaint. A Motion to Dismiss this amended complaint is currently pending before the U.S. District Court. In August 2006, the U.S. District Court in the 401(k) plan class action (action (iii) described above) dismissed the action with prejudice, and the plaintiff recently appealed the dismissal to the U.S. Court of Appeals for the Fourth Circuit. Finally, the U.S. District Court also dismissed the action against Janus’ Board of Directors without leave to amend

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(action (iv) above), ruling that the plaintiff had failed to make a pre-suit demand on the Board of Directors a required by applicable state law. The time to appeal from this dismissal has not yet expired. As a result of the above events, the Company and JCM are the remaining defendants, in some capacity, in one or more of the actions described in the preceding paragraph.

As previously disclosed, the Auditor of the State of West Virginia, in his capacity as securities commissioner, initiated administrative proceedings against many of the defendants in the market timing cases (including Janus) and seeks disgorgement and other monetary relief based on similar market timing allegations (In the Matter of Janus Capital Group Inc. et al., Before the Securities Commissioner, State of West Virginia, Summary Order No. 05-1320). Janus and other similarly situated defendants continue to challenge the statutory authority of the Auditor to bring such an action. No further proceedings are currently scheduled in this matter.

Excessive Fee Litigation

JCM is a defendant in a consolidated lawsuit challenging the investment advisory fees charged by JCM to certain funds managed by JCM (Walter Sins, et al. v. Janus Capital Management, LLC, U.S. District Court, District of Colorado, Case No. 04-CV-01647-WDM-MEH; Michael Fleisher, et al. v. Janus Capital Management LLC, 04-CV-02395-MSK-CBS). The Excessive Fee Litigation was filed by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. Fact discovery is complete and the parties are in the process of completing expert discovery. Trial in this matter is scheduled to commence on May 21, 2007.

IPO Antitrust Litigation

In 2001, a Janus subsidiary was named as a defendant in a class action suit filed in the U.S. District Court for the Southern District of New York. (Pfeiffer v. Credit Suisse First Boston, U.S. District Court, Southern District of New York, Case No. 01-CV-2014). The suit alleges that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff’s antitrust claims in November 2003. In September 2005, the U.S. Court of Appeals for the Second Circuit vacated the U.S. District Court’s decision to dismiss the claims and remanded the case for further proceedings. In March 2006, the defendants, including the Janus subsidiary, filed a Petition for a Writ of Certiorari with the U.S. Supreme Court to review the U.S. Court of Appeal’s decision. The Petition for a Writ of Certiorari was granted by the U.S. Supreme Court in December 2006.

Management believes that the claims made in the civil actions described above have little or no merit and intends to defend against them.

NOTE 17 — RELATED PARTY TRANSACTIONS

Janus earns fees from the various registered investment companies for which it acts as investment adviser. Accounts receivable include amounts due from these investment companies. The table below presents this related party activity as of and for the years ended December 31 (in millions):

				Accounts
	Investment			Receivable
	Management and			from Registered
	Shareowner			Investment			12b-1 Plan
	Servicing Fees			Companies			Fees Earned
2006		$	708.7		$	70.8		$	1.3
2005		680.6			74.9			0.8
2004		779.0			94.0			0.9

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Certain officers and directors of Janus are also officers, directors and/or trustees for the various registered investment companies for which Janus acts as investment adviser.

NOTE 18 — SHAREHOLDER RIGHTS PLAN

Janus entered into the Shareholder Rights Plan (“Rights Plan”) with UMB Bank, N.A., as rights agent as of June 14, 2000. Effective October 2, 2006, UMB Bank, N.A. was replaced as rights agent by Wells Fargo Bank N.A. In connection with the Rights Plan, the Janus Board declared a dividend of one right (“Right”) for each outstanding share of Janus common stock as of the close of business on June 14, 2000 (the “Rights Record Date”). The Rights are not exercisable or transferable separately from the shares of Janus common stock until the earlier of: (i) 10 days following a public announcement that a person or group has acquired or obtained the right to acquire beneficial ownership of 15% or more of the outstanding shares of Janus common stock (unless beneficial ownership of 15% or more is a result of Company repurchases of its own stock), or (ii) 10 days following the commencement or announcement of an intention to make a tender or exchange offer that would result in an acquiring person or group beneficially owning 15% or more of the outstanding shares of Janus common stock (an “Acquiring Person”), unless the Janus Board sets a later date in either event (the earlier of (i) or (ii) being the “Rights Distribution Date”). Under the Rights Plan, the Janus Board has the option to redeem the Rights at a nominal cost or prevent the Rights from being triggered by designating certain offers for all the outstanding Janus common stock as Permitted Offers (as defined in the Rights Plan). No supplement or amendment may be made to the Rights Plan which changes the Redemption Price, the Final Expiration Date, the Purchase Price (as those terms are defined in the Rights Plan) or the number of 1¤1000ths of a share of Preferred Stock for which a Right is exercisable. Subject to the foregoing, prior to the Rights Distribution Date, Janus may amend or supplement the Rights Plan without the consent of any of the holders of the Rights. Following the Rights Distribution Date, the Rights Plan may be amended to cure any ambiguity, correct or supplement any provision that is defective or inconsistent with any other provision of the Rights Plan, or change or supplement any provision so long as such amendment or supplement does not adversely affect the holders of the Rights (other than an Acquiring Person or group). The Rights expire 10 years after the Rights Record Date unless earlier redeemed by Janus.

The Rights, when exercisable, entitle their holders (other than those held by an Acquiring Person) to purchase 1¤1000th of a share of Series A Janus Preferred Stock (subject to adjustment) or, in certain instances, other securities of Janus, including Janus common stock, having a market value equal to twice the exercise price of the Right. In certain circumstances, if Janus is involved in a merger or consolidation and is not the surviving entity or disposes of more than 50% of its assets or earnings power, the Rights also entitle their holders (other than an acquiring person or group) to purchase the highest priority voting shares in the surviving entity or its affiliates having a market value of two times the exercise price of the Rights.

The Rights Plan is intended to encourage a potential Acquiring Person or group to negotiate directly with the Janus Board of Directors but may have certain antitakeover consequences. The Rights Plan could significantly dilute the interests in Janus of an Acquiring Person. The Rights Plan may therefore have the effect of delaying, deterring or preventing a change in control of Janus.

NOTE 19 — SEGMENT AND GEOGRAPHIC INFORMATION

Reportable segments are identified by management based on Janus’ organizational structure and the business activities from which it earns revenue. Janus has determined that it has two primary lines of business: Investment Management and Printing and Fulfillment.

Janus derives substantially all of its revenues and net income from its Investment Management segment, which provides investment management and administrative services to the Company’s investment

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products. Revenues are generally based upon a percentage of the market value of assets under management and are calculated as a percentage of the daily average asset balance in accordance with contractual agreements with the Company’s investment products. Assets under management primarily consist of domestic and international equity and debt securities. Accordingly, fluctuations in the financial markets, relative investment performance, sales and redemptions of investment products, and changes in the composition of assets under management are all factors that have a direct effect on Janus’ operating results.

The Printing and Fulfillment segment derives revenues from digital printing of marketing and compliance communication, fulfillment services (primarily to the financial services industry) and offset printing. The operations of the Printing and Fulfillment segment do not contribute significantly to consolidated revenues and net income.

The following is a summary of financial information concerning the segments (in millions):

	2006
	Investment				Printing and
	Management				Fulfillment				Consolidated
Revenues		$	935.8			$	90.9			$	1,026.7
Depreciation and amortization		32.0				7.9				39.9
Other operating expenses		664.9				98.9				763.8
Operating income (loss)		238.9				(15.9		)		223.0
Interest expense		(32.3		)		-				(32.3		)
Other, net		37.0				2.4				39.4
Income tax (provision) benefit		(90.1		)		8.2				(81.9		)
Equity earnings of unconsolidated affiliate		7.1				-				7.1
Minority interest		(21.7		)		-				(21.7		)
Net income (loss)		$	138.9			$	(5.3	)		$	133.6
Total assets		$	3,379.6			$	158.3			$	3,537.9
Capital expenditures		$	14.6			$	2.4			$	17.0

	2005
	Investment				Printing and
	Management				Fulfillment				Consolidated
Revenues		$	868.3			$	84.8			$	953.1
Depreciation and amortization		35.9				7.9				43.8
Other operating expenses		639.2				112.2				751.4
Operating income (loss)		193.2				(35.3		)		157.9
Interest expense		(28.6		)		—				(28.6		)
Other, net		37.9				1.4				39.3
Income tax (provision) benefit		(72.8		)		4.9				(67.9		)
Equity earnings of unconsolidated affiliate		7.1				—				7.1
Minority interest		(20.0		)		—				(20.0		)
Net income (loss)		$	116.8			$	(29.0	)		$	87.8
Total assets		$	3,456.7			$	171.8			$	3,628.5
Capital expenditures		$	18.3			$	5.3			$	23.6

55

	2004
	Investment				Printing and
	Management				Fulfillment				Consolidated
Revenues		$	921.8			$	89.0			$	1,010.8
Depreciation and amortization		48.9				7.7				56.6
Other operating expenses		742.3				100.0				842.3
Operating income (loss)		130.6				(18.7		)		111.9
Interest expense		(38.4		)		—				(38.4		)
Other, net		191.4				0.7				192.1
Income tax (provision) benefit		(99.4		)		7.2				(92.2		)
Equity earnings of unconsolidated affiliate		6.1				—				6.1
Minority interest		(10.0		)		—				(10.0		)
Net income (loss)		$	180.3			$	(10.8	)		$	169.5
Total assets		$	3,565.2			$	202.4			$	3,767.6
Capital expenditures		$	9.9			$	16.6			$	26.5

The following summary provides information concerning Janus’ principal geographic areas as of and for the years ended December 31, (in millions):

	2006		2005		2004
Revenues:
United States	$	924.4	$	868.1	$	928.7
International*	102.3		85.0		82.1
Total	$	1,026.7	$	953.1	$	1,010.8
Long-lived assets:
United States	$	2,467.7	$	2,401.5	$	2,378.9
International*	4.1		6.9		15.6
Total	$	2,471.8	$	2,408.4	$	2,394.5

*International revenues and assets are attributed to countries based on location at which services are performed, primarily the United Kingdom.

NOTE 20 — QUARTERLY FINANCIAL DATA (UNAUDITED)

	2006
	First		Second		Third		Fourth		Full
(in millions, except per share amounts)	Quarter		Quarter		Quarter		Quarter		Year
Total revenue	$	256.1	$	254.6	$	250.1	$	265.9	$	1,026.7
Operating income	59.2		53.2		51.3		59.3		223.0
Net income	35.3		31.1		29.5		37.7		133.6
Earnings per share  — Basic	0.17		0.15		0.15		0.19		0.66
Earnings per share  — Diluted	0.17		0.15		0.15		0.19		0.66

	2005
	First		Second		Third		Fourth		Full
(in millions, except per share amounts)	Quarter		Quarter		Quarter		Quarter		Year
Total revenue	$	239.0	$	229.3	$	237.5	$	247.3	$	953.1
Operating income	41.3		39.8		44.8		32.0		157.9
Net income	19.6		25.7		31.7		10.8		87.8
Earnings per share  — Basic	0.09		0.12		0.15		0.05		0.40
Earnings per share  — Diluted	0.09		0.12		0.15		0.05		0.40

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF CONTROLS AND PROCEDURES

As of December 31, 2006, Janus evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are the controls and other procedures that the Company designed to ensure that it (i) records, processes, summarizes and reports in a timely manner the information it must disclose in reports that it files with or submits to the SEC and (ii) accumulates and communicates information to management, to allow timely decisions regarding disclosure. Gary D. Black, Chief Executive Officer and David R. Martin, Executive Vice President and Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Black and Martin concluded that, as of the date of their evaluation, Janus’ disclosure controls and procedures were effective.

There has been no change in Janus’ internal controls over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the fourth quarter of 2006 that has materially affected, or is reasonably likely to materially affect, Janus’ internal controls over financial reporting.

NYSE ANNUAL CEO CERTIFICATION

The CEO of the Company has previously submitted to the NYSE the annual certifications required by Section 303A.12(a) of the NYSE Corporate Governance Rules.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEMS 10, 11, 12, 13 AND 14.

The Company’s Proxy Statement for its 2007 Annual Meeting of Stockholders, which, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference in this Annual Report on Form 10-K pursuant to General Instruction G(3) of Form 10-K, provides the information required under Part III (Items 10, 11, 12, 13 and 14).

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)   List of Documents Filed as Part of this Report

(1)   Financial Statements

The financial statements and related notes, together with the report of Deloitte & Touche LLP dated February 26, 2007, appear in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K.

(2)   Financial Statement Schedules

The schedules and exhibits for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission appear in Part II, Item 8, Financial Statements and Supplementary Data, under the Index to Financial Statements of this Form 10-K.

(3)   List of Exhibits

(b)   Exhibits

The Company has incorporated by reference herein certain exhibits as specified below pursuant to Rule 12b-32 under the Exchange Act.

	(3) Articles of Incorporation and Bylaws
3.1.1	Delaware Certificate of Incorporation as Amended and Restated on June 14, 2000, is hereby incorporated by reference from Exhibit 3.1.1 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
3.1.2	Certificate of Designation dated June 15, 2000, establishing Series A Preferred Stock, is hereby incorporated by reference from Exhibit 3.1.2 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
3.2	Bylaws of Janus Capital Group Inc. as Amended and Restated on March 6, 2006, is hereby incorporated by reference from Exhibit 3.1 to Janus’ Current Report on Form 8-K, dated March 7, 2006 (File No. 001-15253)
3.3	Certificate of Ownership and Merger, merging Janus Capital Corporation with and into Stilwell Financial Inc., is hereby incorporated by reference from Exhibit 3.1 to Janus’ Registration Statement on Form S-4 declared effective on February 11, 2003 (File No. 333-102783)
	(4) Instruments Defining the Rights of Security Holders, Including Indentures
4.1	Form of Certificate representing Common Stock is hereby incorporated by reference from Exhibit 4.1 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
4.2.1	Stockholders’ Rights Agreement, dated as of June 14, 2000, between Janus Capital Group Inc. and UMB Bank, N.A., as Rights Agent is hereby incorporated by reference from Exhibit 4.2.1 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
4.2.2	Certificate of Designation establishing Series A Preferred Stock set forth on Exhibit 3.1.2 above, is hereby incorporated by reference

58

4.2.3	Amendment No. 1 to Rights Agreement between Janus Capital Group Inc. and UMB Bank N.A., as Rights Agent, dated February 23, 2005, is hereby incorporated by reference from Exhibit 4.1 to Janus’ Current Report on Form 8-K, dated February 28, 2005 (File No. 001-5253)
4.2.4	Amendment No. 2 to Rights Agreement between Janus Capital Group Inc. and Wells Fargo Bank N.A., as successor Rights Agent, dated October 2, 2006, is attached to this Form 10-K as Exhibit 4.1
4.3	Article FOURTH, Article FIFTH, Article SIXTH, Article SEVENTH and Article ELEVENTH of Exhibit 3.1.1 above are hereby incorporated by reference
4.4	Article II: Article III, Section 2; and Article V of Exhibit 3.2 above are hereby incorporated by reference
4.5.1	7.00% Senior Notes due 2006 Indenture, dated as of November 6, 2001, between Janus Capital Group Inc. and The Chase Manhattan Bank, is hereby incorporated by reference from Exhibit 4.1 to Janus’ Current Report on Form 8-K, dated November 6, 2001
4.5.2	Officers’ Certificate pursuant to the Indenture (as per Exhibit 4.5.1 above) is hereby incorporated by reference from Exhibit 4.2 to Janus’ Current Report on Form 8-K, dated November 6, 2001 (File No. 001-15253)
4.5.3	Officers’ Certificate pursuant to the Indenture (as per Exhibit 4.5.1 above) is hereby incorporated by reference from Exhibit 4.1 to Janus’ Current Report on Form 8-K, dated April 5, 2002 (File No. 001-15253)
4.5.4	Officers’ Certificate pursuant to the Indenture (as per Exhibit 4.5.1 above) is hereby incorporated by reference from Exhibit 4.1 to Janus’ Current Report on Form 8-K, dated July 2, 2002 (File No. 001-15253)
4.6	7.75% Notes due 2009 Prospectus Supplement (to Prospectus dated April 25, 2002) is hereby incorporated by reference from Form 424B2, filed June 28, 2002 (File No. 333-86606)
4.7	6.119% Senior Notes Due 2014 Indenture, dated as of April 26, 2004, between Janus Capital Group Inc. and JP Morgan Chase Bank, as Trustee is hereby incorporated by reference from Exhibit 4.2 to Janus’ Form 10-Q for the quarterly period ended March 31, 2004 (File No. 001-15253)
4.8	5.875% Senior Notes Due 2011 Prospectus Supplement (to Prospectus dated April 25, 2002) is hereby incorporated by reference from Form 424B5, filed September 15, 2006 (File No. 333-86606)
	(10) Material Contracts
10.1	Representative Director Indemnification Agreement is hereby incorporated by reference from Exhibit 10.1 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
10.2	Representative Officer Indemnification Agreement is hereby incorporated by reference from Exhibit 10.2 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)

59

10.3	Intercompany Agreement, dated as of August 16, 1999, between Kansas City Southern Industries, Inc. and Janus Capital Group Inc., is hereby incorporated by reference from Exhibit 10.3 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
10.4	Tax Disaffiliation Agreement, dated as of August 16, 1999, between Kansas City Southern Industries, Inc. and Janus Capital Group Inc., is hereby incorporated by reference from Exhibit 10.4 to Janus’ Registration Statement on Form 10 declared effective on June 15, 2000 (File No. 001-15253)
10.5	$200 million Three-Year Competitive Advance and Revolving Credit Facility Agreement (the “Facility”), dated as of October 19, 2005, with Citibank, N.A., as administrative agent and swingline lender and JPMorgan Chase Bank, N.A., as syndication agent for the lenders is hereby incorporated by reference from Exhibit 10.1 to Janus’ Current Report on Form 8-K, dated October 26, 2005 (File No. 001-15253)
10.6	Share Exchange Agreement with DST Systems, Inc. dated August 25, 2003, is hereby incorporated by reference from Exhibit 99.A to Janus’ SC 13D/A, dated August 25, 2003 (File No. 001-15253)
10.7	Amended and Restated Limited Liability Company Agreement of Janus Capital Management LLC, dated as of March 13, 2002, is hereby incorporated by reference to Janus’ Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-15253)
10.8	Assignment and Assumption Agreement, dated March 16, 2004, between Janus Capital Group Inc. and Capital Group Partners, Inc. is hereby incorporated by reference from Exhibit 10.3 to Janus’ quarterly report on Form 10-Q, dated May 6, 2004 (File No. 001-15253)
10.9	Stilwell Financial Inc. 1998 Long Term Incentive Stock Plan, as Amended and Restated effective as of May 9, 2001 is hereby incorporated by reference from Exhibit 10.2 to Janus’ Form 10-Q for the quarterly period ended June 30, 2001 (File No. 001-15253)
10.9.1	Amended and Restated Janus Capital Group Inc. 1998 Long Term Incentive Stock Plan, effective as of May 12, 2004 is attached to this Form 10-K as Exhibit 10.1*
10.10	Janus Capital Group Inc. Employee Stock Purchase Plan, as Amended and Restated Effective October 23, 2006, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001- 15253)*
10.11	Stilwell Financial Inc. Savings-Related Share Option Scheme dated March 1, 2001 is hereby incorporated by reference from Exhibit 4.1 on Form S-8 dated April 27, 2001 (File No. 333-59636)*
10.12	Janus Capital Group Inc. 2004 Employment Inducement Award Plan, as adopted effective as of April 26, 2004, is hereby incorporated by reference from Exhibit 99.1 from Form S-8, dated May 17, 2004, and the Form of the Non-Qualified Stock Option Award Agreement from Exhibit 99.2 and the Form of the Restricted Stock Award Agreement from Exhibit 99.3*
10.13	Janus Capital Group Inc. Mutual Fund Share Investment Plan is hereby incorporated by reference from Exhibit 10.1 and Exhibit 10.2 to Janus’ Current Report on Form 8-K, dated January 25, 2005 (File No. 001- 15253)*
10.14	Janus Capital Group Inc. Management Incentive Compensation Plan, effective January 1, 2003, is hereby incorporated by reference from Appendix B to Janus’ 2003 Proxy Statement on Schedule 14A (File No. 001-15253)*

60

10.15.1	Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, as Amended and Restated effective November 1, 2001, is hereby incorporated by reference from Exhibit 10.3 to Janus’ Form 10-Q for the quarterly period ended September 30, 2001 (File No. 001-15253)*
10.15.2	First and Second Amendments to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective January 1, 2002 are hereby incorporated by reference from Exhibit 10.5 to Janus’ Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 001-15253)*
10.15.3	Third Amendment to the 401(k), Janus Capital Group Inc. Profit Sharing and Employee Stock Ownership Plan, dated October 2, 2002, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Form 10-Q for the quarterly period ended September 30, 2002 (File No. 001-15253)*
10.15.4	Fourth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, is hereby incorporated by reference from Exhibit 10.13.4 to Janus’ Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001- 15253)*
10.15.5	Fifth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective March 8, 2004, and August 12, 2004, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 001-15253)*
10.15.6	Sixth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective March 28, 2005, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 001-15253)*
10.15.7	Seventh Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective April 1, 2005, is hereby incorporated by reference from Exhibit 10.5 to Janus’ Form 10-Q for the quarterly period ended June 30, 2005 (File No. 001-15253)*
10.15.8	Eighth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective May 26, 2005, is hereby incorporated by reference from Exhibit 10.4 to Janus’ Form 10-Q for the quarterly period ended June 30, 2005 (File No. 001-15253)*
10.15.9	Ninth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective January 1, 2006, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Annual report on Form 10-K for the year ended December 31, 2005 (File No. 001- 15253)*
10.15.10	Tenth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective January 1, 2007, is attached to this Form 10-K as Exhibit 10.2*
10.16	Janus Capital Group Inc. Income Deferral Program, Effective as of November 9, 2004 is hereby incorporated by reference from Exhibit 10.1 to Janus’ Current Report on Form 8-K, dated November 12, 2004 (File No. 001-15253)*
10.17	Janus Capital Group Inc. Amended and Restated Directors’ Deferred Fee Plan, effective as of January 1, 2005 is hereby incorporated by reference from Exhibit 10.3 to Janus’ Annual report on Form 10-K for the year ended December 31, 2004 (File No. 001- 15253)*

61

10.18.1	Form of Janus Capital Group Inc. Restricted Stock, Mutual Fund Units and Stock Option Award Agreements effective for awards granted in 2006, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Annual report on Form 10-K for the year ended December 31, 2005 (File No. 001- 15253)*
10.18.2	Form of Long-term Incentive Acceptance with Appendix A (Restricted Stock), Appendix B (Stock Options) and Appendix C (Mutual Fund Units), effective for awards granted in 2007, is attached to this Form 10.K as Exhibit 10.3*
10.19	Janus’ 2006 variable compensation plan for certain executive officers, approved by the Compensation Committee of the Board of Directors for Janus on January 23, 2006, is hereby incorporated by reference from Janus’ Current Report on Form 8-K, dated January 26, 2006 (File No. 001-15253)*
10.20	Janus’ 2005 Long-Term Incentive Stock Plan, approved by shareholders of the Company on May 10, 2005, is hereby incorporated by reference From Appendix C to Janus’ 2005 Proxy Statement on Schedule 14A (File No. 001-15253)*
10.21.1	Amended and Restated Employment Agreement by and between Janus Capital Group Inc. and Gary Black, dated September  25, 2006, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Current Report on Form 8-K, dated September 28, 2006 (File No. 001-15253)*
10.21.2	Change in Control Agreement by and between Janus Capital Group Inc. and Gary D. Black, dated May 1, 2006, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Current Report on Form 8-K, dated May 4, 2006 (File No. 001-15253)*
10.22.1	Change of Control Agreement by and between Janus Capital Group Inc. and Robin C. Beery, dated as of February 10, 2003, is hereby incorporated by reference from Exhibit 10.32 to Janus’ Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-15253)*
10.22.2	Bonus Deferral Agreement by and between Janus Capital Group Inc. and Robin C. Beery, dated as of February 20, 2004, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Form 10-Q for the quarterly period ended June 30, 2004 (File No. 001-15253)*
10.23	Transition Agreement by and between Janus Capital Group Inc. and Girard C. Miller dated as of August 2, 2005, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Form 10-Q for the quarterly period ended June 30, 2005 (File No. 001-15253)*
10.24.1	Employment Agreement by and between Janus Capital Group Inc. and John H. Bluher, dated July 7, 2004, is hereby incorporated by reference from Exhibit 10.1 from Form S-4/A, dated September 20, 2004 (File No. 333-116379)*
10.24.2	Change of Control Agreement by and between Janus Capital Group Inc. and John H. Bluher, dated as of May 1, 2006, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Current Report on Form 8-K, dated May 4, 2006 (File No. 001-15253)*
10.25	Consulting and Separation Agreement by and between Janus Capital Group Inc. and Mark B. Whiston, dated as of April 20, 2004, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Form 10-Q for the quarterly period ended March 1, 2004 (File No. 001-15253)*
10.26	Separation Agreement by and between Janus Capital Group Inc. and Lars O. Soderberg, dated as of July 21, 2004, is hereby incorporated by reference from Exhibit 10.1 to Janus’ Form 10-Q for the quarterly period ended June 30, 2004 (File No. 001-15253)*

62

10.27.1	Term Sheet setting forth the terms of employment of David R. Martin is hereby incorporated by reference from Exhibit 10.1 to Janus’ Current Report on Form 8-K, dated June 7, 2005 (File No. 001-15253)*
10.27.2	Change in Control Agreement by and between Janus Capital Group Inc. and David R. Martin, dated June 7, 2005, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Current Report on Form 8-K, dated June 7, 2005 (File No. 001-15253)*
10.28	Change in Control Agreement by and between Janus Capital Group Inc. and Dominic C. Martellaro, dated May 1, 2006, is hereby incorporated by reference from Exhibit 10.3 to Janus’ Current Report on Form 8-K, dated May 4, 2006 (File No. 001-15253)*
10.29	Change in Control Agreement by and between the Company and John W. Zimmerman, dated May 1, 2006, is hereby incorporated by reference from Exhibit 10.4 to Janus’ Current Report on Form 8-K, dated May 4, 2006 (File No. 001-15253)*
10.30	Change in Control Agreement by and between the Company and Gregory A. Frost, dated August 5, 2005, is attached to this Form 10-K as Exhibit 10.4
10.31	Change in Control Agreement by and between the Company and Kelley A. Howes, dated August 5, 2005, is attached to this Form 10-K as Exhibit 10.5
10.32.1	Summary cover letter of employment agreement by and between the Company and Jonathan Coleman, dated December 29, 2004, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.32.2	Letter Severance Agreement by and between the Company and Jonathan Coleman, dated December 29, 2004, is hereby incorporated by reference from Exhibit 10.4 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.32.3	Change in Control Agreement by and between the Company and Jonathan Coleman, dated January 1, 2005, is hereby incorporated by reference from Exhibit 10.6 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.33.1	Summary cover letter of employment agreement by and between the Company and Richard Gibson Smith, dated December 29, 2004, is hereby incorporated by reference from Exhibit 10.2 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.33.2	Letter Severance Agreement by and between the Company and Richard Gibson Smith, dated December 29, 2004, is hereby incorporated by reference from Exhibit 10.4 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.33.3	Change in Control Agreement by and between the Company and Richard Gibson Smith dated, January 1, 2005, is hereby incorporated by reference from Exhibit 10.6 to Janus’ Form 10-Q for the quarterly period ended September 30, 2006 (File No. 001-15253)*
10.34	Amendment to long-term incentive awards granted to Steven L. Scheid approved on November 11, 2005 is hereby incorporated by reference to Janus’ Current Report on Form 8-K, dated November 16, 2005 (File No. 001-15253)*
	*Compensatory plan or agreement.
	(12) Statements Re Computation of Ratios
12.1	The Computation of Ratio of Earnings to Fixed Charges prepared pursuant to Item 601(b)(12) of Regulation S-K is attached to this Form 10-K as Exhibit 12.1

63

	(21) Subsidiaries of the Company
21.1	The list of the Subsidiaries of the Company prepared pursuant to Item 601(b)(21) of Regulation S-K is attached to this Form 10-K as Exhibit 21.1
	(23) Consents of Experts and Counsel
23.1	The Consent of Independent Registered Public Accounting Firm prepared pursuant to Item 601(b)(23) of Regulation S-K is attached to this Form 10-K as Exhibit 23.1
	(31) Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification of Gary D. Black, Chief Executive Officer of Registrant
31.2	Certification of David R. Martin, Executive Vice President and Chief Financial Officer of Registrant
	(32) Section 1350 Certificates
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
32.2	Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
	(99) Additional Exhibits
99.1	Lipper Ratings

64

(c)Exhibits

JANUS CAPITAL GROUP INC.
2006 FORM 10-K ANNUAL REPORT
INDEX TO EXHIBITS

Exhibit No.			Document	Regulation S-K Item 601(b) Exhibit No.
	4.1	Amendment No. 2 to Rights Agreement between Janus Capital Group Inc. and Wells Fargo Bank N.A., as successor Rights Agent, dated October 2, 2006			4
	10.1	Amended and Restated Janus Capital Group Inc. 1998 Long Term Incentive Stock Plan, effective as of May 12, 2004			10
	10.2	Tenth Amendment to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, effective January 1, 2007			10
	10.3	Form of Long-term Incentive Acceptance with Appendix A (Restricted Stock), Appendix B (Stock Options) and Appendix C (Mutual Fund Units), effective for awards granted in 2007			10
	10.4	Change in Control Agreement by and between the Company and Gregory A. Frost, dated August 5, 2005			10
	10.5	Change in Control Agreement by and between the Company and Kelley A. Howes, dated August 5, 2005			10
	12.1	The Computation of Ratio of Earnings to Fixed Charges prepared pursuant to Item 601(b)(12) of Regulation S-K			12
	21.1	The List of the Subsidiaries of the Company prepared pursuant to Item 601(b)(21) of Regulation S-K			21
	23.1	Consent of Independent Registered Public Accounting Firm — Deloitte & Touche LLP			23
	31.1	Certification of Gary D. Black, Chief Executive Officer of Registrant			31
	31.2	Certification of David R. Martin, Executive Vice President and Chief Financial Officer of Registrant			31
	32.1	Certification of Gary D. Black, Chief Executive Officer of Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			32
	32.2	Certification of David R. Martin, Executive Vice President and Chief Financial Officer of Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			32
	99.1	Lipper Ratings			99

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Janus Capital Group Inc.
	By:	/s/ GARY D. BLACK
		Gary D. Black
		Chief Executive Officer
February 26, 2007

The officers and directors of Janus Capital Group Inc., whose signatures appear below, hereby constitute and appoint John H. Bluher or David R. Martin, and each of them (with full power to each of them to act alone), the true and lawful attorney-in-fact to sign and execute, on behalf of the undersigned, any amendment(s) to this Form 10-K Annual Report for the year ended December 31, 2006, and any instrument or document filed as part of, as an exhibit to or in connection with any amendment, and each of the undersigned does hereby ratify and confirm as his or her own act and deed all that said attorneys shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 26, 2007.

	Signature		Title
/s/ GARY D. BLACK		Director and Chief Executive Officer
Gary D. Black
/s/ DAVID R. MARTIN		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
David R. Martin
/s/ GREGORY A. FROST		Senior Vice President and Controller (Principal Accounting Officer)
Gregory A. Frost
/s/ STEVEN L. SCHEID		Chairman of the Board
Steven L. Scheid
/s/ P. F. BALSER		Director
P. F. Balser
/s/ M. D. BILLS		Director
M. D. Bills

66

/s/ G. A. COX	Director
G. A. Cox
/s/ J. P. CRAIG, III	Director
J. P. Craig, III
/s/ J. R. FREDERICKS	Director
J.R. Fredericks
/s/ D. R. GATZEK	Director
D. R. Gatzek
/s/ R. T. PARRY	Director
R.T. Parry
/s/ L. H. ROWLAND	Director
L. H. Rowland
/s/ R. SKIDELSKY	Director
R. Skidelsky

67

EX-4.1

Ex. 4.1

AMENDMENT NO. 2 TO THE RIGHTS AGREEMENT

Amendment No. 2 to the Rights Agreement, dated as of October 2, 2006 (the “Amendment”), by and between Janus Capital Group Inc., a Delaware corporation (the “Company”) (formerly known as Stilwell Financial Inc., a Delaware corporation), and Wells Fargo Bank, N.A., a national banking association organized and existing under the laws of the United States of America (“Wells Fargo”), as successor Rights Agent.

WHEREAS, on June 14, 2000, the Company and UMB Bank, N.A. entered into a Rights Agreement, as amended on February 23, 2005 (the “Agreement”); and

WHEREAS, pursuant to Section 21 of the Agreement, the Company desires to amend the Agreement to appoint Wells Fargo as successor Rights Agent.

NOW, THEREFORE, in consideration of the premises and mutual agreements herein set forth, and intending to be legally bound hereby, the parties hereto agree that the Agreement shall be and hereby is amended in the following manner:

Section 1.  Appointment.  The Company hereby appoints Wells Fargo to act as Rights Agent for the Company and the holders of the Rights in accordance with the terms and conditions of the Agreement, and Wells Fargo hereby accepts such appointment.  The term “Rights Agent” as used in the Agreement shall be deemed to refer to Wells Fargo as of the date of this Amendment.

Section 2.  “Agreement” as Amended.  The term “Agreement” as used in the Agreement shall be deemed to refer to the Agreement as amended hereby, and all references to the Agreement shall be deemed to include this Amendment.  Except as amended hereby, the Agreement and all schedules or exhibits thereto remain in full force and effect.

Section 3.  Effectiveness.  This Amendment shall be effective as of the date first written above, and except as set forth herein, the Agreement shall remain in full force and effect and otherwise shall be unaffected hereby.

Section 4.  Governing Law.   This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts to be made and performed entirely within such state.

Section 5.  Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and attested as of the date first written above.

JANUS CAPITAL GROUP INC.
By:	/s/ Gregory A. Frost_
	Name: Gregory A. Frost
	Title: Senior Vice President
WELLS FARGO BANK, N.A.
By:	/s/ Steven J. Hoffman
	Name: Steven J. Hoffman
	Title: Assistant Vice President

2

EX-10.1

Ex. 10.1

JANUS CAPITAL GROUP INC.

1998 Long Term Incentive Stock Plan

(as amended and restated effective as of May 12, 2004)

Table of Contents

Article	Page
1. History, Effective Date, Objectives and Duration	1
2. Definitions	1
3. Administration	9
4. Shares Subject to the Plan and Maximum Awards	11
5. Eligibility and General Conditions of Awards	12
6. Stock Options	16
7. Stock Appreciation Rights and Limited Stock Appreciation Rights	18
8. Restricted Shares	20
9. Performance Units and Performance Shares	21
10. Bonus Shares	22
11. Beneficiary Designation	22
12. Deferrals	22
13. Rights of Employees/Directors/Consultants	23
14. Change of Control	23
15. Amendment, Modification, and Termination	24
16. Withholding	25
17. Successors	26
18. Additional Provisions	26

Janus Capital Group Inc.

1998 Long Term Incentive Stock Plan

(AS AMENDED AND RESTATED EFFECTIVE AS OF MAY 12, 2004)

Article 1.   History, Effective Date, Objectives and Duration

1.1                 History.  Janus Capital Group Inc., a Delaware corporation (the “Company”), has established the Janus Capital Group Inc. 1998 Long Term Incentive Stock Plan, as set forth herein, and as the same may be amended from time to time (the “Plan”).  The Plan was originally adopted by the Board of Directors of the Company (the “Board”) and approved by the sole stockholder of the Company, Kansas City Southern Industries, Inc. (“KCSI”) and by the stockholders of KCSI on July 15, 1998, to be effective as of June 1, 1998 (the “Effective Date”).  Effective August 11, 1999, Section 2.14 of the Plan was amended and the Plan was renamed; effective June 15, 2000, Sections 2.51, 5.7 and 15.1 were amended; effective January 18, 2001, Sections 2.42, 2.51 and 5.6(d) were amended; effective May 9, 2001, Section 5.6(d) was amended; effective March 12, 2003, Sections 1.1 and 18.7 were amended; and effective May 12, 2004, Sections 2.2, 2.5, 2.6, 2.16, 2.34, 2.42, 2.50, 3.1, 4.1, 8.3, 8.4, 8.5 and 13.3 were amended.  Each such time the Plan was amended, the Plan has been restated as so amended, as set forth herein.

1.2                 Objectives of the Plan.  The Plan is intended to allow employees, directors and consultants of the Company and its Subsidiaries to acquire or increase equity ownership in the Company, thereby strengthening their commitment to the success of the Company and stimulating their efforts on behalf of the Company, and to assist the Company and its Subsidiaries in attracting new employees, directors and consultants and retaining existing employees, directors and consultants. The Plan also is intended to optimize the profitability and growth of the Company through incentives which are consistent with the Company’s goals; to provide employees, directors and consultants with an incentive for excellence in individual performance; and to promote teamwork among employees, directors and consultants.

1.3                 Duration of the Plan.  The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Article 15 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions.  However, in no event may an Incentive Stock Option be granted under the Plan on or after the date 10 years following the earlier of (i) the date the Plan was adopted and (ii) the date the Plan was approved by the stockholders of the Company.

Article 2.   Definitions

Whenever used in the Plan, the following terms shall have the meanings set forth below:

2.1                 “Article” means an Article of the Plan.

2.2                 “Award” means Options (including Incentive Stock Options), Restricted Shares (awarded as Shares or Share Units), Bonus Shares (awarded as Shares or Share Units), stock

appreciation rights (SARs), limited stock appreciation rights (LSARs), Performance Units, Performance Shares or Dividend Equivalents granted under the Plan.

2.3                 “Award Agreement” means the written agreement by which an Award shall be evidenced.

2.4                 “Board” has the meaning set forth in Section 1.1.

2.5                 “Bonus Shares” means Shares or Share Units that are awarded to a Grantee without cost and without restrictions in recognition of past performance (whether determined by reference to another employee benefit plan of the Company or otherwise) or as an incentive to become an employee, director or consultant of the Company or a Subsidiary.

2.6                 “Cause” means, unless otherwise defined in an Award Agreement,

(a)     before the occurrence of a Change of Control, any one or more of the following, as determined by the Committee:

(1)     a Grantee’s commission of a crime which, in the judgment of the Committee, resulted or is likely to

result in damage or injury to the Company or a Subsidiary;

(2)     the material violation by the Grantee of written policies of the Company or a Subsidiary;

(3)     the habitual neglect or failure by the Grantee in the performance of his or her duties to the Company

or a Subsidiary (but only if such neglect or failure is not remedied within a reasonable remedial period after Grantee’s

receipt of written notice from the Company which describes such neglect or failure in reasonable detail and specifies the

remedial period); or

(4)     action or inaction by the Grantee in connection with his or her duties to the Company or a

Subsidiary resulting, in the judgment of the Committee, in material injury to the Company or a Subsidiary; and

(b)     from and after the occurrence of a Change of Control, the occurrence of any one or more of the following, as determined in the good faith and reasonable judgment of the Committee:

(1)     Grantee’s conviction for committing an act of fraud, embezzlement, theft, or any other act

constituting a felony involving moral turpitude or causing material damage or injury, financial or otherwise, to the

Company;

(2)     a demonstrably willful and deliberate act or failure to act which is committed in bad faith, without

reasonable belief that such action or inaction is in the best

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interests of the Company, which causes material damage or injury, financial or otherwise, to the Company (but only if

such act or inaction is not remedied within 15 business days of Grantee’s receipt of written notice from the Company

which describes the act or inaction in reasonable detail); or

(3)     the consistent gross neglect of duties or consistent wanton negligence by the Grantee in the

performance of the Grantee’s duties (but only if such neglect or negligence is not remedied within a reasonable remedial

period after Grantee’s receipt of written notice from the Company which describes such neglect or negligence in

reasonable detail and specifies the remedial period).

2.7     “Change of Control” means, unless otherwise defined in an Award Agreement, any one or more of the following:

(a)     the acquisition or holding by any person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), other than by the Company or any Subsidiary or any employee benefit plan of the Company or a Subsidiary (and other than by KCSI prior to the Spin-off Distribution), of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 20% or more of the then-outstanding Common Stock or the then-outstanding Voting Power of the Company; provided, however, that no Change of Control shall occur solely by reason of any such acquisition by a corporation with respect to which, after such acquisition, more than 60% of both the then-outstanding common shares and the then-outstanding Voting Power of such corporation are then beneficially owned, directly or indirectly, by the persons who were the bene­ficial owners of the then-outstanding Common Stock and Voting Power of the Company immediately before such acquisition, in substantially the same proportions as their respective ownership, immediately before such acquisition, of the then-outstanding Common Stock and Voting Power of the Company; or

(b)     individuals who, as of the date of the Spin-off Distribution, constitute the Board (the “Incum­bent Board”) cease for any reason to constitute at least 75% of the Board; provided that any individual who becomes a director after the Effective Date whose election or nomi­nation for election by the Company’s stockholders was approved by at least 75% of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 under the 1934 Act) or “tender offer” (as such term is used in Section 14(d) of the 1934 Act) or a proposed Extraordinary Transaction (as defined below)) shall be deemed to be a member of the Incumbent Board; or

(c)     approval by the stockholders of the Company of any one or more of the following:

(1)     a merger, reorganiza­tion, consolidation or similar transaction (any of the foregoing, an “Extraordinary Transaction”) with respect to which persons who were the respective beneficial owners of the then-outstanding Common Stock and Voting Power of the Company immediately before such Extraordinary Transaction would not, if such Extraordinary Transaction

3

were to be consummated immediately after such stockholder approval (but otherwise in accordance with the terms presented in writing to the stockholders of the Company for their approval), beneficially own, directly or indirectly, more than 60% of both the then-outstanding common shares and the then-outstanding Voting Power of the corporation resulting from such Extraordinary Transaction, in substantially the same proportions as their respective ownership, immediately before such Extraordinary Transaction, of the then-outstanding Common Stock and Voting Power of the Company,

(2)     a liquidation or dissolution of the Company, or

(3)     the sale or other disposition of all or substantially all of the assets of the Company in one transaction or a series of related transactions.

2.8                 “Change of Control Value” means the Fair Market Value of a Share on the date of a Change of Control.

2.9                 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and regulations and rulings thereunder.  References to a particular section of the Code include references to successor provisions of the Code or any successor code

2.10               “Committee,” “Plan Committee” and “Management Committee” have the meanings set forth in Article 3.

2.11               “Common Stock” means the common stock, $.01 par value, of the Company.

2.12               “Company” has the meaning set forth in Section 1.1.

2.13               “Covered Employee” means a Grantee who, as of the date that the value of an Award is recognizable as taxable income, is one of the group of “covered employees,” within the meaning of Code Section 162(m).

2.14               “Disability” means, unless otherwise defined in an Award Agreement, for purposes of the exercise of an Incentive Stock Option after Termination of Affiliation, a disability within the meaning of Section 22(e)(3) of the Code, and for all other purposes, means total disability as determined for purposes of the long term disability plan of Company or any Subsidiary or other employer of the Grantee and disability shall be deemed to occur for purposes of the Plan on the date such determination of disability is made.

2.15               “Disqualifying Disposition” has the meaning set forth in Section 6.4.

2.16               “Dividend Equivalents” has the meaning set forth in Section 13.3.

2.17               “Effective Date” has the meaning set forth in Section 1.1.

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2.18               “Eligible Person” means (i) any employee (including any officer) of the Company or any Subsidiary, including any such employee who is on an approved leave of absence, layoff, or has been subject to a disability which does not qualify as a Disability, (ii) any director of the Company or any Subsidiary and (iii) any person performing services for the Company or a Subsidiary in the capacity of a consultant.  Solely for purposes of granting KCSI Substitute Options (as defined in Section 6.3), Eligible Person shall also include any person who holds a KCSI Option (as defined in Section 6.3) as of the date that a KCSI Substitute Option is granted.

2.19               “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.  References to a particular section of the Exchange Act include references to successor provisions.

2.20               “Extraordinary Transaction” has the meaning set forth in Section 2.7.

2.21               “Fair Market Value” means (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee, and (B) with respect to Shares, unless otherwise determined by the Committee, as of any date, (i) the average of the high and low trading prices on the date of determination on the New York Stock Exchange (or, if no sale of Shares was reported for such date, on the next preceding date on which a sale of Shares was reported); (ii) if the Shares are not listed on the New York Stock Exchange, the average of the high and low trading prices of the Shares on such other national exchange on which the Shares are principally traded or as reported by the National Market System, or similar organization, or if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organizations; or (iii) in the event that there shall be no public market for the Shares, the fair market value of the Shares as determined by the Committee.

2.22               “Freestanding SAR” means an SAR that is granted independently of any other Award.

2.23               “Good Reason” means, unless otherwise defined in an Award Agreement, the occurrence after a Change of Control, without a Grantee’s prior written consent, of any one or more of the following:

(a)     the assignment to the Grantee of any duties which result in a material adverse change in the Grantee’s position (including status, offices, titles, and reporting require­ments), authority, duties, or other responsibilities with the Company, or any other action of the Company which results in a material adverse change in such position, authority, duties, or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Company promptly after receipt of notice thereof given by the Grantee,

(b)     any relocation of the Grantee of more than 40 miles from the place where the Grantee was located at the time of the Change of Control, or

5

(c)     a material reduction or elimination of any component of the Grantee’s rate of compensa­tion, including (x) base salary, (y) any incentive payment or (z) benefits or prerequisites which the Grantee was receiving immediately prior to a Change of Control.

2.24               “Grant Date” has the meaning set forth in Section 5.2.

2.25               “Grantee” means an individual who has been granted an Award.

2.26               “Incentive Stock Option” means an option granted under Article 6 of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provisions thereto.

2.27               “including” or “includes” means “including, without limita­tion,” or “includes, without limitation,” respectively.

2.28               “LSAR” means a limited stock appreciation right.

2.29               “Mature Shares” means Shares for which the holder thereof has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.

2.30               “Minimum Consideration” means $.01 per Share or such other amount that is from time to time considered to be capital for purposes of Section 154 of the Delaware General Corporation Law.

2.31               “Option” means an option granted under Article 6 of the Plan.

2.32               “Option Price” means the price at which a Share may be purchased by a Grantee pursuant to an Option.

2.33               “Option Term” means the period beginning on the Grant Date of an Option and ending on the expiration date of such Option, as specified in the Award Agreement for such Option and as may, consistent with the provisions of the Plan, be extended from time to time by the Committee prior to the expiration date of such Option then in effect.

2.34               “Outside Director” means a member of the Board who is not an employee of the Company or any Subsidiary and who meets the other requirements to be an outside director (as that term is defined for purposes of the regulations under Code section 162(m)).

2.35               “Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m).

2.36               “Performance Period” has the meaning set forth in Section 9.2.

6

2.37               “Performance Share” or “Performance Unit” has the meaning set forth in Article 9.

2.38               “Period of Restriction” means the period during which the transfer of Restricted Shares is limited in some way (the length of the period being based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 8.

2.39               “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.40               “Plan” has the meaning set forth in Section 1.1.

2.41               “Required Withholding” has the meaning set forth in Article 16.

2.42               “Restricted Shares” means Shares or Share Units that are subject to forfeiture if the Grantee does not satisfy the conditions specified in the Award Agreement applicable to such Shares or Share Units.

2.43               “Retirement” means, for any Grantee who is a director of the Company or an employee, Termination of Affiliation by the Grantee upon either (i) having both attained age fifty-five (55) and completed at least ten (10) years of service with the Company or a Subsidiary or a Consolidated Subsidiary, including any years of service such employee may have had with KCSI or (ii) meeting such other requirements as may be specified by the Committee.

2.44               “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, as amended from time to time, together with any successor rule, as in effect from time to time.

2.45               “SAR” means a stock appreciation right.

2.46               “SEC” means the United States Securities and Exchange Commission, or any successor thereto.

2.47               “Section” means, unless the context otherwise requires, a Section of the Plan.

2.48               “Section 16 Person” means a person who is subject to potential liability under Section 16(b) of the 1934 Act with respect to transactions involving equity securities of the Company.

2.49               “Share” means a share of Common Stock.

7

2.50               “Share Unit” means a bookkeeping entry representing the equivalent of one share of Common Stock that is payable in the form of Common Stock, cash or any combination of the foregoing.

2.51               “Spin-off Distribution” means the distribution by KCSI of at least 80% of the outstanding Shares, as a result of which the Company ceases to be a subsidiary of KCSI.

2.52               “Strike Price” of any SAR shall equal, for any Tandem SAR (whether such Tandem SAR is granted at the same time as or after the grant of the related Option), the Option Price of such Option, or for any other SAR, 100% of the Fair Market Value of a Share on the Grant Date of such SAR; provided that the Committee may specify a higher Strike Price in the Award Agreement.

2.53               “Subsidiary” means, for purposes of grants of Incentive Stock Options, a corporation as defined in Section 424(f) of the Code (with the Company being treated as the employer corporation for purposes of this definition) and, for all other purposes, a United States or foreign corporation or limited liability company, partnership or other similar entity with respect to which the Company owns, directly or indirectly, 50% (or such lesser percentage as the Committee may specify, which percentage may be changed from time to time and may be different for different entities) or more of the Voting Power of such corporation, limited liability company, partnership or other similar entity and “Consolidated Subsidiary” means a Subsidiary that is consolidated with the Company for financial reporting purposes.

2.54               “Tandem SAR” means an SAR that is granted in connection with a related Option, the exercise of which shall require cancellation of the right to purchase a Share under the related Option (and when a Share is purchased under the related Option, the Tandem SAR shall similarly be canceled).

2.55               “Termination of Affiliation” occurs on the first day on which an individual is for any reason no longer providing services to the Company or any Subsidiary in the capacity of an employee, director or consultant, or with respect to an individual who is an employee or director of, or consultant to, a corporation which is a Subsidiary, the first day on which such corporation ceases to be a Subsidiary.

2.56               “10% Owner” means a person who owns capital stock (including stock treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or any Subsidiary.

2.57               “Voting Power” means the combined voting power of the then-outstanding securities of a corporation entitled to vote generally in the election of directors.

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Article 3.   Administration

3.1Committee

(a)  Subject to Article 15, and to Section 3.2, the Plan shall be administered by the Board, or a committee appointed by the Board to administer the Plan (“Plan Committee”).  To the extent the Board considers it desirable to comply with or qualify under Rule 16b-3 or meet the Performance-Based Exception, the Plan Committee shall consist of two or more directors of the Company, all of whom qualify as Outside Direc­tors and “non-employee directors” within the meaning of Rule 16b-3. The number of members of the Plan Committee shall from time to time be increased or decreased, and shall be subject to such conditions, in each case as the Board deems appropriate to permit transactions in Shares pursuant to the Plan to satisfy such conditions of Rule 16b-3 and the Performance-Based Exception as then in effect.

(b) The Board or the Plan Committee may appoint and delegate to another committee (“Management Committee”) any or all of the authority of the Board or the Plan Committee, as applicable, with respect to Awards to Grantees other than Grantees who are Section 16 Persons at the time any such delegated authority is exercised. With respect to Awards that are intended to meet the Performance-Based Exception and that are made to a Grantee who is expected to be a Covered Employee, such delegation shall not include any authority, which if exercised by the Management Committee rather than by the Plan Committee, would cause the Grantee’s Award to fail to meet the Performance-Based Exception.

(c)  Any references herein to “Committee” are references to the Board, or the Plan Committee or the Management Committee, as applicable.

3.2Powers of Committee

Subject to the express provisions of the Plan, the Committee has full and final authority and sole discretion as follows:

(a)  to determine when, to whom and in what types and amounts Awards should be granted and the terms and conditions applicable to each Award, including the benefit payable under any SAR, Performance Unit or Performance Share, and whether or not specific Awards shall be granted in connection with other specific Awards, and if so whether they shall be exercisable cumulatively with, or alternatively to, such other specific Awards;

(b) to determine the amount, if any, that a Grantee shall pay for Restricted Shares, whether to permit or require the payment of cash dividends thereon to be deferred and the terms related thereto, when Restricted Shares (including Restricted Shares acquired upon the exercise of an Option) shall be forfeited and whether such shares shall be held in escrow;

(c)  to construe and interpret the Plan and to make all determinations necessary or advisable for the administration of the Plan;

9

(d) to make, amend, and rescind rules relating to the Plan, including rules with respect to the exercisability and nonforfeitability of Awards upon the Termination of Affiliation of a Grantee;

(e)  to determine the terms and conditions of all Award Agreements (which need not be identical) and, with the consent of the Grantee, to amend any such Award Agreement at any time, among other things, to permit transfers of such Awards to the extent permitted by the Plan; provided that the consent of the Grantee shall not be required for any amendment which (i) does not adversely affect the rights of the Grantee, or (ii) is necessary or ad­visable (as determined by the Com­mittee) to carry out the purpose of the Award as a result of any new or change in existing applicable law;

(f)  to cancel, with the consent of the Grantee, outstanding Awards and to grant new Awards in substitution therefore;

(g) to accelerate the exercisability (including exercisability within a period of less than six months after the Grant Date) of, and to accelerate or waive any or all of the terms and condi­tions applicable to, any Award or any group of Awards for any reason and at any time, including in connection with a Termination of Affiliation;

(h) subject to Sections 1.3 and 5.3, to extend the time during which any Award or group of Awards may be exercised;

(i)  to make such adjustments or modifications to Awards to Grantees working outside the United States as are advisable to fulfill the purposes of the Plan or to comply with applicable local law;

(j)   to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including limiting the percentage of Awards which may from time to time be exercised by a Grantee; and

(k)  to take any other action with respect to any matters relating to the Plan for which it is responsible.

All determinations on all matters relating to the Plan or any Award Agreement may be made in the sole and absolute discretion of the Committee, and all such determinations of the Committee shall be final, conclusive and binding on all Persons.  No member of the Committee shall be liable for any action or determination made with respect to the Plan or any Award.

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Article 4.   Shares Subject to the Plan and Maximum Awards

4.1                 Number of Shares Available for Grants.  Subject to adjustment as provided in Section 4.2, the number of Shares hereby reserved for issuance under the Plan shall be 30,000,000, and the number of Shares for which Awards (other than KCSI Substitute Options, as defined in Section 6.3) may be granted to any Grantee on any Grant Date, when aggregated with the number of Shares for which Awards (other than KCSI Substitute Options) have previously been granted to such Grantee in the same calendar year, shall not exceed one percent (1%) of the total Shares outstanding as of such Grant Date; provided, however, that the total number of Shares for which Awards (other than KCSI Substitute Options) may be granted to any Grantee in any calendar year shall not exceed 2,000,000. For purposes of determining the maximum for a Grantee under the preceding sentence, any award of Shares that the Grantee receives under the Company’s Employment Inducement Award Plan shall be treated as if it were an Award of Shares under this Plan.  If any Shares subject to an Award granted hereunder are forfeited or such Award otherwise terminates without the issuance of such Shares or of other consider­ation in lieu of such Shares, the Shares subject to such Award, to the extent of any such forfeiture or termination shall again be available for grant under the Plan.  If any Shares (whether subject to or received pursuant to an Award granted hereunder, purchased on the open market, or otherwise obtained) are withheld, applied as payment, or sold pursuant to procedures approved by the Committee and the proceeds thereof applied as payment in connection with the exercise of an Award or the withholding of taxes related thereto, such Shares, to the extent of any such withholding or payment, shall again be available or shall increase the number of Shares available, as applicable, for grant under the Plan.  The Committee may from time to time determine the appropriate methodology for calculating the number of Shares (i) issued pursuant to the Plan, and (ii) granted to any Grantee pursuant to the Plan.  Shares issued pursuant to the Plan may be treasury Shares or newly-issued Shares.

4.2                 Adjustments in Authorized Shares.  In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Shares or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event that occurs at any time after the Spin-off Distribution affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award or the substitution of other property for Shares subject to an outstanding Award; provided, in each case that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such adjustment would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto;

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and provided further, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

Article 5.   Eligibility and General Conditions of Awards

5.1                 Eligibility.  The Committee may grant Awards to any Eligible Person, whether or not he or she has previously received an Award.

5.2                 Grant Date.  The Grant Date of an Award shall be the date on which the Committee grants the Award or such later date as specified by the Committee.

5.3                 Maximum Term.  The Option Term or other period during which an Award may be outstanding shall under no circumstances extend more than 10 years after the Grant Date, and shall be subject to earlier termination as herein provided; provided, however, that any deferral of a cash payment or of the delivery of Shares that is permitted or required by the Committee pursuant to Article 12 may, if so permitted or required by the Committee, extend more than 10 years after the Grant Date of the Award to which the deferral relates.

5.4                 Award Agreement.  To the extent not set forth in the Plan, the terms and conditions of each Award (which need not be the same for each grant or for each Grantee) shall be set forth in an Award Agreement.

5.5                 Restrictions on Share Transferability.  The Committee may impose such restrictions on any Shares acquired pursuant to the exercise or vesting of an Award as it may deem advisable, including restrictions under applicable federal securities laws.

5.6                 Termination of Affiliation.  Except as otherwise provided in an Award Agreement, and subject to the provisions of Section 14.1, the extent to which the Grantee shall have the right to exercise, vest in, or receive payment in respect of an Award following Termination of Affiliation shall be determined in accordance with the following provisions of this Section 5.6.

(a)  For Cause.  If a Grantee has a Termination of Affiliation for Cause, (i) the Grantee’s Restricted Shares that are forfeitable shall thereupon be forfeited, subject to the provisions of Section 8.4 regarding repayment of certain amounts to the Grantee; and (ii) any unexercised Option, LSAR or SAR, and any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation, shall terminate effective immediately upon such Termination of Affiliation.

(b) On Account of Death or Disability.  If a Grantee has a Termination of Affiliation on account of death or Disability, then:

(1)           the Grantee’s Restricted Shares that were forfeitable shall thereupon become nonforfeitable;

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(2)           any unexercised Option or SAR, whether or not exercisable on the date of such Termination of Affiliation, may be exercised, in whole or in part, within the first 12 months after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (i) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (ii) the Grantee’s beneficiary designated in accordance with Article 11; and

(3)           the benefit payable with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation on account of death or Disability shall be equal to the product of the Fair Market Value of a Share as of the date of such Termination of Affiliation or the value of the Performance Unit specified in the Award Agreement (determined as of the date of such Termination of Affiliation), as applicable, multiplied successively by each of the following:

(i)         a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of such Performance Period until the date of such Termination of Affiliation and the denominator of which is the number of months (including as a whole month any partial month) in the Performance Period; and

(ii)        a percentage determined by the Committee that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period, or, if the Committee elects to compute the benefit after the end of the Performance Period, the Performance Percentage, as determined by the Committee, attained during the Performance Period.

(c)               On Account of Retirement.  If a Grantee has a Termination of Affiliation on account of Retirement, then:

(1)           the Grantee’s Restricted Shares that were forfeitable shall thereupon become nonforfeitable;

(2)           any unexercised Option or SAR, whether or not exercisable on the date of such Termination of Affiliation, may be exercised, in whole or in part, within the first five years after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (i) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (ii) the Grantee’s beneficiary designated in accordance with Article 11; and

(3)           the benefit payable with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation on account of Retirement shall be equal to the product of the Fair Market Value of a Share as of the date of such Termination of Affiliation or the value of the Performance Unit

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specified in the Award Agreement (determined as of the date of such Termination of Affiliation), as applicable, multiplied successively by each of the following:

(i)         a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of such Performance Period until the date of such Termination of Affiliation and the denominator of which is the number of months (including as a whole month any partial month) in the Performance Period; and

(ii)        a percentage determined by the Committee that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period, or, if the Committee elects to compute the benefit after the end of the Performance Period, the Performance Percentage, as determined by the Committee, attained during the Performance Period.

(d)              Any Other Reason.  If a Grantee has a Termination of Affiliation for any reason other than for Cause, death, Disability or Retirement, then:

(1)           the Grantee’s Restricted Shares, to the extent forfeitable on the date of the Grantee’s Termination of Affiliation, shall be forfeited on such date;

(2)           any unexercised Option or SAR, to the extent exercisable immediately before the Grantee’s Termination of Affiliation, may be exercised in whole or in part, not later than three months after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (i) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (ii) the Grantee’s beneficiary designated in accordance with Article 11;

(3)           if such Termination of Affiliation is the result of the Grantee’s termination of employment by the Corporation or a Consolidated Subsidiary (other than for Cause), then, in addition to giving effect to the immediately preceding clause (2), the portion of any Option that was not exercisable immediately before the Grantee’s Termination of Affiliation, may be exercised in whole or in part, not later than three months after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (i) his or her personal representative or the person to whom the Option is transferred by will or the applicable laws of descent and distribution, or (ii) the Grantee’s beneficiary designated in accordance with Article 11; and

(4)           any Performance Shares or Performance Units with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation shall terminate immediately upon such Termination of Affiliation.

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5.7                 Nontransferability of Awards.

(a) Except as provided in Section 5.7(c) below, each Award, and each right under any Award, shall be exercisable only by the Grantee during the Grantee’s lifetime, or, if permissible under applicable law, by the Grantee’s guardian or legal representative.

(b)              Except as provided in Section 5.7(c) below, no Award (prior to the time, if applicable, Shares are issued in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Shares, to the Company), and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

(c) To the extent and in the manner permitted by the Committee, and subject to such terms, conditions, restrictions or limitations that may be prescribed by the Committee, a Grantee may transfer an Award (other than an Incentive Stock Option) to (i) a spouse, sibling, parent, child (including an adopted child) or grandchild (any of which, an “Immediate Family Member”) of the Grantee; (ii) a trust, the primary beneficiaries of which consist exclusively of the Grantee or Immediate Family Members of the Grantee; or (iii) a corporation, partnership or similar entity, the owners of which consist exclusively of the Grantee or Immediate Family Members of the Grantee.

5.8                 Cancellation and Rescission of Awards.  Unless the Award Agreement specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict any unexercised Award at any time if the Grantee is not in compliance with all applicable provisions of the Award Agreement and the Plan or if the Grantee has a Termination of Affiliation for Cause.

5.9                 Loans and Guarantees.  The Committee may, subject to applicable law, (i) allow a Grantee to defer payment to the Company of all or any portion of the Option Price of an Option or the purchase price of Restricted Shares, or (ii) cause the Company to loan to the Grantee, or guarantee a loan from a third party to the Grantee for, all or any portion of the Option Price of an Option or the purchase price of Restricted Shares or all or any portion of any taxes associated with the exer­cise of, nonforfeitability of, or payment of benefits in connection with, an Award.  Any such payment deferral, loan or guarantee by the Company shall be on such terms and conditions as the Committee may determine.

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Article 6.  Stock Options

6.1                 Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee.  Without in any manner limiting the generality of the foregoing, the Committee may grant to any Eligible Person, or permit any Eligible Person to elect to receive, an Option in lieu of or in substitution for any other compensation (whether payable currently or on a deferred basis, and whether payable under this Plan or otherwise) which such Eligible Person may be eligible to receive from the Company or a Subsidiary.

6.2                 Award Agreement.  Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the Option Term, the number of shares to which the Option pertains, the time or times at which such Option shall be exercisable and such other provisions as the Committee shall determine.

6.3                 Option Price.  The Option Price of an Option under this Plan shall be determined by the Committee, and shall be equal to or more than 100% of the Fair Market Value of a Share on the Grant Date; provided, however, that any Option that is (i) granted to a Grantee in connection with the Spin-off Distribution, (ii) associated with an option to purchase shares of stock of KCSI (“KCSI Option”) held by such Grantee immediately prior to such Spin-off Distribution, and (iii) intended to preserve for the Grantee the economic value of all or a portion of such KCSI Option (“KCSI Substitute Option”) may, to the extent necessary to achieve such preservation of economic value, be granted with an Option Price that is less than 100% of the Fair Market Value of a Share on the Grant Date; and provided, further, that any Option that is (x) granted to a Grantee in connection with the acquisition (“Acquisition”), however effected, by the Company of another corporation or entity (“Acquired Entity”) or the assets thereof, (y) associated with an option to purchase shares of stock of the Acquired Entity or an affiliate thereof (“Acquired Entity Option”) held by such Grantee immediately prior to such Acquisition, and (z) intended to preserve for the Grantee the economic value of all or a portion of such Acquired Entity Option (“Substitute Option”) may, to the extent necessary to achieve such preservation of economic value, be granted with an Option Price that is less than 100% of the Fair Market Value of a Share on the Grant Date.

6.4                 Grant of Incentive Stock Options.  At the time of the grant of any Option, the Committee may designate that such Option shall be made subject to additional restrictions to permit it to qualify as an “incentive stock option” under the requirements of Section 422 of the Code. Any Option designated as an Incentive Stock Option shall, to the extent required by Section 422 of the Code:

(a)    if granted to a 10% Owner, have an Option Price not less than 110% of the Fair Market Value of a Share on its Grant Date;

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(b)   be exercisable for a period of not more than 10 years (five years in the case of an Incentive Stock Option granted to a 10% Owner) from its Grant Date, and be subject to earlier termination as provided herein or in the applicable Award Agreement;

(c)    not have an aggregate Fair Market Value (as of the Grant Date of each Incentive Stock Option) of the Shares with respect to which Incentive Stock Options (whether granted under the Plan or any other stock option plan of the Grantee’s employer or any parent or Subsidiary thereof (“Other Plans”)) are exercisable for the first time by such Grantee during any calendar year, determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the “$100,000 Limit”);

(d)   if the aggregate Fair Market Value of the Shares (determined on the Grant Date) with respect to the portion of such grant which is exercisable for the first time during any calendar year (“Current Grant”) and all Incentive Stock Options previously granted under the Plan and any Other Plans which are exercisable for the first time during the same calendar year (“Prior Grants”) would exceed the $100,000 Limit be exercisable as follows:

(1)             the portion of the Current Grant which would, when added to any Prior Grants, be exercisable with respect to Shares which would have an aggregate Fair Market Value (determined as of the respective Grant Date for such options) in excess of the $100,000 Limit shall, notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in the first subsequent calendar year or years in which it could be exercisable for the first time by the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and

(2)             if, viewed as of the date of the Current Grant, any portion of a Current Grant could not be exercised under the preceding provisions of this Section during any calendar year commencing with the calendar year in which it is first exercisable through and including the last calendar year in which it may by its terms be exercised, such portion of the Current Grant shall not be an Incentive Stock Option, but shall be exercisable as an Option which is not an Incentive Stock Option at such date or dates as are provided in the Current Grant;

(e)  be granted within 10 years from the earlier of the date the Plan is adopted or the date the Plan is approved by the stock­holders of the Company; and

(f)  by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee’s lifetime, only by the Grantee; provided, however, that the Grantee may, in any manner permitted by the Plan and specified by the Committee, designate in writing a beneficiary to exercise his or her Incentive Stock Option after the Grantee’s death.

Any Option designated as an Incentive Stock Option shall also require the Grantee to notify the Committee of any disposition of any Shares issued pursuant to the exercise of the Incentive Stock Option under the circumstanc­es described in Sec­tion 421(b) of the Code (relating to certain

17

disqualifying dispositions) (any such circumstance, a “Disqualifying Disposition”), within 10 days of such Disqualifying Disposition.

Notwithstanding the foregoing and Section 3.2(e), the Committee may, without the consent of the Grantee, at any time before the exercise of an Option (whether or not an Incentive Stock Option), take any action necessary to prevent such Option from being treated as an Incentive Stock Option.

6.5                 Payment.  Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares made by any one or more of the following means subject to the approval of the Committee:

(a) cash, personal check or wire transfer;

(b) Mature Shares, valued at their Fair Market Value on the date of exercise;

(c) Restricted Shares held by the Grantee for at least six months prior to the exercise of the Option, each such Share valued at the Fair Market Value of a Share on the date of exercise;

(d)  subject to applicable law, pursuant to procedures approved by the Committee, through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise; or

(e) when permitted by the Committee, payment may also be made in accordance with Sec­tion 5.9.

If any Restricted Shares (“Tendered Restricted Shares”) are used to pay the Option Price, a number of Shares acquired on exercise of the Option equal to the number of Tendered Restricted Shares shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option.

Article 7.   Stock Appreciation Rights and Limited Stock Appreciation Rights

7.1                 Grant of SARs.  Subject to the terms and conditions of the Plan, SARs may be granted to any Eligible Person at any time and from time to time as shall be determined by the Committee.  The Committee may grant Freestanding SARs, Tandem SARs, or any combination thereof.

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The Committee shall determine the number of SARs granted to each Grantee (subject to Article 4), the Strike Price thereof, and, consistent with Section 7.2 and the other provisions of the Plan, the other terms and conditions pertaining to such SARs.

7.2                 Exercise of Tandem SARs.  Tandem SARs may be exercised for all or part of the Shares subject to the related Award upon the surrender of the right to exercise the equivalent portion of the related Award.  A Tandem SAR may be exercised only with respect to the Shares for which its related Award is then exercisable.

Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR, (i) the Tandem SAR will expire no later than the expiration of the underlying Option; (ii) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the difference between the Option Price of the underlying Option and the Fair Market Value of the Shares subject to the underlying Option at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the Option exceeds the Option Price of the Option.

7.3                 Payment of SAR Amount.  Upon exercise of an SAR, the Grantee shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a)  the excess of the Fair Market Value of a Share on the date of exercise over the Strike Price;

by

(b)  the number of Shares with respect to which the SAR is exercised;

provided that the Committee may provide in the Award Agreement that the benefit payable on exercise of an SAR shall not exceed such percentage of the Fair Market Value of a Share on the Grant Date as the Committee shall specify.  As determined by the Committee, the payment upon SAR exercise may be in cash, in Shares which have an aggregate Fair Market Value (as of the date of exercise of the SAR) equal to the amount of the payment, or in some combination thereof, as set forth in the Award Agreement.

7.4                 Grant of LSARs.  Subject to the terms and conditions of the Plan, LSARs may be granted to any Eligible Person at any time and from time to time as shall be determined by the Committee.  Each LSAR shall be identified with a Share subject to an Option or SAR held by the Grantee, which may include an Option or SAR previously granted under the Plan.  Upon the exercise, expiration, termination, forfeiture or cancellation of the Option or SAR with which an LSAR is identified, such LSAR shall terminate.

7.5                 Exercise of LSARs.  Each LSAR shall automatically be exercised upon a Change of Control which has not been approved by the Incumbent Board.  The exercise of an LSAR shall

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result in the cancellation of the Option or SAR with which such LSAR is identified, to the extent of such exercise.

7.6                 Payment of LSAR Amount.  Within 10 business days after the exercise of an LSAR, the Company shall pay to the Grantee, in cash, an amount equal to the difference between:

(a)  the greatest of (i) the Change of Control Value, (ii) the Fair Market Value of a Share on the date occurring during the 180-day period immediately preceding the date of the Change of Control on which such Fair Market Value is the greatest or (c) such other valuation amount, if any, as may be determined pursuant to the provisions of the applicable Award Agreement;

minus

(b)  either (i) in the case of an LSAR identified with an Option, the Option Price of such Option or (ii) in the case of an LSAR identified with an SAR, the Strike Price of such SAR.

Article 8.   Restricted Shares

8.1                 Grant of Restricted Shares.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Committee shall determine.

8.2                 Award Agreement.  Each grant of Restricted Shares shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Committee shall determine.  The Committee may impose such conditions and/or restrictions on any Restricted Shares granted pursuant to the Plan as it may deem advisable, including restrictions based upon the achievement of specific performance goals (Company-wide, divisional, Subsidiary and/or individual), time-based restrictions on vesting, and/or restrictions under applicable securities laws.

8.3                 Consideration.  The Committee shall determine the amount, if any, that a Grantee shall pay for Restricted Shares, which shall be (except with respect to Restricted Shares that are treasury shares) at least the Minimum Consideration for each Restricted Share. Such payment shall be made in full by the Grantee before the delivery of the shares or share units and in any event no later than 10 business days after the Grant Date for such shares or share units.

8.4                 Effect of Forfeiture.  If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or share units or acquired such Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to have resold such Restricted Shares to the Company at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market Value of a Share or Share Unit on the date of such forfeiture. The Company shall pay to the Grantee the required amount as soon as is administratively practical. Such Restricted Shares shall cease to be outstanding, and shall no longer confer on the Grantee thereof

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any rights as a stockholder of the Company, from and after the date of the event causing the forfeiture, whether or not the Grantee accepts the Company’s tender of payment for such Restricted Shares.

8.5                 Escrow; Legends.  The Committee may provide that any certificates for Restricted Shares (x) shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until such Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear an appropriate legend restricting the transfer of such Restricted Shares.  If any Restricted Shares become nonforfeitable, the Company shall cause any certificates for such shares to be issued without such legend.

Article 9.   Performance Units and Performance Shares

9.1                 Grant of Performance Units and Performance Shares.  Subject to the terms of the Plan, Performance Units or Performance Shares may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

9.2                 Value/Performance Goals.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant.  Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant.  The Committee shall set performance goals which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares that will be paid out to the Grantee.  For purposes of this Article 9, the time period during which the performance goals must be met shall be called a “Performance Period.”

9.3                 Earning of Performance Units and Performance Shares.  Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive a payout based on the number and value of Performance Units or Performance Shares earned by the Grantee over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

If a Grantee is promoted, demoted or transferred to a different business unit of the Company during a Performance Period, then, to the extent the Committee determines the performance goals or Performance Period are no longer appropriate, the Committee may adjust, change or eliminate the performance goals or the applicable Performance Period as it deems appropriate in order to make them appropriate and comparable to the initial performance goals or Performance Period.

9.4                 Form and Timing of Payment of Performance Units and Performance Shares.  Payment of earned Performance Units or Performance Shares shall be made in a lump sum following the close of the applicable Performance Period.  The Committee may pay earned Performance Units or Performance Shares in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance

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Units or Performance Shares at the close of the applicable Performance Period.  Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.  The form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

As determined by the Committee, a Grantee may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units or Performance Shares but not yet distributed to the Grantee.  In addition, a Grantee may, as determined by the Committee, be entitled to exercise his or her voting rights with respect to such Shares.

Article 10.   Bonus Shares

Subject to the terms of the Plan, the Committee may grant Bonus Shares to any Eligible Person, in such amount and upon such terms and at any time and from time to time as shall be determined by the Committee.  The terms of such Bonus Shares shall be set forth in the Award Agreement pertaining to the grant of the Award.

Article 11.   Beneficiary Designation

Each Grantee under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit.  Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Company, and will be effective only when filed by the Grantee in writing with the Company during the Grantee’s lifetime.  In the absence of any such designation, benefits remaining unpaid at the Grantee’s death shall be paid to the Grantee’s estate.

Article 12.   Deferrals

The Committee may permit or require a Grantee to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Shares, the satisfaction of any requirements or goals with respect to Performance Units or Performance Shares, or the grant of Bonus Shares.  If any such deferral is required or permitted, the Committee shall establish rules and procedures for such deferrals.  Except as otherwise provided in an Award Agreement, any payment or any Shares that are subject to such deferral shall be made or delivered to the Grantee upon the Grantee’s Termination of Affiliation.

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Article 13.   Rights of Employees/Directors/Consultants

13.1               Employment.  Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Grantee’s employment, directorship or consultancy at any time, nor confer upon any Grantee the right to continue in the employ or as a director or consultant of the Company.

13.2               Participation.  No employee, director or consultant shall have the right to be selected to receive an Award under the Plan or, having been so selected, to be selected to receive a future Award.

13.3               Dividend Equivalents.  Subject to the provisions of the Plan and any Award, the recipient of an Award (including any Award deferred in accordance with procedures established pursuant to Article 12) may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash, stock or other property dividends, or cash payments in amounts equivalent to cash, stock or other property dividends on shares of Common Stock (“Dividend Equivalents”) with respect to the number of shares of Common Stock covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested.

Article 14.   Change of Control

14.1               Change of Control.  Except as otherwise provided in an Award Agreement, if a Change of Control occurs, then:

(a)  the Grantee’s Restricted Shares that were forfeitable shall thereupon become nonforfeitable;

(b)  any unexercised Option or SAR, whether or not exercisable on the date of such Change of Control, shall thereupon be fully exercisable and may be exercised, in whole or in part; and

(c)  the Company shall immediately pay to the Grantee, with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Change of Control, a cash payment equal to the product of (i) in the case of a Performance Share, the Change of Control Value or (ii) in the case of a Performance Unit, the value of the Performance Unit specified in the Award Agreement, as applicable, multiplied successively by each of the following:

(1)  a fraction, the numerator of which is the number of whole and partial months that have elapsed between the beginning of such Performance Period and the date of such

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Change of Control and the denominator of which is the number of whole and partial months in the Performance Period; and

(2)  a percentage equal to a greater of (x) the target percentage, if any, specified in the applicable Award Agreement or (y) the maximum percentage, if any, that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Change of Control would continue until the end of the Performance Period.

14.2               Pooling of Interests Accounting.  If the Committee determines, prior to a sale or merger of the Company that the Committee determines is reasonably likely to occur, that the grant or exercise of Options, SARs or LSARs would preclude the use of pooling of interests accounting (“pooling”) after the consummation of such sale or merger and that such preclusion of pooling would have a material adverse effect on such sale or merger, the Committee may (a) make any adjustments in such Options, SARs or LSARs prior to the sale or merger that will permit pooling after the consummation of such sale or merger or (b) cause the Company to pay the benefits attributable to such Options, SARs or LSARs (including for this purpose not only the spread between the then Fair Market Value of the Shares subject to such Options, SARs or LSARs and the Option Price or Strike Price applicable thereto, but also the additional value of such Options, SARs, or LSARs in excess of such spread, as determined by the Committee) in the form of Shares if such payment would not cause the transaction to remain or become ineligible for pooling; provided, however, no such adjustment or payment may be made that would adversely affect in any material way any such Options, SARs or LSARs without the consent of the affected Grantee.

Article 15.   Amendment, Modification, and Termination

15.1               Amendment, Modification, and Termination.  Subject to the terms of the Plan, the Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part without the approval of the Company’s stockholders.  The Board may delegate to the Plan Committee any or all of the authority of the Board under Section 15.1 to alter, amend, suspend or terminate the Plan.

15.2               Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including the events described in Section 4.2) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that no such adjustment shall be authorized to the extent that such authority would be inconsistent with the Plan’s meeting the requirements of the Performance-Based Exception.

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15.3               Awards Previously Granted.  Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award.

Article 16.   Withholding

16.1               Withholding

(a)  Mandatory Tax Withholding.

(1)        Whenever, under the Plan, Shares are to be delivered upon exercise or payment of an Award or upon Restricted Shares becoming nonforfeitable, or any other event with respect to rights and benefits hereunder, the Company shall be entitled to require (i) that the Grantee remit an amount in cash, or if determined by the Committee, Mature Shares, sufficient to satisfy all federal, state, local and foreign tax withholding requirements related thereto (“Required Withhold­ing”), (ii) the withholding of such Required Withholding from compensation otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan or (iii) any combination of the foregoing.

(2)        Any Grantee who makes a Disqualifying Disposition or an election under Section 83(b) of the Code shall remit to the Company an amount sufficient to satisfy all resulting Required Withholding; provided that, in lieu of or in addition to the foregoing, the Company shall have the right to withhold such Required Withholding from compensa­tion otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan.

(b)   Elective Share Withholding.

(1)        Subject to subsection 16.1(b)(2), a Grantee may elect the withholding (“Share Withholding”) by the Company of a portion of the Shares subject to an Award upon the exercise of such Award or upon Restricted Shares becoming non-forfeitable or upon making an election under Section 83(b) of the Code (each, a “Taxable Event”) having a Fair Market Value equal to (i) the minimum amount necessary to satisfy Required Withholding liability attributable to the Taxable Event; or (ii) with the Committee’s prior approval, a greater amount, not to exceed the estimated total amount of such Grantee’s tax liability with respect to the Taxable Event.

(2)        Each Share Withholding election shall be subject to the following conditions:

(i)   any Grantee’s election shall be subject to the Committee’s discretion to revoke the Grantee’s right to elect Share Withholding at any time before the Grantee’s election if the Committee has reserved the right to do so in the Award Agreement;

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(ii)   the Grantee’s election must be made before the date (the “Tax Date”) on which the amount of tax to be withheld is determined; and

(iii)   the Grantee’s election shall be irrevocable.

16.2                Notification under Code Section 83(b).  If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Company of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. The Committee may, in connection with the grant of an Award or at any time thereafter prior to such an election being made, prohibit a Grantee from making the election described above.

Article 17.   Successors

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business and/or assets of the Company.

Article 18.   Additional Provisions

18.1               Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.

18.2               Severability.  If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

18.3               Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges as may be required.  Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Company shall not be obligated to deliver any Shares or other benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Company of any applicable law or regulation.

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18.4                   Securities Law Compliance.

(a) If the Committee deems it necessary to comply with any applicable securities law, or the requirements of any stock exchange upon which Shares may be listed, the Committee may impose any restriction on Shares acquired pursuant to Awards under the Plan as it may deem advisable.  All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which Shares are then listed, any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.  If so requested by the Company, the Grantee shall make a written representation to the Company that he or she will not sell or offer to sell any Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act of 1993, as amended, and any applicable state securities law or unless he or she shall have furnished to the Company evidence satisfactory to the Company that such registration is not required.

(b)  If the Committee determines that the exercise or nonforfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any stock exchange upon which any of the Company’s equity securities are listed, then the Committee may postpone any such exer­cise, nonforfeitability or delivery, as applicable, but the Company shall use all reasonable efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date.

18.5               No Rights as a Stockholder.  A Grantee shall not have any rights as a stockholder of the Company with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such shares have been delivered to him or her. Restrict­ed Shares, whether held by a Grantee or in escrow by the Secretary of the Company, shall confer on the Grantee all rights of a stockholder of the Company, except as otherwise provided in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the Committee may require the payment of cash dividends thereon to be deferred and, if the Committee so determines, reinvested in additional Restricted Shares. Stock dividends and deferred cash dividends issued with respect to Restricted Shares shall be subject to the same restrictions and other terms as apply to the Restricted Shares with respect to which such dividends are issued. The Committee may provide for payment of interest on deferred cash dividends.

18.6               Nature of Payments.  Awards shall be special incentive payments to the Grantee and shall not be taken into account in computing the amount of salary or compensation of the Grantee for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary and (ii) the Grantee, except as such plan or agreement shall otherwise expressly provide.

18.7               Performance Measures.  Unless and until the Committee proposes for stockholder vote and stockholders approve a change in the general performance measures set forth

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in this Section 18.7, the performance measure(s) to be used for purposes of such Awards shall be chosen from among the following:

(a)           stock price;

(b)           market share;

(c)           sales (gross or net);

(d)           asset quality;

(e)           non-performing assets;

(f)            earnings per share;

(g)           return on equity;

(h)           costs;

(i)            operating income;

(j)            net income;

(k)           marketing-spending efficiency;

(l)            return on operating assets;

(m)          return on assets;

(n)           core non-interest income;

(o)           fund performance

(p)           pre-tax margin

(q)           pre-tax income; and/or

(r)            levels of cost savings.

Any of the foregoing performance measures may be applied, as determined by the Committee, in respect of the Company or any of its subsidiaries, affiliates, business units or divisions and/or the Company’s or any of its subsidiary’s, affiliate’s, business unit’s or division’s worldwide, regional or country specific operations (or any combination of the foregoing).  Performance measures shall specify whether they are to be measured relative to budgeted or other internal goals, operations, performance or results of the Company and/or any of its subsidiaries, affiliates, business units or divisions, or relative to the performance of one or more peer groups of the Company and/or any of its subsidiaries, affiliates, business units or divisions, with the composition of  any such peer groups to be determined by the Committee at the time the performance measure is established.  Performance measures may be stated in the alternative or in combination.  The Committee shall have the right but not the obligation to make adjustments to a performance measure to take into account any unusual or extraordinary events, to the extent not inconsistent with the requirements of the Performance-Based Exception.

The Committee may adjust the determinations of the degree of attainment of the preestablished performance goals; provided, however, that Awards which are designed to qualify for the Performance-Based Exception may not be adjusted upward without the approval of the Company’s stockholders (the Committee may adjust such Awards downward).

In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such

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changes, and still qualify for the Performance-Based Exception, the Committee shall have sole discretion to make such changes without obtaining stockholder approval.

18.8               Governing Law.  The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware other than its laws respecting choice of law.

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EX-10.2

Ex. 10.2

Tenth Amendment to the

Janus Capital Group Inc. Inc. 401(k), Profit Sharing and

Employee Stock Ownership Plan

Janus Capital Group Inc. Inc., hereinafter referred to as the “Employer,” makes this Tenth Amendment, generally effective January 1, 2007.

WHEREAS, the Employer has previously established the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan, hereinafter referred to as the “Plan”, for the benefit of eligible employees and their beneficiaries; and

WHEREAS, pursuant to Section 8.03 of the Plan, the Board of Directors of the Employer is authorized to amend the Plan; and

WHEREAS, the Board of Directors of the Employer is desirous of amending the Plan to add a Roth 401(k) account, to provide for automatic enrollments at 3% of pay, to adopt good faith amendments for the final 401(k) and (m) regulations and to allow for 100% diversification of the investment in employer securities in certain circumstances;

NOW, THEREFORE, pursuant to Section 8.03 of the Plan, the following amendment is hereby made and shall be generally effective January 1, 2007:

1.Section 1.25 Payroll Withholding Agreement is amended in its entirety to read as follows:

1.25        Payroll Withholding Agreement.

Payroll Withholding Agreement means an affirmative or passive election by a Participant directing the Employer to withhold, each payroll period, a whole percentage of his Compensation (or such other amount as allowed by the Plan Administrator) and to contribute such withheld amount to the Plan pursuant to the provisions of Article 3.

As soon as administratively feasible on or after an Employee’s initial Entry Date (or, for a rehired Participant, as soon as administratively feasible after his re-employment commencement date), the Plan Administrator (or its designee) will notify such individual that, by becoming and remaining an Employee of the Employer (or other Participating Employer of which he is an Employee), he automatically has elected, effective for the first paycheck after his Entry Date (or, for a rehired Participant, his reentry date), to make an Employee Pre-tax Elective Deferral to the Plan equal to a whole percentage of his Compensation as specified in Section 3.01;  provided, such Employee may, within ten days (not less than five (5) business days) before his first paycheck due on or after his Entry Date (or his reentry date, if applicable), complete a new Payroll Withholding Agreement to modify or revoke such passive Payroll Withholding Agreement (that is, passive

election), and such passive election will not be effective.  Once such passive election becomes effective, it will apply to each subsequent paycheck until modified or revoked.

Any Employee whose latest Entry Date or reentry date occurred before the announcement of this plan provision, must complete an affirmative Payroll Withholding Agreement to have any Employee Elective Deferral made on his behalf; and the passive deferral election rules will not apply to such Employee.  Any such Payroll Withholding Agreement will be effective for each paycheck thereafter until modified or revoked.

Payroll Withholding Agreements will be governed by the following general guidelines:

(a)At any time, the Plan Administrator, in a uniform and nondiscriminatory manner, may change any aspect of, or deactivate (and subsequently reactivate), the passive election provisions. Further, the passive or automatic election may, on a nondiscriminatory basis in accordance with procedures established by the Plan Administrator: (1) be applied to all Participants or to Eligible Employees who become Participants after a certain date, and (2) provide for scheduled automatic increases to the passive or automatic election at scheduled intervals.

(b)The Plan Administrator will establish and apply guidelines concerning the frequency and timing of amendments or changes to Payroll Withholding Agreements.  Notwithstanding the foregoing, a Participant may revoke his Payroll Withholding Agreement at any time and discontinue all future withholding.

(c)The Plan Administrator may amend or revoke its Payroll Withholding Agreement with any Participant at any time, if the Plan Administrator determines that such revocation or amendment is necessary to ensure that a Participant’s Annual Additions for any Plan Year will not exceed the limitations of Article 10 or to insure that the requirements of Code Sections 401(k) and 401(m) of the Code have been satisfied with respect to the amount which may be withheld and contributed on behalf of the Highly Compensated Group.

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2.Section 3.01 Employee Pre-tax Contributions Account is renamed and amended in its entirety to read as follows:

3.01        Employee Elective Deferral Accounts

(a)General

Separate accounts shall be maintained for a Participant’s Pre-tax Elective Deferrals and his Roth Elective Deferrals.  Employee Elective Deferral Accounts means the two separate Accounts of a Participant reflecting (1) Pre-tax Elective Deferrals, investment income or loss allocated thereto and distributions, and (2) Roth Elective Deferrals, investment income or loss allocated thereto and distributions.  A Participant’s Employee Elective Deferral Accounts are 100% vested at all times.

(b)   Employee Elective Deferral Contributions

(1)Amount of Contribution

Each Participant may elect, pursuant to a Payroll Withholding Agreement, to make an Employee Elective Deferral Contribution not to exceed 75% of the Participant’s Compensation, without regard to the limit imposed by Code Section 401(a)(17). Such contributions will be designated as a whole percentage of Compensation or a whole dollar amount.

Each Participant may elect to have two Payroll Withholding Agreements: (i) the regular Payroll Withholding Agreement, which will apply to base compensation and overtime compensation; and (ii) the bonus Payroll Withholding Agreement, which will apply to all compensation other than base compensation and overtime compensation (by way of illustration and not as a limitation, bonus compensation, incentive compensation and performance compensation). Such contributions will be designated as a whole percentage of Compensation or a whole dollar amount.

A Participant must irrevocably designate an Employee Elective Deferral Contribution (which includes any Catch-up contributions) as either a Pre-tax Elective Deferral or a Roth Elective Deferral at the time of the payroll withholding election. In the event a Participant fails to designate an Employee Elective Deferral Contribution as either a Pre-tax Elective Deferral or a Roth Elective Deferral, the Elective Deferral Contribution will be deemed to be a Pre-tax Elective Deferral.

The passive or automatic election Employee Pre-tax Elective Deferral Contribution percentage for a newly eligible Participant and for a

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rehired Participant pursuant to Section 1.25 is 3% of the Participant’s Compensation.

(2)Nondiscrimination Requirements

All Employee Elective Deferral Contributions are Elective Contributions within the meaning of Section 11.02(b)(8) and must satisfy the Nondiscrimination Requirements of Section 11.02.

(3)Excess Deferrals

The maximum amount of Employee Elective Deferral Contributions which can be made under the Plan on behalf of any Participant during any calendar year will be limited to that amount which would not constitute an Excess Deferral as defined in Section 11.02(b)(14).

The Plan Administrator will distribute any Excess Deferral, together with the income allocable to it, to the Participant no later than April 15 of the calendar year immediately following the year of the Excess Deferral.  If a Participant notifies the Plan Administrator within the time prescribed by the Code and regulations promulgated thereunder of any calendar year that Excess Deferrals have been made on his account for the previous calendar year by reason of participation in a Cash or Deferred Arrangement maintained by another employer or employers, and if the Participant requests that the Plan Administrator distribute a specific amount to him on account of Excess Deferrals and certifies that the requested amount is an Excess Deferral, the Plan Administrator will designate the amount requested together with the income allocable to it as a distribution of Excess deferrals and distribute such amount no later than April 15 of the calendar year immediately following the year of such Excess Deferral.

The amount of Excess Deferrals to be distributed will be reduced by any Excess Contributions previously distributed or recharacterized with respect to the Plan Year beginning with or within the calendar year and which are distributed prior to April 15 of that calendar year.  The amount of income allocable to the Excess Deferral will be determined as described in Section 11.02(g).

(4)Timing of Deposits

The Employer will deposit all Employee Elective Deferral Contributions on the earliest date on which contributions can reasonably be segregated from the Employer’s general assets.

Contributions contributed to the Plan through payroll deduction shall be segregated from the Employer’s general assets and contributed to the trust fund as soon as administratively feasible following the payroll

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period for which the contribution was made but in no event later than the fifteenth (15th) business day of the month following the month the deferrals were excluded from Compensation (or such other date specified under regulations issued by the Secretary of Labor).

The Contribution Period for Employee Elective Deferral Contributions is each payroll period.

(5)Roth Elective Deferrals

(i)Roth Elective Deferrals are permitted

This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

The Plan’s definitions and terms shall be amended as follows to allow for Roth Elective Deferrals as of January 1, 2007.  Roth Elective Deferrals shall be treated in the same manner as Pre-tax Elective Deferrals for all Plan purposes.  The Employer may, in operation, implement deferral election procedures provided such procedures are communicated to Participants and permit Participants to modify their elections at least once each Plan Year.

(ii)Employee Elective Deferrals

For years beginning after 2006, the term “Employee Elective Deferrals” includes Pre-tax Elective Deferrals and Roth Elective Deferrals.  Any references in the pre-existing Plan provisions to “Employee Pre-tax Account” and “Employee Pre-tax Contribution(s)” are replaced with “Employee Elective Deferral Accounts” and “Employee Elective Deferral Contribution(s),” respectively.

(iii)Pre-tax Elective Deferrals

“Pre-tax Elective Deferrals” means a Participant’s Elective Deferrals which are not includible in the Participant’s gross income at the time deferred and have been irrevocably designated as Pre-tax Elective Deferrals by the Participant in his or her deferral election.  A Participant’s Pre-tax Elective Deferrals will be separately accounted for, as will gains and losses attributable to those Pre-tax Elective Deferrals.

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(iv)Roth Elective Deferrals

“Roth Elective Deferrals” means a Participant’s Elective Deferrals that are includible in the Participant’s gross income at the time deferred and have been irrevocably designated as Roth Elective Deferrals by the Participant in his or her deferral election.  A Participant’s Roth Elective Deferrals will be separately accounted for, as will gains and losses attributable to those Roth Elective Deferrals, in a Roth Elective Deferral account.  However, forfeitures may not be allocated to such account. The Plan must also maintain a record of a Participant’s investment in the contract (i.e., designated Roth contributions that have not been distributed).  Roth Elective Deferrals are not considered Employee After-tax Contributions for Plan purposes.

(v)Ordering Rules for Distributions

The Plan Administrator operationally may implement an ordering rule procedure for withdrawals (including, but not limited to, hardship or other in-service withdrawals) from a Participant’s accounts attributable to Pre-tax Elective Deferrals or Roth Elective Deferrals. Such ordering rules may specify whether the Pre-tax Elective Deferrals or Roth Elective Deferrals are distributed first.

(vi)Corrective distributions attributable to Roth Elective Deferrals

For any Plan Year in which a Participant may make both Roth Elective Deferrals and Pre-tax Elective Deferrals, the Plan Administrator operationally may implement an ordering rule procedure for the distribution of Excess Deferrals (Code Section 402(g)), Excess Contributions (Code Section 401(k)), Excess Aggregate Contributions (Code Section 401(m)), and Excess Annual Additions (Code Section 415).  Such ordering rules may specify whether the Pre-tax Elective Deferrals or Roth Elective Deferrals are distributed first, to the extent such type of Elective Deferrals was made for the year.

(vii)Loans

The Plan Administrator shall modify the loan guidelines or program to provide limitations on the ability to borrow from, or use as security, a Participant’s Roth Elective Deferral account. Similarly, the loan guidelines or program shall be modified to provide that a Participant’s Roth Elective Deferral account may

6

be considered for purposes of determining the value of the Participant’s accounts in the Plan to determine the maximum amount that a Participant may borrow, but the Roth Elective Deferral account is not available as a source from which a loan may be made.

(viii)Rollovers

A direct rollover of a distribution from a Participant’s Roth Elective Deferral account of the Plan shall only be made to another Roth Elective Deferral account of an applicable retirement plan as described in Code Section 402A(e)(1) or to a Roth IRA as described in Code Section 408A, and only to the extent the rollover is permitted under the rules of Code Section 402(c).

a.The Plan shall accept a rollover contribution to a Participant’s Roth Elective Deferral account only if it is a direct rollover from another Roth Elective Deferral account of an applicable retirement plan as described in Code Section 402A(e)(1) and only to the extent the rollover is permitted under the rules of Code Section  402(c). The Employer, operationally and on a uniform and nondiscriminatory basis, may decide whether to accept any such rollovers.

b.The Plan shall not provide for a direct rollover (including an automatic rollover) for distributions from a Participant’s Roth Elective Deferral account if the amount of the distributions that are eligible rollover distributions are reasonably expected to total less than $200 during a year. In addition, any distribution from a Participant’s Roth Elective Deferral account are not taken into account in determining whether distributions from a Participant’s other accounts are reasonably expected to total less than $200 during a year. However, eligible rollover distributions from a Participant’s Roth Elective Deferral account are taken into account in determining whether the total amount of the Participant’s account balances under the Plan exceed the Plan’s limits for purposes of mandatory distributions from the Plan.

c.If the Plan’s procedures allow a Participant to elect a direct rollover of only a portion of an eligible rollover distribution but only if the amount rolled over is at least

7

$500, such procedure is applied by treating any amount distributed from a Participant’s Roth Elective Deferral account as a separate distribution from any amount distributed from the Participant’s other accounts in the Plan, even if the amounts are distributed at the same time.

(ix)Operational Compliance

The Plan Administrator will administer Roth Elective Deferrals in accordance with applicable regulations or other binding authority not reflected in this amendment. Any applicable regulations or other binding authority shall supersede any contrary provisions of this amendment.

(c)Catch-Up Contributions

Effective January 1, 2002, all employees who are eligible to make Employee Pre-tax Contributions (now called Employee Elective Deferrals) under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make Catch-Up Contributions in accordance with, and subject to the limitations of Code Section 414(v).  Such Catch-Up Contributions shall not be taken into account for purposes of Code Sections 402(g) and 415.  The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of making of such Catch-Up Contributions. Catch-up Contributions may be either Pre-tax Elective Deferrals or Roth Elective Deferrals as designated by the Participant under Section 3.01(b)(1).

3.             Section 4.04 of the Plan is hereby amended in its entirety to read as follows:

4.04        ESOP Diversification.

Except as provided in this Section 4.04, a Participant does not have the right to direct the Trustee with respect to the investment or reinvestment of the assets comprising the Participant’s ESOP Stock Bonus Contributions Account.

(a)Each Participant who attains age 55 or older and who is or becomes 100% vested in the Participant’s ESOP Stock Bonus Contributions Account, in accordance with Section 1.33, may direct the Trustee as to the investment of 100% of the value of the Participant’s Accrued Benefit attributable to Employer Securities (the Eligible Accrued Benefit).

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(b)Effective January 1, 2007, a Participant who has completed three Years of Vesting Service, a Participant who has suffered a Disability, a Beneficiary of such a Participant or a Beneficiary of a deceased Participant (where the Beneficiary has an account under the Plan to which the Beneficiary is entitled to exercise the rights of a Participant) may   direct the Trustee as to the investment of up to 100% of the value of the Participant’s Accrued Benefit attributable to Employer Securities (the Eligible Accrued Benefit) at any time.

(c)The Plan Administrator shall maintain records which indicate the Eligible Accrued Benefit of each Participant.

(d)Each Participant who elects to diversify pursuant to this Section 4.04 may direct the investment in the same manner as described in Section 4.02.  Once diversified, the Participant may not direct the investment of the diversified amount to acquire Employer Securities.

4.The Plan is generally amended by the addition of the following Articles to the Plan as a good-faith amendment pursuant to Internal Revenue Service (IRS) Notice 2005-94, as required by the IRS to reflect the Final 401(k) and (m) Regulations:

ARTICLE I

PREAMBLE

1.1Adoption of amendment.  This Amendment to the Plan is adopted to reflect certain provisions of the Final Regulations under Code Sections 401(k) and 401(m) that were published on December 29, 2004 (hereinafter referred to as the “Final 401(k) Regulations”).  This Amendment is intended as good faith compliance with the requirements of these provisions.

1.2Supersession of inconsistent provisions.  This Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Amendment.

If this Plan uses the ADP Test Safe Harbor provisions, then the provisions of Amendment Section 9.2(a) apply and all matching contributions under the Plan will be applied without regard to any allocation conditions except as provided in that Section.

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ARTICLE II

EFFECTIVE DATE

2.1Effective Date.  This Amendment is effective, and the Plan shall implement the provisions of the Final 401(k) Regulations, with respect to Plan Years beginning after December 31, 2005, unless otherwise specifically stated.

ARTICLE III

GENERAL RULES

3.1Deferral elections.  A cash or deferred arrangement (“CODA”) is an arrangement under which eligible Employees may make elective deferral elections. Such elections cannot relate to compensation that is currently available prior to the adoption or effective date of the CODA.  In addition, except for occasional, bona fide administrative considerations, contributions made pursuant to such an election cannot precede the earlier of (1) the performance of services relating to the contribution and (2) when the compensation that is subject to the election would be currently available to the Employee in the absence of an election to defer.

3.2Vesting provisions.  Elective Contributions are always fully vested and nonforfeitable. The Plan shall disregard Elective Contributions in applying the vesting provisions of the Plan to other contributions or benefits under Code Section 411(a)(2).  However, the Plan shall otherwise take a participant’s Elective Contributions into account in determining the Participant’s vested benefits under the Plan. Thus, for example, the Plan shall take Elective Contributions into account in determining whether a Participant has a nonforfeitable right to contributions under the Plan for purposes of forfeitures, and for applying provisions permitting the repayment of distributions to have forfeited amounts restored, and the provisions of Code Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii) permitting a plan to disregard certain service completed prior to breaks-in-service (sometimes referred to as “the rule of parity”).

ARTICLE IV

HARDSHIP DISTRIBUTIONS

4.1Applicability.  The provisions of this Article IV apply if the Plan provides for hardship distributions upon satisfaction of the deemed immediate and heavy financial need standards set forth in Regulation Section 1.401(k)-1(d)(2)(iv)(A) as in effect prior to the issuance of the Final 401(k) Regulations.

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4.2Hardship events.  A distribution under the Plan is hereby deemed to be on account of an immediate and heavy financial need of an Employee if the distribution is for one of the following or any other item permitted under Regulation Section 1.401(k)-1(d)(3)(iii)(B):

(a)Expenses for (or necessary to obtain) medical care that would be deductible under Code Section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income);

(b)Costs directly related to the purchase of a principal residence for the Employee (excluding mortgage payments);

(c)Payment of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post-secondary education for the Employee, the Employee’s spouse, children, or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B));

(d)Payments necessary to prevent the eviction of the Employee from the Employee’s principal residence or foreclosure on the mortgage on that residence;

(e)Effective July 1, 2007, payments for burial or funeral expenses for the Employee’s deceased parent, spouse, children or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(d)(1)(B)); or

(f)Effective July 1, 2007, expenses for the repair of damage to the Employee’s principal residence that would qualify for the casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

4.3Reduction of Code Section 402(g) limit following hardship distribution.  If the Plan provides for hardship distributions upon satisfaction of the safe harbor standards set forth in Regulation Sections 1.401(k)-1(d)(3)(iii)(B) (deemed immediate and heavy financial need) and 1.401(k)-1(d)(3)(iv)(E) (deemed necessary to satisfy immediate need), then there shall be no reduction in the maximum amount of elective deferrals that a Participant may make pursuant to Code Section 402(g) solely because of a hardship distribution made by this Plan or any other plan of the Employer.

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ARTICLE V

ACTUAL DEFERRAL PERCENTAGE (ADP) TEST

5.1Targeted contribution limit.  Qualified Nonelective Contributions (as defined in Regulation Section 1.401(k)-6) cannot be taken into account in determining the Actual Deferral Ratio (ADR) for a Plan Year for a Non-Highly Compensated Employee (NHCE) to the extent such contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan’s “representative contribution rate.”  Any Qualified Nonelective Contribution taken into account under an Actual Contribution Percentage (ACP) test under Regulation Section 1.401(m)-2(a)(6) (including the determination of the representative contribution rate for purposes of Regulation Section 1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this Section (including the determination of the “representative contribution rate” under this Section).  For purposes of this Section:

(a)The Plan’s “representative contribution rate” is the lowest “applicable contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and who is employed by the Employer on the last day of the Plan Year), and

(b)The “applicable contribution rate” for an eligible NHCE is the sum of the Qualified Matching Contributions (as defined in Regulation Section 1.401(k)-6) taken into account in determining the ADR for the eligible NHCE for the Plan Year and the Qualified Nonelective Contributions made for the eligible NHCE for the Plan Year, divided by the eligible NHCE’s Code Section 414(s) compensation for the same period.

Notwithstanding the above, Qualified Nonelective Contributions that are made in connection with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into account for a Plan Year for an NHCE to the extent such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s) compensation.

Qualified Matching Contributions may only be used to calculate an ADR to the extent that such Qualified Matching Contributions are matching contributions that are not precluded from being taken into account under

the ACP test for the Plan Year under the rules of Regulation Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 7.1.

5.2Limitation on QNECs and QMACs.  Qualified Nonelective Contributions and Qualified Matching Contributions cannot be taken into account to determine an ADR to the extent such contributions are taken into account for purposes of satisfying any other ADP test, any ACP test, or the requirements of Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4.  Thus, for example, matching contributions that are made pursuant to Regulation Section 1.401(k)-3(c) cannot be taken into account under the ADP test. Similarly, if a plan switches from the current year testing method to the prior year testing method pursuant to Regulation Section 1.401(k)-2(c), Qualified Nonelective Contributions that are taken into account under the current year testing method for a year may not be taken into account under the prior year testing method for the next year.

5.3ADR of HCE if multiple plans.  The Actual Deferral Ratio (ADR) of any Participant who is a Highly Compensated Employee (HCE) for the Plan Year and who is eligible to have Elective Contributions (as defined in Regulation Section 1.401(k)-6) (and Qualified Nonelective Contributions and/or Qualified Matching Contributions, if treated as Elective Contributions for purposes of the ADP test) allocated to such Participant’s accounts under two (2) or more cash or deferred arrangements described in Code Section 401(k), that are maintained by the same Employer, shall be determined as if such Elective Contributions (and, if applicable, such Qualified Nonelective Contributions and/or Qualified Matching Contributions) were made under a single arrangement.  If an HCE participates in two or more cash or deferred arrangements of the Employer that have different Plan Years, then all Elective Contributions made during the Plan Year being tested under all such cash or deferred arrangements shall be aggregated, without regard to the plan years of the other plans.  However, for Plan Years beginning before the effective date of this Amendment, if the plans have different Plan Years, then all such cash or deferred arrangements ending with or within the same calendar year shall be treated as a single cash or deferred arrangement.  Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under the Regulations of Code Section 401(k).

5.4Plans using different testing methods for the ADP and ACP test.  Except as otherwise provided in this Section, the Plan may use the current year testing method or prior year testing method for the ADP test for a Plan Year without regard to whether the current year testing method or prior year testing method is used for the ACP test for that Plan Year.  However, if different testing methods are used, then the Plan cannot use:

(a)The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

(b)The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the ADP test); or

(c)The rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching Contributions into account under the ADP test (rather than the ACP test).

ARTICLE VI

ADJUSTMENT TO ADP TEST

6.1Distribution of Income attributable to Excess Contributions.  Distributions of Excess Contributions must be adjusted for income (gain or loss), including an adjustment for income for the period between the end of the Plan Year and the date of the distribution (the “gap period”).  The Administrator has the discretion to determine and allocate income using any of the methods set forth below:

(a)Reasonable method of allocating income.  The Administrator may use any reasonable method for computing the income allocable to Excess Contributions, provided that the method does not violate Code Section 401(a)(4), is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participant’s accounts.  A Plan will not fail to use a reasonable method for computing the income allocable to Excess Contributions merely because the income allocable to Excess Contributions is determined on a date that is no more than seven (7) days before the distribution.

(b)Alternative method of allocating income.  The Administrator may allocate income to Excess Contributions for the Plan Year by multiplying the income for the Plan Year allocable to the Elective Contributions and other amounts taken into account under the ADP test (including contributions made for the Plan Year), by a fraction, the numerator of which is the Excess Contributions for the Employee for the Plan Year, and the denominator of which is the sum of the:

(1)Account balance attributable to Elective Contributions and other amounts taken into account under the ADP test as of the beginning of the Plan Year, and

(2)Any additional amount of such contributions made for the Plan Year.

(c)Safe harbor method of allocating gap period income.  The Administrator may use the safe harbor method in this paragraph to determine income on Excess Contributions for the gap period.  Under this safe harbor method, income on Excess Contributions for the gap period is equal to ten percent (10%) of the income allocable to Excess Contributions for the Plan Year that would be determined under paragraph (b) above, multiplied by the number of calendar months that have elapsed since the end of the Plan Year.  For purposes of calculating the number of calendar months that have elapsed under the safe harbor method, a corrective distribution that is made on or before the fifteenth (15th) day of a month is treated as made on the last day of the preceding month and a distribution made after the fifteenth day of a month is treated as made on the last day of the month.

(d)Alternative method for allocating Plan Year and gap period income.  The Administrator may determine the income for the aggregate of the Plan Year and the gap period, by applying the alternative method provided by paragraph (b) above to this aggregate period.  This is accomplished by (1) substituting the income for the Plan Year and the gap period, for the income for the Plan Year, and (2) substituting the amounts taken into account under the ADP test for the Plan Year and the gap period, for the amounts taken into account under the ADP test for the Plan Year in determining the fraction that is multiplied by that income.

6.2Corrective contributions.  If a failed ADP test is to be corrected by making an Employer contribution, then the provisions of the Plan for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions to an amount that does not exceed the targeted contribution limits of Section 5.1 of this Amendment, or in the case of a corrective contribution that is a Qualified Matching Contribution, the targeted contribution limit of Section 7.1 of this Amendment.

ARTICLE VII

ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST

7.1Targeted matching contribution limit.  A matching contribution with respect to an Elective Contribution for a Plan Year is not taken into account under the Actual Contribution Percentage (ACP) test for an NHCE to the extent it exceeds the greatest of:

(a)five percent (5%) of the NHCE’s Code Section 414(s) compensation for the Plan Year;

(b)the NHCE’s Elective Contributions for the Plan Year; and

(c)the product of two (2) times the Plan’s “representative matching rate” and the NHCE’s Elective Contributions for the Plan Year.

For purposes of this Section, the Plan’s “representative matching rate” is the lowest “matching rate” for any eligible NHCE among a group of NHCEs that consists of half of all eligible NHCEs in the Plan for the Plan Year who make Elective Contributions for the Plan Year (or, if greater, the lowest “matching rate” for all eligible NHCEs in the Plan who are employed by the Employer on the last day of the Plan Year and who make Elective Contributions for the Plan Year).

For purposes of this Section, the “matching rate” for an Employee generally is the matching contributions made for such Employee divided by the Employee’s Elective Contributions for the Plan Year.  If the matching rate is not the same for all levels of Elective Contributions for an Employee, then the Employee’s “matching rate” is determined assuming that an Employee’s Elective Contributions are equal to six percent (6%) of Code Section 414(s) compensation.

If the Plan provides a match with respect to the sum of the Employee’s after-tax Employee contributions and Elective Contributions, then for purposes of this Section, that sum is substituted for the amount of the Employee’s Elective Contributions in subsections (b) & (c) above and in determining the “matching rate,” and Employees who make either after-tax Employee contributions or Elective Contributions are taken into account in determining the Plan’s “representative matching rate.”  Similarly, if the Plan provides a match with respect to the Employee’s after-tax Employee contributions, but not Elective Contributions, then for purposes of this subsection, the Employee’s after-tax Employee contributions are substituted for the amount of the Employee’s Elective Contributions in subsections (b) & (c) above and in determining the “matching rate,” and Employees who make after-tax Employee contributions are taken into account in determining the Plan’s “representative matching rate.”

7.2Targeted QNEC limit.  Qualified Nonelective Contributions (as defined in Regulation Section 1.401(k)-6) cannot be taken into account under the Actual Contribution Percentage (ACP) test for a Plan Year for an NHCE to the extent such contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan’s “representative contribution rate.”  Any Qualified Nonelective Contribution taken into account under an Actual Deferral

Percentage (ADP) test under Regulation Section 1.401(k)-2(a)(6) (including the determination of the “representative contribution rate” for purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be taken into account for purposes of this Section (including the determination of the “representative contribution rate” for purposes of subsection (a) below).  For purposes of this Section:

(a)The Plan’s “representative contribution rate” is the lowest “applicable contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and who is employed by the Employer on the last day of the Plan Year), and

(b)The “applicable contribution rate” for an eligible NHCE is the sum of the matching contributions (as defined in Regulation Section 1.401(m)-1(a)(2)) taken into account in determining the ACR for the eligible NHCE for the Plan Year and the Qualified Nonelective Contributions made for that NHCE for the Plan Year, divided by that NHCE’s Code Section 414(s) compensation for the Plan Year.

Notwithstanding the above, Qualified Nonelective Contributions that are made in connection with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into account for a Plan Year for an NHCE to the extent such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s) compensation.

7.3ACR of HCE if multiple plans.  The Actual Contribution Ratio (ACR) for any Participant who is a Highly Compensated Employee (HCE) and who is eligible to have matching contributions or after-tax Employee contributions allocated to his or her account under two (2) or more plans described in Code Section 401(a), or arrangements described in Code Section 401(k) that are maintained by the same Employer, shall be determined as if the total of such contributions was made under each plan and arrangement.  If an HCE participates in two (2) or more such plans or arrangements that have different plan years, then all matching contributions and after-tax Employee contributions made during the Plan Year being tested under all such plans and arrangements shall be aggregated, without regard to the plan years of the other plans.  For plan years beginning before the effective date of this Amendment, all such plans and arrangements ending with or within the same calendar year shall be treated as a single plan or arrangement.  Notwithstanding the foregoing,

certain plans shall be treated as separate if mandatorily disaggregated under the Regulations of Code Section 401(m).

7.4Plans using different testing methods for the ACP and ADP test.  Except as otherwise provided in this Section, the Plan may use the current year testing method or prior year testing method for the ACP test for a Plan Year without regard to whether the current year testing method or prior year testing method is used for the ADP test for that Plan Year.  However, if different testing methods are used, then the Plan cannot use:

(a)The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

(b)The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the ADP test); or

(c)The rules of Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching Contributions into account under the ADP test (rather than the ACP test).

ARTICLE VIII

ADJUSTMENT TO ACP TEST

8.1Distribution of Income attributable to Excess Aggregate Contributions.  Distributions of Excess Aggregate Contributions must be adjusted for income (gain or loss), including an adjustment for income for the period between the end of the Plan Year and the date of the distribution (the “gap period”).  For the purpose of this Section, “income” shall be determined and allocated in accordance with the provisions of Section 6.1 of this Amendment, except that such Section shall be applied by substituting “Excess Contributions” with “Excess Aggregate Contributions” and by substituting amounts taken into account under the ACP test for amounts taken into account under the ADP test.

8.2Corrective contributions.  If a failed ACP test is to be corrected by making an Employer contribution, then the provisions of the Plan for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions to an amount that does not exceed the targeted contribution limits of Sections 7.1 and 7.2 of this Amendment.

ARTICLE IX

SAFE HARBOR PLAN PROVISIONS

9.1Applicability. The provisions of this Article IX apply if the Plan uses the alternative method of satisfying the Actual Deferral Percentage (ADP) test set forth in Code Section 401(k)(12) (ADP Test Safe Harbor) and/or the Actual Contribution Percentage (ACP) test set forth in Code Section 401(m)(11) (ACP Test Safe Harbor).

9.2Elimination of allocation conditions on matching contributions.  If, prior to the date this Amendment has been executed, an ADP Test Safe Harbor notice has been given for a Plan Year for which this Amendment is effective and such notice provides that there are no allocation conditions imposed on any matching contributions under the Plan, then (1) the Plan will be an ACP Test Safe Harbor plan, provided the ACP Test Safe Harbor requirements are met and (2) the Plan will not impose any allocation conditions on matching contributions.  However, if, prior to the date this Amendment has been executed, an ADP Test Safe Harbor notice has been given for a Plan Year for which this Amendment is effective and such notice provides that there are allocation conditions imposed on any matching contributions under the Plan, the Employer may either:

(a)satisfy the ACP Test for such Plan Year using the current year testing method.  With respect to any Plan Year beginning after the date this Amendment has been executed, if the Plan uses the ADP Test Safe Harbor and provides for matching contributions, then the Plan will not impose any allocation conditions on matching contributions.

(b)retain any allocation conditions contained in the Plan with regard to matching contributions for any Plan Year for which this Amendment is effective.  In this case, the Plan must continue to satisfy the ACP Test for each such Plan Year.

9.3Matching Catch-up contributions.  If the Plan provides for ADP Test Safe Harbor matching contributions or ACP Test Safe Harbor matching contributions, then catch-up contributions (as defined in Code Section 414(v)) will be taken into account in applying such matching contributions under the Plan.

9.4Plan Year requirement. Except as provided in Regulation Sections 1.401(k)-3(e) and 1.401(k)-3(f), and below, the Plan will fail to satisfy the requirements of Code Section 401(k)(12) and this Section for a Plan Year unless such provisions remain in effect for an entire twelve (12) month Plan Year.

9.5Change of Plan Year. If a Plan has a short Plan Year as a result of changing its Plan Year, then the Plan will not fail to satisfy the requirements of Section 9.4 of this Amendment merely because the Plan Year has less than twelve (12) months, provided that:

(a)The Plan satisfied the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements for the immediately preceding Plan Year; and

(b)The Plan satisfies the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements (determined without regard to Regulation Section 1.401(k)-3(g)) for the immediately following Plan Year (or for the immediately following twelve (12) months if the immediately following Plan Year is less than twelve (12) months).

9.6Timing of matching contributions. If the ADP Test Safe Harbor contribution being made to the Plan is a matching contribution (or any ACP Test Safe Harbor matching contribution) that is made separately with respect to each payroll period (or with respect to all payroll periods ending with or within each month or quarter of a Plan Year) taken into account under the Plan for the Plan Year, then safe harbor matching contributions with respect to any elective deferrals and/or after-tax employee contributions made during a Plan Year quarter must be contributed to the Plan by the last day of the immediately following Plan Year quarter.

9.7Exiting safe harbor matching. The Employer may amend the Plan during a Plan Year to reduce or eliminate prospectively any or all matching contributions under the Plan (including any ADP Test Safe Harbor matching contributions) provided: (a) the Administrator provides a supplemental notice to the Participants which explains the consequences of the amendment, specifies the amendment’s effective date, and informs Participants that they will have a reasonable opportunity to modify their cash or deferred elections and, if applicable, after-tax Employee contribution elections; (b) Participants have a reasonable opportunity (including a reasonable period after receipt of the supplemental notice) prior to the effective date of the amendment to modify their cash or deferred elections and, if applicable, after-tax Employee contribution elections; and (c) the amendment is not effective earlier than the later of: (i) thirty (30) days after the Administrator gives supplemental notice; or (ii) the date the Employer adopts the amendment. An Employer which amends its Plan to eliminate or reduce any matching contribution under this Section, effective during the Plan Year, must continue to apply all of the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements of the Plan until the amendment becomes effective and also must apply for the entire Plan Year, using current year testing, the ADP test and the ACP test.

9.8Plan termination. An Employer may terminate the Plan during a Plan Year in accordance with Plan termination provisions of the Plan and this Section.

(a)Acquisition/disposition or substantial business hardship. If the Employer terminates the Plan resulting in a short Plan Year, and the termination is on account of an acquisition or disposition transaction described in Code Section 410(b)(6)(C), or if the termination is on account of the Employer’s substantial business hardship within the meaning of Code Section 412(d), then the Plan remains an ADP Test Safe Harbor and/or ACP Test Safe Harbor Plan provided that the Employer satisfies the ADP Test Safe Harbor and/or ACP Test Safe Harbor provisions through the effective date of the Plan termination.

(b)Other termination. If the Employer terminates the Plan for any reason other than as described in Section 9.7(a) above, and the termination results in a short Plan Year, the Employer must conduct the termination under the provisions of Section 9.7 above, except that the Employer need not provide Participants with the right to change their cash or deferred elections.

IN WITNESS WHEREOF, the Employer, has caused this instrument to be executed as of the date specified below.

		JANUS CAPITAL GROUP INC.
Dated:	December 29, 2006	By:	Curt R. Foust
		Its:	Assistant General Counsel

EX-10.3

Ex. 10.3

JANUS LONG TERM INCENTIVE AWARD (“LTI”) ACCEPTANCE FORM

[Name]
[Address]
[City, State ZIP]

With the full execution of this LTI Acceptance Form, the Company grants to [Name] (“you” or “Grantee/Participant”), effective as of February 2, 2007 (the “Grant Date”), a [Restricted Stock Award, Non-Qualified Stock Option Award and Mutual Fund Unit Award] (the “LTI Award[s]”) as described below, subject to the attached Company [Plan(s)] and the attached [Appendix/Appendices].

Restricted Stock Award — see Terms of Restricted Stock Award attached as Appendix A
Number of Shares Granted:	[RSA shares]
Share Withholding Election to cover taxes (Please initial one of the following):
1.             Minimum Tax Withholding Rate
2.             Maximum Tax Withholding Rate
3.             Opt Out of Share Withholding Program
(See Share Withholding Section 4 of Appendix A)
Non-Qualified Stock Option Award — see Terms of Non-Qualified Stock Option Award attached as Appendix [B]
Number of Shares Granted:	[Option shares]
Option or Exercise Price:	[Exercise Price]
Expiration Date (7 year term):	[Expiration Date]
(must exercise before the Expiration Date)
Mutual Fund Unit Award — see Terms of Mutual Fund Unit Award attached as Appendix [C]
Value on Grant Date:	[$MFA Value]

a.             Except as otherwise provided herein, in the Plan[s] and/or any applicable written employment or severance agreement, the LTI Award[s] will become vested and no longer subject to restriction on the vesting dates and in the amounts indicated below, provided that you are providing Services (as defined in the attached [Appendix/Appendices]) to the Company or one of its Consolidated Subsidiaries [and subject to the satisfaction of applicable Section 162(m) performance criteria, if any, as established by the Janus Capital Group Inc. Compensation Committee (the “Committee”)].  However, in the event that a vesting date occurs on a day when the New York Stock Exchange is closed, then such vesting date will occur on the next business day.

Date First Exercisable	Percentage  Vesting
February 1, 2008	25%
February 1, 2009	25%
February 1, 2010	25%
February 1, 2011	25%

b.             The vesting schedule set forth in (a) above is subject to the following performance accelerated vesting schedule based on the change in the Company’s full year adjusted diluted earnings per share* (as calculated by the Company):

Change in EPS Result	Total Vesting% Per Year, Including Section (a)	Incremental Vesting% Above Section (a)
Negative up to 10%	25%	-0-
10.1 – 15%	30%	+5%
15.1 – 20%	35%	+10%
20.1 – 25%	40%	+15%
25.1 – 50%	45%	+20%
> 50%	50%	+25%

*As presented in the Company’s annual earnings release after review by the Company’s Audit Committee, but subject to the following adjustment:  when calculating earnings per share growth, any positive effect or impact on the Company’s earnings directly arising from the final vesting event (roll-off) of the April 2002 grant of Class E shares (as converted to Company Stock on March 12, 2003) will be excluded from such calculations.

c.             Notwithstanding the provisions of (a) and (b) above, if there is a Change of Control or if Grantee/Participant has a Termination of Affiliation with the Company due to Retirement (subject to tax withholding prior to termination), death or Disability, the LTI Award(s) shall vest in full.  Except as provided herein, in the event that Grantee/Participant has a Termination of Affiliation, any portion of the LTI Award(s) that is unvested, and any of Grantee/Participant’s rights hereunder, shall be terminated, cancelled and forfeited effective immediately upon such Termination of Affiliation.

d.             In accordance with the Plan[s], the Committee may, in its sole discretion, accelerate the vesting of all or a portion of the LTI Award[s] or waive any or all of the terms and conditions applicable to this LTI Acceptance Form or the attached [Appendix/Appendices].

e.             Capitalized terms used but not defined in this LTI Acceptance Form have the meaning specified in the Plan[s] and/or in the attached [Appendix/Appendices].

By executing this LTI Acceptance Form, you indicate your acceptance of the LTI Award[s] set forth above and agree to be bound by the terms, conditions and provisions set forth in the LTI Acceptance Form, the attached [Appendix/Appendices] and the Company Plan[s], all of which are incorporated by reference herein and are an integral part of this LTI Acceptance Form.  Please sign and return this LTI Acceptance Form to the Assistant Corporate Secretary’s Office in the envelope provided within sixty (60) days after the Company’s mailing of this LTI Acceptance Form to you.  In the event you fail to return the executed original within sixty (60) days, the Company reserves the right to unilaterally (without your consent) terminate and forfeit the LTI Award[s], suspend or forfeit any vesting event arising from the LTI Award[s], and/or revoke this LTI Acceptance Form and the rights set forth in the attached [Appendix/Appendices].

2

This LTI Acceptance Form may be executed in counterparts, which together shall constitute one and the same original.  This LTI Acceptance Form may be executed by the exchange of facsimile signature pages, provided that by doing so the Grantee/Participant agrees to provide an original signature as soon thereafter as possible.

ACCEPTED AND AGREED TO AS OF THE GRANT DATE:
GRANTEE/PARTICIPANT:
[Name]
JANUS CAPITAL GROUP INC.
By:
	By:  Curt R. Foust
	Title:  Assistant Corporate Secretary

3

JANUS CAPITAL GROUP INC.

DESIGNATION OF BENEFICIARY

Subject to the terms of the Company’s Plan[s], and in connection with my previously granted long-term incentive awards granted under the Plan[s], revoking any previous designation in connection with any previous award under the Plan[s] which may be inconsistent herewith, I hereby designate:

(Beneficiary/Trust Name and Relationship)

Address

as my beneficiary to receive upon my death the balance, if any, of my entire previously granted long-term incentive awards, if any, under the Plan[s] and the LTI Award[s].  This designation of beneficiary shall be binding upon my estate and upon my heirs and legatees, and the Company may rely hereon without further authorization from any representative of my estate or any other persons and without inquiring into the terms of my Last Will and Testament or any Codicil thereto.  If the beneficiary designated hereinabove shall have predeceased me or if the trust is revoked, then I direct that, upon my death, my estate shall become the beneficiary of all my previously granted long-term incentive awards under the Plan[s] to the extent permitted by, and in accordance with the terms and conditions of the Plan[s] and the LTI Award[s].  I reserve the right to change, in writing, this designation of beneficiary at any time, and I understand that this designation shall not become effective until received by the Company’s Corporate Secretary.

I have executed this Designation of Beneficiary this      day of                                      , 2007.

[Name]

4

APPENDIX A — TERMS OF RESTRICTED STOCK AWARD

1.Grant of Restricted Stock Award.

Subject to the provisions of this Appendix, the LTI Acceptance Form and the Company’s [1998 Long Term Incentive Stock Plan, 2005 Long Term Incentive Stock Plan], as may be amended from time to time (the “Plan”), the Company hereby grants to the Grantee the number of restricted shares of common stock of the Company, par value $.01 per share (“Common Stock”) identified under the Restricted Stock Award section of the attached LTI Acceptance Form (the “Restricted Stock”).

2.No Right to Continued Employment.

Nothing in this Appendix or the Plan shall confer upon Grantee any right to continue providing Services to, or be in the employ of, the Company or any of its Consolidated Subsidiaries or interfere in any way with the right of the Company or any such Consolidated Subsidiary to terminate Grantee’s association or employment at any time.

3.Unfair Interference.

During Grantee’s employment with the Company or any Consolidated Subsidiary and during the twelve months after Termination of Affiliation, Grantee shall not: (i) knowingly and directly solicit, hire or attempt to hire, or assist another in soliciting, hiring or attempting to hire, on behalf of any Competitive Business, any person who is an employee or contractor of the Company or any Consolidated Subsidiary; or (ii) knowingly and directly divert, attempt to divert, or solicit, or assist another in diverting, attempting to divert or soliciting, the customer business of any Protected Client on behalf of a Competitive Business.  For purposes of this section, “Competitive Business” means any business that provides investment advisory or investment management services or related services; and “Protected Client” shall mean any person or entity to whom the Company or any Consolidated Subsidiary provided investment advisory or investment management services at any point during the six months preceding Grantee’s Termination of Affiliation.

4.Share Withholding Program.

In connection with Section 11 (pertaining to the withholding of taxes), the Company hereby offers Grantee the opportunity to participate in the Janus share withholding program (the “Program”) as more fully described in Exhibit A attached hereto.  The Program is voluntary.  However, if Grantee opts out of the Program, Grantee will be required to pay the Company the minimum withholding amount on or before each vesting date.  Grantee’s election, if any, under #1 or #2 of the Restricted Stock Award section of the LTI Acceptance Form will indicate Grantee’s acceptance of the terms set forth in Exhibit A and will revoke any previous Program election in connection with a restricted stock award which may be inconsistent herewith.

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5.Issuance of Shares.

Subject to Section 11 (pertaining to the withholding of taxes), as soon as practicable after each vesting event under Subsection[s] (a) [and (b)] of the LTI Acceptance Form, or if Grantee had a Termination of Affiliation pursuant to Subsection (c) of the LTI Acceptance Form, as soon as practicable after such termination (in each case, provided there has been no prior forfeiture of the Restricted Stock pursuant to the terms of this Appendix or the Plan), the Company shall issue (or cause to be delivered) to the Grantee one or more stock certificates or otherwise transfer shares with respect to the Restricted Stock vesting (or shall take other appropriate steps to reflect the Grantee’s unrestricted ownership of all or a portion of the vested Restricted Stock that is subject to this Appendix).

6.Nontransferability of the Restricted Stock.

Any unvested shares of the Restricted Stock shall not be transferable by the Grantee by means of sale, assignment, exchange, encumbrance, pledge or otherwise.

7.Rights as a Stockholder.

Except as otherwise specifically provided in this Appendix, the Grantee shall have all the rights of a stockholder with respect to the Restricted Stock including, without limitation, the right to vote the Restricted Stock and the right to receive dividend payments.  Dividends and distributions other than regular cash dividends, if any, may result in an adjustment pursuant to Section 8.

8.Adjustment in the Event of Change in Stock.

In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Common Stock or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event that affects the Common Stock such that an adjustment is determined by the Committee to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust the number and type of shares, or, if deemed appropriate, make provision for a cash payment to the Grantee or the substitution of other property for shares of Restricted Stock; provided, that the number of shares of Restricted Stock shall always be a whole number.

9.Payment of Transfer Taxes, Fees and Other Expenses.

The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of shares received by Grantee in connection with the Restricted Stock, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith.

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10.Other Restrictions.

The Restricted Stock shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the Grantee with respect to the disposition of shares of Common Stock is necessary or desirable as a condition of, or in connection with, the delivery or purchase of shares pursuant thereto, then in any such event, the grant and/or vesting of Restricted Stock shall not be effective unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

11.Taxes and Withholding.

No later than the date as of which an amount first becomes includible in the gross income of the Grantee for federal income tax purposes with respect to any Restricted Stock, the Grantee shall pay all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld by either: (i) participating in the Company’s Program to have shares withheld by the Company or its agent as set forth in Section 4 above (provided that it will not result in adverse accounting consequences to the Company), or (ii) making other payment arrangements satisfactory to the Company.  The obligations of the Company under this Appendix shall be conditioned on compliance by the Grantee with this Section 11.  It is intended that the foregoing provisions of this Section 11 shall normally govern the payment of withholding taxes; however, if withholding is not accomplished under the preceding provisions of this Section 11, the Grantee agrees that the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee, including compensation or the delivery of the Restricted Stock that gives rise to the withholding requirement.

12.Notices.

Any notice to be given to the Company shall be addressed to the Company at its principal office, in care of its Assistant Corporate Secretary.  Any notice to be given to Grantee shall be addressed to Grantee at the address listed in the Company’s records.  By a notice given pursuant to this section, either party may designate a different address for notices.  Any notice shall have been deemed given (i) when actually delivered to the Company, or (ii) if to the Grantee, when actually delivered; when deposited in the U.S. Mail, postage prepaid and properly addressed to the Grantee; or when delivered by overnight courier.

13.Binding Effect.

Except as otherwise provided hereunder, this Appendix shall be binding upon and shall inure to the benefit of the heirs, executors or successors of the parties to this Appendix.

14.Laws Applicable to Construction.

The interpretation, performance and enforcement of this Appendix shall be governed by the laws of the State of Delaware without reference to principles of conflict of laws, as applied to contracts executed in and performed wholly within the State of Delaware.  In addition to the terms and conditions set forth in this Appendix, the Restricted Stock is subject to the terms and conditions of the Plan, which is hereby incorporated by reference.

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15.Severability.

The invalidity or enforceability of any provision of this Appendix shall not affect the validity or enforceability of any other provision of this Appendix.

16.Conflicts and Interpretation.

In the event of any conflict between this Appendix and the Plan, the Plan shall control [except with respect to the definition of Change of Control in Section 19 below].  In the event of any ambiguity in this Appendix, or any matters as to which this Appendix is silent, the Plan shall govern including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret the Plan, (ii) prescribe, amend and rescind rules and regulations relating to the Plan, and (iii) make all other determinations deemed necessary or advisable for the administration of the Plan.

17.Amendment; Section 409A of the Code.

This Appendix may not be modified, amended or waived except by an instrument in writing approved by both parties hereto or approved by the Committee.  The waiver by either party of compli­ance with any provision of this Appendix shall not operate or be construed as a waiver of any other provision of this Appendix, or of any subsequent breach by such party of a provision of this Appendix.  Notwithstanding anything to the contrary contained in the Plan or in this Appendix, to the extent that the Company determines that the Restricted Stock is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Company reserves the right to amend, restructure, terminate or replace the Restricted Stock in order to cause the Restricted Stock to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section.

18.Headings.

The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Appendix.

19.Definitions.

For purposes of the LTI Acceptance Form and this Appendix:

a.     “Services” shall mean the Grantee is providing services to the Company or any Consolidated Subsidiary in the capacity as an employee, a member of the board of directors of the parent company, a trustee of a Janus-affiliated investment company trust, or a consultant pursuant to a written consulting agreement;

b.     “Termination of Affiliation” shall mean the first day when Grantee for any reason is no longer providing Services to the Company or any Consolidated Subsidiary, or with respect to Grantee’s status as an employee, director or trustee of, or consultant to, an entity which is a Consolidated Subsidiary, the first day on which such entity ceases to be a Consolidated Subsidiary; and

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c.     “Change in Control” shall mean the first to occur of any of the following:

(i)            An acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following:  (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iv) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection c (iii) of this definition; or

(ii)           A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who becomes a member of the Board subsequent to the effective date hereof, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other accrual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(iii)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or stock of another entity (“Business Combination”); excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding

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Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company or any employee benefit plan (or related trust) of the Company or the corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Business Combination; and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Business Combination; or

(iv)          The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

                For purposes of this definition, “person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

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(Share Withholding Program - Restricted Stock Award)

Exhibit A

1.             Definitions.  All capitalized terms used herein to the extent not defined below shall have the meaning set forth in Appendix attached hereto.

a.             The “Program” shall mean the Company’s share withholding program set forth below.

b.“Common Stock” shall mean the common stock of the Company.

c.             “Current Grant” shall mean the terms and restrictions of the LTI Acceptance Form and Appendix, as may be amended, received by the Grantee in connection with one or more grants of restricted Common Stock.

d.             “Cumulative Grants” shall mean the Current Grant together with additional grants of restricted Common Stock pursuant to the terms of subsequent awards.

2.             Share Withholding Election.  By initialing either #1 or #2 on the LTI Acceptance Form, the Grantee elects to satisfy his or her federal, state and local payroll and income tax withholding obligations arising in connection with the vesting of restricted shares of Common Stock received by the Grantee upon a future vesting event under the Cumulative Grants, as provided in Section 3 below, by participating in the Program.  The Grantee is electing to participate in this Program, in part, in order to take advantage of the safe harbor provisions provided by Rule 10b5-1 of the rules promulgated under the Securities Exchange Act of 1934, as amended.

3.             Share Withholding.  The Grantee’s share withholding election, as designated under the Restricted Stock Award section of the LTI Acceptance Form, shall be binding on the Grantee.  An election based on subsection 3(a) below will result in the sale of the approximate number of shares of Common Stock that will cover the minimum withholding obligations.  An election based on subsection 3(b) below will result in the sale of the number of shares of Common Stock to cover up to the approximate maximum tax rate.

a.             Minimum Tax Withholding Rate.  By electing this Section 3(a) item (corresponds to election #1 under the Restricted Stock Award section of the LTI Acceptance Form), the Grantee hereby authorizes and requests that the Company withhold from the shares of Common Stock otherwise issuable to the Grantee in connection with any future vesting event that number of shares of Common Stock having a value, based on the Fair Market Value on the applicable vesting date, approximately equal to the minimum statutory payroll and income tax withholding rate (collectively, the “Withholding Rate”) on the applicable vesting date.  The Company agrees to pay over to the appropriate taxing authorities an amount approximately equal to the Fair Market Value on the applicable vesting date of the shares of Common Stock withheld pursuant to the immediately preceding sentence.  For purposes of this Program, the Withholding Rate for non-employee directors or any other person who is a party to one or more Cumulative Grants but is not an employee of the Company or one of its Subsidiaries shall be 30%, subject to the then-current laws and regulations related to payroll and income tax.

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b.             Maximum Tax Withholding Rate.  By electing this Section 3(b) (corresponds to election #2 under the Restricted Stock Award section of the LTI Acceptance Form), the Grantee authorizes and requests that the Company take the actions set forth in Section 3(a) above.  In addition, the Grantee hereby authorizes and requests that Charles Schwab or other Company designated broker (i) sell from the shares of Common Stock issued to the Grantee in connection with any future vesting event that number of shares of Common Stock generating cash proceeds, after payment of any applicable brokerage fees as agreed to by the Grantee (“Proceeds”), approximately equal to the difference between the maximum statutory payroll and income tax withholding rates and the minimum statutory payroll and income tax withholding rates on the applicable vesting date (such difference, the “Additional Tax Amount”), (ii) remit the Additional Tax Amount to the Company and (iii) credit to the Grantee’s account at Charles Schwab or other Company designated broker an amount equal to the excess of such Proceeds over the Additional Tax Amount.  For purposes of this Program, the Additional Tax Amount for non-employee directors or any other person who is a party to one or more Grant Agreements but is not an employee of the Company or one of its Subsidiaries shall be 0%.  All sales under the foregoing provisions shall be made by Charles Schwab or other Company designated broker on the applicable vesting date or as soon thereafter as practicable.  Subject to the foregoing provisions, the timing and manner of execution of any transaction shall be subject to principles of best execution as applied by Charles Schwab or other Company designated broker.  The Grantee acknowledges and agrees that Charles Schwab or other Company designated broker, acting consistent with principles of best execution, may be unable to effect sales of the Common Stock due to the Common Stock not trading in sufficient volume at or above a specified limit price, market rules on volume and price priority and precedence, legal or regulatory restrictions, or other factors.

c.             The Company agrees to promptly pay over to the appropriate taxing authorities the Additional Tax Amount upon receipt of such amount from Charles Schwab or other Company designated broker.

d.             The Grantee acknowledges and agrees that he or she shall not exercise or attempt to exercise any influence over how, when or whether any sales of shares of Common Stock are made by Charles Schwab or other Company designated broker, except as set forth in the instructions included in this Program.

e.             “Fair Market Value” means, unless otherwise determined by the Committee, as of any applicable measurement date, (i) the average of the high and low trading prices of the Common Stock on such date on the New York Stock Exchange (or, if no sale of Common Stock was reported for such date, on the preceding date on which a sale of Common Stock was so reported); (ii) if the Common Stock is not listed on the New York Stock Exchange on the applicable measurement date, the average of the high and low trading prices of the Common Stock on such other national exchange on which the Common Stock is principally traded or as reported by the Nasdaq National Market System, or similar organization, or if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organizations; or (iii) in the event that there shall be no public market for the Common Stock, the fair market value of the Common Stock as determined by the Committee.

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f.              Shares withheld or sold pursuant to this Program shall be deemed issued and delivered to the Grantee for all purposes of the Cumulative Grants and the Company shall not have any further obligation in respect of any such shares under the Cumulative Grants  or otherwise.

g.             The Grantee acknowledges and agrees that any federal, state, local or foreign tax obligations that exceed the value of the shares of Common Stock withheld pursuant to this Program and/or the Additional Tax Amount remitted by Charles Schwab or other Company designated broker to the Company (if applicable), including without limitation any payroll and income tax withholding obligations in excess of the minimum statutory withholding obligations, shall remain the responsibility of the Grantee and must be paid in full by the Grantee in accordance with the Cumulative Grants  and applicable law.

4.             Compliance with Law.  The Grantee hereby irrevocably agrees that the sales of Common Stock pursuant to this Program shall be automatically suspended or cancelled by the Company upon the occurrence of any of the following events:

a.The death of the Grantee;

b.             The proposed sale or sales of Common Stock provided for by this Program would violate Section 16 of the Securities Exchange Act of 1934 or the Rules promulgated thereunder, Rule 144 of the Securities Act of 1933, or any other federal or state law or regulation;

c.             The Company’s Board of Directors votes to suspend all trading of Common Stock;

d.The Company commences a public offering of any of its equity securities; or

e.             The Company has merged, been acquired, or reorganized in any transaction which results in the Common Stock being exchanged or converted.

5.             Miscellaneous.

a.             The interpretation, performance and enforcement of this Program shall be governed by the laws of the State of Delaware, without regard to any otherwise applicable conflict of laws principles thereof that would apply the laws of any other state.

b.             This Program may not be modified, revoked, terminated, amended or waived except by an instrument in writing signed by all parties hereto.  The waiver by either party of compliance with any provision of this Program shall not operate or be construed as a waiver of any other provision of this Program or of any subsequent breach by such party of this Program.  Once per calendar year, the Company may provide the Grantee with the opportunity to modify, revoke, terminate, amend, waive or otherwise alter the election made pursuant to this Program for future vesting events.  The Grantee shall not be permitted to do so at any other time or under any other circumstance unless approved by Company legal counsel.  If this Program is so modified, amended or any provision waived, no sales shall be made during the sixty calendar days immediately following such modification, amendment or waiver.

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APPENDIX [B] – TERMS OF NON-QUALIFIED STOCK OPTION AWARD

1.Grant of Non-Qualified Stock Option Award.

Subject to the provisions of this Appendix, the LTI Acceptance Form and the Company’s [1998 Long Term Incentive Plan, 2005 Long Term Incentive Stock Plan], as may be amended from time to time (the “Plan”), the Company hereby grants to the Grantee a non-qualified stock option (the “Option Award”) to purchase that number of shares of the Company’s Common Stock (“Shares”) identified under the Non-Qualified Stock Option Award section of the LTI Acceptance Form.

2.Term.

The Option Award shall expire on the Expiration Date indicated in the Non-Qualified Stock Option Award section of the LTI Acceptance Form, unless terminated earlier as provided herein, in the LTI Acceptance Form or in the Plan. The Option Award must be exercised before the Expiration Date.

3.Manner of Exercise.

a.             This Option Award shall be exercised by delivering to the Company (or its authorized agent), during the period in which such Option Award is exercisable, (i) a written notice of your intent to purchase a specific number of Shares pursuant to this Option Award (a “Notice of Exercise”), and (ii) full payment of the Option/Exercise Price for such specific number of Shares.  Payment may be made by any one or more of the following means:

(i) cash or personal check; or

(ii) if approved and permitted by the Committee, through the delivery of Shares having a Fair Market Value on the day of exercise equal to such Option/Exercise Price (the number of Shares may be initially estimated using the Fair Market Value on the last stock trading day preceding the exercise day, with a true-up of any differential effective as of the exercise date), which Shares either (i) have been owned by you for at least six months (“Mature Shares”) or (ii) were purchased by you on the open market.  Certificates for Shares shall be properly endorsed with signatures guaranteed (unless such signature guarantee is waived by an officer of the Company), and shall represent Shares which are fully paid, non-assessable, and free and clear from all liens and encumbrances; or

(iii) if approved and permitted by the Committee, through the sale of the Shares acquired on exercise of this Option Award through a broker to whom you have submitted irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if required by the Company, the amount of federal, state, local or foreign withholding taxes payable by reason of such exercise. A copy of such delivery

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instructions must also be delivered to the Company by you with the Notice of Exercise.

b.             The exercise of the Option Award shall become effective at the time such a Notice of Exercise has been received by the Company, which must be before the Expiration Date.  You will not have any rights as a stockholder of the Company with respect to the Shares deliverable upon exercise of this Option Award until a certificate for such Shares is delivered to you or the Shares are otherwise transferred to you.

c.             If the Option Award is exercised as permitted herein by any person or persons other than yourself, such Notice of Exercise shall be accompanied by such documentation as the Company may reasonably require, including without limitation, evidence of the authority of such person or persons to exercise the Option Award and evidence satisfactory to the Company that any death taxes payable with respect to such Shares have been paid or provided for.

4.Exercisability After Termination of Affiliation.

This Option Award may be exercised only while you are providing Services to the Company or a Consolidated Subsidiary, except that this Option Award may also be exercised after the date on which you cease providing Services (“Termination Date”) in accordance with this section:

a.             if you have a Termination of Affiliation on account of Retirement, you may exercise this Option Award at any time during the first five years after your Termination Date;

b.             if you have a Termination of Affiliation on account of death, the executor or administrator of your estate, your heirs or legatees, or beneficiary designated in accordance with the Plan, as applicable, may exercise this Option Award at any time during the first 12 months after your Termination Date;

c.             if you have a Termination of Affiliation on account of Disability, you may also exercise this Option Award at any time during the first 12 months after your Termination Date;

d.             if you have a Termination of Affiliation on account of any other reason (other than a dismissal for Cause in which the Option Award will be immediately forfeited), you may exercise the portion of this Option Award that is vested immediately prior to the Termination Date at any time during the first three (3) months after your Termination Date.  However, except as otherwise provided in this Section 4, this Option Award may be exercised after your Termination Date only to the extent it is exercisable on the Termination Date, and under no circumstances may this Option Award be exercised on or after the Expiration Date.  For purposes of this Section 4, if you are employed by a corporation or limited liability company (“LLC”) that is a Consolidated Subsidiary of the Company, you will be deemed to have had a Termination of Affiliation as of the first day on which such corporation or LLC ceases to be a Consolidated Subsidiary of the Company. 

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5.No Right to Continued Employment.

Nothing in this Appendix, the LTI Acceptance Form or the Plan shall confer upon you any right to continue providing Services to, or be in the employ of, the Company or any of its Consolidated Subsidiaries or interfere in any way with the right of the Company or any such Consolidated Subsidiary to terminate your association or employment at any time.

6.Unfair Interference.

During Grantee’s employment with the Company or any Consolidated Subsidiary and during the twelve months after Termination of Affiliation, Grantee shall not: (i) knowingly and directly solicit, hire or attempt to hire, or assist another in soliciting, hiring or attempting to hire, on behalf of any Competitive Business, any person who is an employee or contractor of the Company or any Consolidated Subsidiary; or (ii) knowingly and directly divert, attempt to divert, or solicit, or assist another in diverting, attempting to divert or soliciting, the customer business of any Protected Client on behalf of a Competitive Business.  For purposes of this section, “Competitive Business” means any business that provides investment advisory or investment management services or related services; and “Protected Client” shall mean any person or entity to whom the Company or any Consolidated Subsidiary provided investment advisory or investment management services at any point during the six months preceding Grantee’s Termination of Affiliation.

7.No Waiver.

The failure of the Company in any instance to exercise any of its rights granted under this Appendix or the Plan shall not constitute a waiver of any other rights that may arise under this Appendix.

8.Limited Transferability of Option Award.

Except as provided in the immediately following sentence, this Option Award is exercisable during your lifetime only by you or your guardian or legal representative, and this Option Award is not transferable except by will or the laws of descent and distribution.  To the extent and in the manner permitted by the Committee, and subject to such terms, conditions, restrictions or limitations of this Appendix or the Plan or that may be prescribed by the Committee, you may transfer this Option Award to:

a.             your spouse, sibling, parent, child (including an adopted child) or grandchild (any of which is an “Immediate Family Member”);

b.             a trust, the primary beneficiaries of which consist exclusively of you or your Immediate Family Members; or

c.             a corporation, partnership or similar entity, the owners of which consist exclusively of you or your Immediate Family Members.

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9.Fractional or De Minimis Shares.

The Option Award shall not be exercisable with respect to a fractional share or with respect to fewer that ten (10) Shares, unless the remaining Shares are fewer than ten (10).

10.Nonstatutory Option Award.  

        This Option Award has been designated by the Committee as a Nonstatutory Option Award; it does not qualify as an incentive stock Option Award.

11.Taxes.

a.             The Company is not required to issue Shares upon the exercise of this Option Award unless you first pay to the Company such amount, if any, as may be required by the Company to satisfy any liability it may have to withhold federal, state, local or foreign income or other taxes relating to such exercise.  You may elect to satisfy such tax withholding obligation by delivering to the Company a written irrevocable election to have the Company withhold a portion of the Shares purchased upon exercise of the Option Award having a Fair Market Value equal to the amount of taxes required to be withheld; provided, however, that the Committee may, at any time before you file such an election with the Company, revoke your right to make such an election.

b.             In addition, you may deliver Mature Shares to the Company to satisfy your federal, state and local withholding tax liability above the minimum amount of taxes required to be withheld by the Company, up to your maximum tax liability arising from the exercise of the Option Award; the Committee retains the right, in its sole discretion, to disapprove any particular delivery of shares of Common Stock and the Committee may, at any time before the delivery of such shares, revoke your right to make such delivery.

12.Attestation to Ownership of Mature Shares.

Whenever under this Appendix you have the right to deliver Mature Shares to the Company for payment of the Option/Exercise Price pursuant to Section 3(a) or for taxes in excess of the minimum amount of taxes required to be withheld by the Company pursuant to Section 11(b), in lieu of physically delivering such shares to the Company, you may elect to deliver to the Company an affidavit and such other documents attesting to ownership of such Mature Shares in such form as is prescribed by the Company from time to time.

13.Amendments. 

This Appendix may be amended only by a writing executed by the Company and you which specifically states that it is amending this Appendix except as otherwise provided for in this Appendix; provided that this Appendix is subject to the power of the Board or the Committee to amend the Plan as provided therein, except that no such amendment shall adversely affect your rights under the LTI Acceptance Form or this Appendix without your consent.

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14.Notices.

Any notice to be given to the Company shall be addressed to the Company at its principal office, in care of its Assistant Corporate Secretary.  Any notice to be given to Grantee shall be addressed to Grantee at the address listed in the Company’s records.  By a notice given pursuant to this section, either party may designate a different address for notices.  Any notice shall have been deemed given (i) when actually delivered to the Company, or (ii) if to the Grantee, when actually delivered; when deposited in the U.S. Mail, postage prepaid and properly addressed to the Grantee; or when delivered by overnight courier. 

15.Severability.

If any part of this Appendix is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any part of this Appendix not declared to be unlawful or invalid.  Any part so declared unlawful or invalid shall, if possible, be construed in a manner which gives effect to the terms of such part to the fullest extent possible while remaining lawful and valid.

16.Applicable Law.

This Appendix shall be construed in accordance with and governed by the laws of the State of Delaware other than its laws respecting choice of law.

17.Headings. 

Headings are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Appendix.

18.Miscellaneous.

a.             Notwithstanding anything to the contrary contained in the Plan or in this Appendix, to the extent that the Company determines that the Option Award is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Company reserves the right to amend, restructure, terminate or replace the Option Award in order to cause the Option Award to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section.

b.             Nothing contained in this Appendix or the LTI Acceptance Form obligates you to exercise all or any part of this Option Award.

19.Definitions.

For purposes of the LTI Acceptance Form and this Appendix:

a.             “Services” shall mean you are providing services to the Company or any Consolidated Subsidiary in the capacity as an employee, a member of the board of directors of the parent company, a trustee of a Janus-affiliated investment company trust, or a consultant pursuant to a written consulting agreement;

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b.             “Termination of Affiliation” shall mean the first day when you for any reason are no longer providing Services to the Company or any Consolidated Subsidiary, or with respect to your status as an employee, director or trustee of, or consultant to, an entity which is a Consolidated Subsidiary, the first day on which such entity ceases to be a Consolidated Subsidiary; and

c.             “Change of Control” shall mean the first to occur of any of the following:

(i)         An acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following:  (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iv) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection c (iii) of this definition; or

(ii)           A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who becomes a member of the Board subsequent to the effective date hereof, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other accrual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(iii)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or stock of another entity (“Business Combination”); excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the

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outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company or any employee benefit plan (or related trust) of the Company or the corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Business Combination; and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Business Combination; or

(iv)          The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

For purposes of this definition, “person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

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APPENDIX [C] - TERMS OF MUTUAL FUND UNIT AWARD

1.Grant of Mutual Fund Unit Award.

                Subject to the provisions of this Appendix, the LTI Acceptance Form and the Company’s Mutual Fund Share Investment Plan, as may be amended from time to time (the “Plan”), the Company hereby grants to Participant a deferred cash award (the “Mutual Fund Award”) as identified in the Mutual Fund Unit Award section of the attached LTI Acceptance Form.

2.Retail Account Required.

If you are a U.S. based employee, you must have an open retail, non-retirement mutual fund account with Janus directly (not through a third party) in order to receive any proceeds or benefits (including vesting) from this Mutual Fund Award.  A failure to maintain such an account will subject this Mutual Fund Award to a suspension of vesting or cancellation and forfeiture.

3.No Right to Continued Employment.

Nothing in this Appendix or the Plan shall confer upon Participant any right to continue providing Services to, or be in the employ of, the Company or any of its Consolidated Subsidiaries or interfere in any way with the right of the Company or any such Consolidated Subsidiary to terminate Participant’s association or employment at any time.

4.Unfair Interference.

During Participant’s employment with the Company or any Consolidated Subsidiary and during the twelve months after Termination of Affiliation, Participant shall not: (i) knowingly and directly solicit, hire or attempt to hire, or assist another in soliciting, hiring or attempting to hire, on behalf of any Competitive Business, any person who is an employee or contractor of the Company or any Consolidated Subsidiary; or (ii) knowingly and directly divert, attempt to divert, or solicit, or assist another in diverting, attempting to divert or soliciting, the customer business of any Protected Client on behalf of a Competitive Business.  For purposes of this section, “Competitive Business” means any business that provides investment advisory or investment management services or related services; and “Protected Client” shall mean any person or entity to whom the Company or any Consolidated Subsidiary provided investment advisory or investment management services at any point during the six months preceding Participant’s Termination of Affiliation.

5.Allocation Elections.

a.             During the vesting period, Participant’s award will be credited to Participant’s Mutual Fund Share Investment Account (“Account”).  The award will be deemed invested in the phantom investments selected by Participant pursuant to online elections through the Plan administrative system (www.millimanonline.com) or as otherwise provided by the Company.  Participant may change the investment elections from time to time; provided, however, in no event shall Participant be able to make changes to the investment elections more than four (4) times per calendar year and any such change should be effective within five (5) days after such election is made.  If you are an

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investment research analyst, or become an investment research analyst during the vesting period of this Mutual Fund Award, you may be required to allocate your investment elections to certain phantom investments as designated in writing by the Director of Research, the Co-Chief Investment Officers or the Chief Executive Officer.

b.             By accepting this Mutual Fund Award, Participant acknowledges and agrees that (i) Participant will open a retail, non-retirement mutual fund account with Janus directly, unless Participant already has such an account (does not apply to employees based outside of the United States); (ii) account balances are subject to any net appreciation or depreciation accruing from time to time based on Participant’s deemed investment election of the Account balance in accordance with Participant’s allocation election(s) in effect from time to time; (iii) Participant is solely responsible for any net appreciation or net depreciation in the balance of Participant’s Account resulting from Participant’s deemed investment elections; (iv) the Company does not guarantee or represent in any manner whatsoever that Participant will realize any appreciation in the balance of the Account as a result of allocating the Account balance for deemed investments in the Janus mutual funds; and (v) any allocation elections must comply with the Company’s pre-clearance and applicable prospectus requirements.  Participant further agrees and acknowledges that Participant is under no obligation to make a deemed investment election in any particular fund, and, if no such investment election is made, that the balance and any transfers in Participant’s Account shall be deemed invested in the Janus Money Market Fund or similar mutual fund if the Janus Money Market Fund is not available.

6.Distribution upon Vesting. 

                Subject to the terms of the Plan, upon the vesting of all or a portion of Participant’s Mutual Fund Award, the value of the vested portion of Participant’s Account shall be distributed to Participant as soon as administratively practicable after the applicable vesting event.  Any distribution shall be in the form of a lump sum cash payment (subject to applicable withholdings), which will be deposited into a Janus retail account to purchase the mutual funds in which Participant was invested on a phantom basis at the time such distribution is processed.  Notwithstanding the above, unless otherwise provided by the Administrator, to the extent that the Administrator determines that the Mutual Fund Award is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the vested portion of such Mutual Fund Award shall be distributed in accordance with the Plan; provided however, any portion of the Mutual Fund Award which is vested under another event not set forth in the LTI Acceptance Form but has not yet been distributed shall be distributed upon the earlier occurrence of a permitted distribution event under Section 409A of the Code.

7.Taxes and Withholding. 

                No later than the date as of which an amount first becomes includible in Participant’s gross income for federal income tax purposes with respect to any Mutual Fund Award, the Company shall withhold all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld.

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8.Amendment; Section 409A of the Code. 

                This Appendix may not be modified, amended or waived except by an instrument in writing approved by both parties hereto or approved by the Committee.  The waiver by either party of compli­ance with any provision of this Appendix shall not operate or be construed as a waiver of any other provision of this Appendix, or of any subsequent breach by such party of a provision of this Appendix.  Notwithstanding anything to the contrary contained in the Plan or in this Appendix, to the extent that the Company determines that the Mutual Fund Award is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Company reserves the right to amend, restructure, terminate or replace the Mutual Fund Award in order to cause the Mutual Fund Award to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section.

9.Notices.

                Any notice to be given to the Company shall be addressed to the Company at its principal office, in care of its Assistant Corporate Secretary.  Any notice to be given to Participant shall be addressed to Participant at the address listed in the Company’s records.  By a notice given pursuant to this section, either party may designate a different address for notices.  Any notice shall have been deemed given (i) when actually delivered to the Company, or (ii) if to the Participant, when actually delivered; when deposited in the U.S. Mail, postage prepaid and properly addressed to the Participant; or when delivered by overnight courier. 

10.Definitions.

For purposes of the LTI Acceptance Form and this Appendix:

a.             “Services” shall mean the Participant is providing services to the Company or any Consolidated Subsidiary in the capacity as an employee, a member of the board of directors of the parent company, a trustee of a Janus-affiliated investment company trust, or a consultant pursuant to a written consulting agreement;

b.             “Termination of Affiliation” shall mean the first day when Participant, for any reason, is no longer providing Services to the Company or any Consolidated Subsidiary, or with respect to Participant’s status as an employee, director or trustee of, or consultant to, an entity with is a Consolidated Subsidiary, the first day on which such entity ceases to be a Consolidated Subsidiary;

c.             “Disability” shall mean total disability as determined for purposes of the long-term disability plan of the Company or the applicable subsidiary-employer of the Participant, and disability shall be deemed to occur for purposes of this Appendix on the date such determination of disability is made; and

d.             “Retirement” shall mean Participant has both attained age fifty-five (55) and completed at least ten (10) years of Service with the Company or a Consolidated Subsidiary.

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EX-10.4

Ex. 10.4

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, dated as of August 1, 2005, is made by and between Janus Capital Group Inc. (the “Company”) and Gregory A. Frost (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of the Company to foster the continued employment of key personnel; and

WHEREAS, the Company recognizes that the possibility of a Change in Control always exists and that such possibility, and the uncertainty and questions which it may raise among employees, may result in the departure or distraction of key personnel to the detriment of the Company; and

WHEREAS, the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key personnel, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.             Defined Terms.  The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2.             Term of Agreement.  The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2006; provided, however, that commencing on January 1, 2006 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.  Notwithstanding anything herein to the contrary, the Term of the Agreement shall immediately terminate if, prior to the Change in Control, the Company (or such other Affiliate of the Parent that then employs the Executive) ceases to be an Affiliate of the Parent.

3.             Company’s Covenants Summarized.  In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein.  Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term.  This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in

writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.             The Executive’s Covenants.  The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5.             Compensation Other Than Severance Payments.

5.1           Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s base salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.

5.2           If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s base salary and incentive compensation to the Executive through the Date of Termination as in effect immediately prior to the Date of Termination or, if higher, as in effect immediately prior to the Change in Control, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control.

5.3           If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due.  Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control.

6.             Severance Payments.

6.1           If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in

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this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof.  For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Parent the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs).

(A)              In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (1) the Executive’s cash compensation in the calendar year prior to the Date of Termination or, if higher, earned in the calendar year immediately prior to the Change in Control and (2) the value of the Company’s contributions made pursuant to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan (or any successor plan) on behalf of the Executive in the four quarters immediately prior to the Date of Termination or, if higher, in the four quarters immediately prior to the Change in Control.  For purposes of calculating the cash compensation payment under Section 6.1(A)(1), the Executive’s annual target bonus in the calendar year immediately prior to the Date of Termination or the Change in Control, as applicable, will be applied rather than the actual bonus amount paid to the Executive.

(B)               For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents medical, dental, and vision insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date.  Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the twenty-four (24) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the

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Change in Control.  The coverage provided pursuant to this Section 6.1(B) shall run concurrently with and shall be offset against any continuation coverage under Part 6 of Title I of Employee Retirement Income Security Act of 1974, as amended.

(C)               The Company will make available to the Executive three months of outplacement service at no cost to the Executive through a provider of such services selected by the Company.

6.2           (A)          Whether or not the Executive becomes entitled to the Severance Payments, if any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject (in whole or part) to the Excise Tax, then, the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.  For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes.

(B)           For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.  Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(B) and such supporting materials as are

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reasonably necessary for the Executive to evaluate the Company’s calculations.  If the Executive disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.

6.3           The payments provided in subsection (A) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth day following the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of Section 6.2 hereof); provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination.  At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.4           In the event the Executive incurs legal fees and expenses disputing in good faith any issue hereunder relating to the termination of the Executive’s employment, seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder, the Company shall reimburse the Executive for such legal fees and expenses if the Executive prevails, in material part, in such dispute.

7.             Termination Procedures and Compensation During Dispute.

7.1           Notice of Termination.  After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth

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in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2           Date of Termination.  “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3           Dispute Concerning Termination.  If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4           Compensation During Dispute.  If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof.  Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement.

8.             No Mitigation.  The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof.  Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

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9.             Successors; Binding Agreement.

9.1           In addition to any obligations imposed by law upon any successor to the Company, and subject to the last sentence of Section 2, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

9.2           This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

10.           Notices.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States regis­tered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address on record at the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

Janus Capital Group Inc.

151 Detroit Street

Denver, Colorado 80206

Attn.: General Counsel

11.           Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company, provided, however, that the Company may amend the Agreement in a manner reasonably intended to avoid the acceleration of tax and the possible imposition of penalties under Section 409A of the Code.  No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this

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Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason or prior to a Change in Control pursuant to the second sentence of Section 6.1 of this Agreement.   The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware.  All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed.  The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13.           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

14.           Settlement of Disputes.  All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing.  Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.  Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the court.

15.           Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)          “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)           “Auditor” shall have the meaning set forth in Section 6.2 hereof.

(C)           “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

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(D)          “Board” shall mean the Board of Directors of the Parent.

(E)           “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties;  (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; or (iii) a willful or reckless violation by the Executive of a material legal or regulatory requirement that is materially and demonstrably injurious to the Company.  For purposes of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.  Any act, or failure to act, based upon express written authority by the Board, Chief Executive Officer and/or Chief Investment Officer with respect to such act or omission or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

(F)           A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1)           An acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Parent (the “Outstanding Parent Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors (the “Outstanding Parent Voting Securities”); excluding, however, the following:  (i) any acquisition directly from the Parent, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Parent, (ii) any acquisition by the Parent, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any entity controlled by the Parent, or (iv) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) of this definition; or

(2)           A change in the composition of the Board such that the individuals who, as of the effective date of the this Agreement, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who

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becomes a member of the Board subsequent to the effective date hereof, whose election, or nomination for election by the Parent’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(3)           Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Parent or the acquisition of the assets or stock of another entity (“Business Combination”); excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Parent or all or substantially all the Parent’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities, as the case may be, (B) no Person (other than the Parent or any employee benefit plan (or related trust) of the Parent or the corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Business Combination; and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting form such Business Combination; or

(4)           The approval by the stockholders of the Parent of a complete liquidation or dissolution of the Parent.

(G)           “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

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(H)          “Company” shall mean Janus Capital Group Inc., collectively with its Affiliates, and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(I)            “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(J)            “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability” shall be as defined under, and the Executive must comply with, the then-current long-term disability policy of the Company.

(K)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(L)           “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

(M)         “Executive” shall mean the individual named in the first paragraph of this Agreement.

(N)          “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (1) through (4) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), or (4) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(1)           a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control other than any such alteration primarily attributable to the fact that the Parent may no longer be a public company or to other changes in the identity, nature or structure of the Parent; and provided, that a change in the Executive’s title or reporting relationships shall not of itself constitute Good Reason (unless such change results in a substantial adverse alteration as described above);

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(2)           a material reduction in the Executive’s aggregate target compensation as in effect immediately prior to the Change in Control or a material adverse change in the methodology used to determine incentive compensation; provided, however, that changes to individual components of Executive’s compensation comprising aggregate target compensation shall not constitute Good Reason;

(3)           the relocation of the Executive’s principal place of employment to a location more than 40 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(4)           any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.  The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness.

The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

(O)          “Gross Up Payment” shall have the meaning set forth in Section 6.2 hereof.

(P)           “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(Q)          “Parent” shall mean Janus Capital Group Inc.

(R)           “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(S)           “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1)           the Parent enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

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(2)           the Parent or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(3)           any Person becomes the beneficial owner, directly or indirectly, of securities of the Parent representing 15% or more of either the then outstanding shares of common stock of the Parent or the combined voting power of the Parent’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Parent or its Affiliates); or

(4)           the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(T)           “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(U)          “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(V)           “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

(W)         “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(X)          “Total Payments” shall mean those payments so described in Section 6.2 hereof.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

JANUS CAPITAL GROUP INC.
By:	/s/ Steven L. Scheid
Name: Steven L. Scheid
Title: Chief Executive Officer
/s/ Gregory A. Frost
Name: Gregory A. Frost

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EX-10.5

Ex. 10.5

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, dated as of August 1, 2005, is made by and between Janus Capital Group Inc. (the “Company”) and Kelley A. Howes (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of the Company to foster the continued employment of key personnel; and

WHEREAS, the Company recognizes that the possibility of a Change in Control always exists and that such possibility, and the uncertainty and questions which it may raise among employees, may result in the departure or distraction of key personnel to the detriment of the Company; and

WHEREAS, the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key personnel, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.             Defined Terms.  The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2.             Term of Agreement.  The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2006; provided, however, that commencing on January 1, 2006 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.  Notwithstanding anything herein to the contrary, the Term of the Agreement shall immediately terminate if, prior to the Change in Control, the Company (or such other Affiliate of the Parent that then employs the Executive) ceases to be an Affiliate of the Parent.

3.             Company’s Covenants Summarized.  In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein.  Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term.  This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in

writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.             The Executive’s Covenants.  The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5.             Compensation Other Than Severance Payments.

5.1           Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s base salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.

5.2           If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s base salary and incentive compensation to the Executive through the Date of Termination as in effect immediately prior to the Date of Termination or, if higher, as in effect immediately prior to the Change in Control, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control.

5.3           If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due.  Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control.

6.             Severance Payments.

6.1           If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in

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this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof.  For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Parent the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs).

(A)              In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (1) the Executive’s cash compensation in the calendar year prior to the Date of Termination or, if higher, earned in the calendar year immediately prior to the Change in Control and (2) the value of the Company’s contributions made pursuant to the Janus Capital Group Inc. 401(k), Profit Sharing and Employee Stock Ownership Plan (or any successor plan) on behalf of the Executive in the four quarters immediately prior to the Date of Termination or, if higher, in the four quarters immediately prior to the Change in Control.  For purposes of calculating the cash compensation payment under Section 6.1(A)(1), the Executive’s annual target bonus in the calendar year immediately prior to the Date of Termination or the Change in Control, as applicable, will be applied rather than the actual bonus amount paid to the Executive.

(B)               For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents medical, dental, and vision insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date.  Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the twenty-four (24) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the

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Change in Control.  The coverage provided pursuant to this Section 6.1(B) shall run concurrently with and shall be offset against any continuation coverage under Part 6 of Title I of Employee Retirement Income Security Act of 1974, as amended.

(C)               The Company will make available to the Executive three months of outplacement service at no cost to the Executive through a provider of such services selected by the Company.

6.2           (A)          Whether or not the Executive becomes entitled to the Severance Payments, if any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject (in whole or part) to the Excise Tax, then, the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.  For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes.

(B)           For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.  Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(B) and such supporting materials as are

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reasonably necessary for the Executive to evaluate the Company’s calculations.  If the Executive disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.

6.3           The payments provided in subsection (A) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth day following the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of Section 6.2 hereof); provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination.  At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.4           In the event the Executive incurs legal fees and expenses disputing in good faith any issue hereunder relating to the termination of the Executive’s employment, seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder, the Company shall reimburse the Executive for such legal fees and expenses if the Executive prevails, in material part, in such dispute.

7.             Termination Procedures and Compensation During Dispute.

7.1           Notice of Termination.  After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth

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in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2           Date of Termination.  “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3           Dispute Concerning Termination.  If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4           Compensation During Dispute.  If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof.  Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement.

8.             No Mitigation.  The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof.  Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

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9.             Successors; Binding Agreement.

9.1           In addition to any obligations imposed by law upon any successor to the Company, and subject to the last sentence of Section 2, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

9.2           This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

10.           Notices.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States regis­tered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address on record at the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

Janus Capital Group Inc.

151 Detroit Street

Denver, Colorado 80206

Attn.: General Counsel

11.           Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company, provided, however, that the Company may amend the Agreement in a manner reasonably intended to avoid the acceleration of tax and the possible imposition of penalties under Section 409A of the Code.  No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this

7

Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason or prior to a Change in Control pursuant to the second sentence of Section 6.1 of this Agreement.   The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware.  All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed.  The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13.           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

14.           Settlement of Disputes.  All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing.  Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.  Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the court.

15.           Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)          “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)           “Auditor” shall have the meaning set forth in Section 6.2 hereof.

(C)           “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

8

(D)          “Board” shall mean the Board of Directors of the Parent.

(E)           “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties;  (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; or (iii) a willful or reckless violation by the Executive of a material legal or regulatory requirement that is materially and demonstrably injurious to the Company.  For purposes of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.  Any act, or failure to act, based upon express written authority by the Board, Chief Executive Officer and/or Chief Investment Officer with respect to such act or omission or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

(F)           A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1)           An acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Parent (the “Outstanding Parent Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors (the “Outstanding Parent Voting Securities”); excluding, however, the following:  (i) any acquisition directly from the Parent, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Parent, (ii) any acquisition by the Parent, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any entity controlled by the Parent, or (iv) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) of this definition; or

(2)           A change in the composition of the Board such that the individuals who, as of the effective date of the this Agreement, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who

9

becomes a member of the Board subsequent to the effective date hereof, whose election, or nomination for election by the Parent’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(3)           Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Parent or the acquisition of the assets or stock of another entity (“Business Combination”); excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Parent or all or substantially all the Parent’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Parent Common Stock and Outstanding Parent Voting Securities, as the case may be, (B) no Person (other than the Parent or any employee benefit plan (or related trust) of the Parent or the corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Business Combination; and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting form such Business Combination; or

(4)           The approval by the stockholders of the Parent of a complete liquidation or dissolution of the Parent.

(G)           “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

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(H)          “Company” shall mean Janus Capital Group Inc., collectively with its Affiliates, and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(I)            “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(J)            “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability” shall be as defined under, and the Executive must comply with, the then-current long-term disability policy of the Company.

(K)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(L)           “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

(M)         “Executive” shall mean the individual named in the first paragraph of this Agreement.

(N)          “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (1) through (4) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (1), or (4) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(1)           a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control other than any such alteration primarily attributable to the fact that the Parent may no longer be a public company or to other changes in the identity, nature or structure of the Parent; and provided, that a change in the Executive’s title or reporting relationships shall not of itself constitute Good Reason (unless such change results in a substantial adverse alteration as described above);

11

(2)           a material reduction in the Executive’s aggregate target compensation as in effect immediately prior to the Change in Control or a material adverse change in the methodology used to determine incentive compensation; provided, however, that changes to individual components of Executive’s compensation comprising aggregate target compensation shall not constitute Good Reason;

(3)           the relocation of the Executive’s principal place of employment to a location more than 40 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(4)           any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.  The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness.

The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

(O)          “Gross Up Payment” shall have the meaning set forth in Section 6.2 hereof.

(P)           “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(Q)          “Parent” shall mean Janus Capital Group Inc.

(R)           “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(S)           “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(1)           the Parent enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

12

(2)           the Parent or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(3)           any Person becomes the beneficial owner, directly or indirectly, of securities of the Parent representing 15% or more of either the then outstanding shares of common stock of the Parent or the combined voting power of the Parent’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Parent or its Affiliates); or

(4)           the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(T)           “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(U)          “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(V)           “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

(W)         “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(X)          “Total Payments” shall mean those payments so described in Section 6.2 hereof.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

JANUS CAPITAL GROUP INC.
By:	/s/ John H. Bluher
Name: John H. Bluher
Title: Executive Vice President
/s/ Kelley A. Howes
Name: Kelley A. Howes

14

EX-12.1

Ex. 12.1

JANUS CAPITAL GROUP INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Year Ended December 31,
	2006		2005		2004		2003		2002
(dollars in millions)
Pretax income, excluding equity in earnings of unconsolidated affiliates	$	230.1	$	168.6	$	265.6	$	815.3	$	248.2
Interest expense	32.3		28.6		38.4		60.5		57.5
Portion of rents representative of an appropriate interest factor	6.4		6.4		7.2		4.3		4.5
Distributed earnings of less than 50% owned affiliates	7.1		7.1		6.1		2.7		—
Income as adjusted	$	275.9	$	210.7	$	317.3	$	882.8	$	310.2
Fixed charges:
Interest expense on indebtedness	$	32.3	$	28.6	$	38.4	$	60.5	$	57.5
Amortized premiums, discounts and capitalized expenses related to indebtness	0.6		1.2		2.2		4.2		—
Portion of rents representative of an appropriate interest factor	6.4		6.4		7.2		4.3		4.5
Total fixed charges	$	39.3	$	36.2	$	47.8	$	69.0	$	62.0
Ratio of Earnings to Fixed Charges	7.02		5.82		6.64		12.79		5.00

EX-21.1

Exhibit 21.1

List of Subsidiaries

All subsidiaries of Janus Capital Group Inc. listed below are included in the consolidated financial statements unless otherwise indicated.

Organization	Percentage of Ownership	State or Other Jurisdiction of Incorporation
Bay Isle Financial LLC (1)	100	Delaware
Berger Financial Group LLC (2)	100	Nevada
Enhanced Investment Technologies, LLC (1)	83	Delaware
Janus Capital Management LLC (3)(4)	95	Delaware
Janus Capital Trust Manager Limited (5)	100	Ireland
Janus Distributors LLC (2)	100	Delaware
Janus Holdings Corporation (3)	100	Nevada
Janus Capital (Asia) Limited (5)	100	Hong Kong
Janus Capital International Limited (5)	100	U.K.
Janus Capital Singapore Pte, Limited (5)	100	Singapore
Janus International Holding LLC (6)	100	Nevada
Janus Management Holdings Corporation (3)	100	Delaware
Janus Services LLC (2)	100	Delaware
Perkins, Wolf, McDonnell and Company, LLC*	30	Delaware
Capital Group Partners, Inc. (3)	100	New York

*Unconsolidated Affiliate, Accounted for Using the Equity Method

(1) Subsidiary of Berger Financial Group LLC

(2) Subsidiary of Janus Capital Management LLC

(3) Subsidiary of Janus Capital Group Inc.

(4) 95% owned by Janus Capital Group Inc. and 5% owned by Janus Management Holdings Corporation

(5) Subsidiary of Janus International Holding LLC

(6) Subsidiary of Janus Holdings Corporation

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statements on Form S-8 (Nos. 333-115579, 333-59636, 333-41348 and 333-41288), Registration Statement No. 333-116379 on Form S-4 and Registration Statements on Form S-3 (Nos. 333-104124, 333-37994, 333-69578 and 333-86606), of our reports dated February 26, 2007, relating to the consolidated financial statements of Janus Capital Group Inc. and management’s report on the effectiveness of internal control over financial reporting of Janus Capital Group Inc., appearing in this Annual Report on Form 10-K of Janus Capital Group Inc. for the year ended December 31, 2006.

/s/ Deloitte & Touche LLP
Denver, Colorado
February 26, 2007

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gary D. Black, certify that:

1.     I have reviewed this annual report on Form 10-K of Janus Capital Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2007

/s/ Gary D. Black

Gary D. Black

Chief Executive Officer

A signed original of this written statement required by Section 302 has been provided to Janus Capital Group Inc. and will be retained by Janus Capital Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David R. Martin, certify that:

1.     I have reviewed this annual report on Form 10-K of Janus Capital Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2007

/s/ David R. Martin

David R. Martin

Executive Vice President and

Chief Financial Officer

A signed original of this written statement required by Section 302 has been provided to Janus Capital Group Inc. and will be retained by Janus Capital Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Janus Capital Group Inc. (the “Company”) on Form 10-K for the year ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Martin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/ David R. Martin

David R. Martin

Executive Vice President and

Chief Financial Officer

Date: February 26, 2007

A signed original of this written statement required by Section 906 has been provided to Janus Capital Group Inc. and will be retained by Janus Capital Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Ex. 99.1

Janus Investment Funds (“JIF”)

			Lipper Rankings Based
			on Total Returns as of 12/31/06
			1-Year		3-Year		5-Year		10-Year		Since PM Inception
	PM Inception	Lipper Category	Percentile Rank (%)	Rank / Total Funds	Percentile Rank (%)	Rank / Total Funds	Percentile Rank (%)	Rank / Total Funds	Percentile Rank (%)	Rank / Total Funds	Percentile Rank (%)	Rank / Total Funds
Growth Funds
Janus Fund	Jan-06	Large-Cap Growth Funds	9	58 / 723	50	306 / 616	34	170 / 505	43	80 / 186	‡
Janus Twenty Fund(1)	Aug-97	Large-Cap Growth Funds	6	43 / 723	1	1 / 616	3	12 / 505	2	2 / 186	2	4 / 230
Janus Research Fund	Jan-06	Large-Cap Growth Funds	25	178 / 723	14	82 / 616	18	91 / 505	5	8 / 186	‡
Janus Orion Fund	Jun-00	Multi-Cap Growth Funds	4	15 / 489	2	5 / 394	6	17 / 310	—	—	33	76 / 230
Janus Enterprise Fund	Jan-02	Mid-Cap Growth Funds	15	90 / 621	9	42 / 489	21	80 / 385	60	92 / 153	12	46 / 391
Janus Venture Fund(1)	Jan-01	Small-Cap Growth Funds	1	2 / 557	10	43 / 456	10	35 / 374	30	41 / 136	16	53 / 336
Janus Global Research Fund	Feb-05	Multi-Cap Growth Funds	4	17 / 489	—	—	—	—	—	—	2	7 / 434
Janus Triton Fund	Jun-06	Small-Cap Growth Funds	16	88 / 557	—	—	—	—	—	—	‡
Core Funds
Janus Growth and Income Fund	Dec-03	Large-Cap Core Funds	94	757 / 811	18	122 / 680	31	180 / 581	4	9 / 251	18	122 / 682
Janus Contrarian Fund	Feb-00	Multi-Cap Core Funds	1	2 / 909	1	1 / 646	1	3 / 468	—	—	12	40 / 341
Janus Balanced Fund	Apr-05	Mixed-Asset Target Alloc. Mod. Funds	53	224 / 425	25	75 / 306	38	82 / 219	4	4 / 107	14	55 / 393
Janus Fundamental Equity Fund	Apr-05	Large-Cap Core Funds	83	669 / 811	2	9 / 680	7	36 / 581	1	1 / 251	3	22 / 769
INTECH Risk-Managed Stock Fund	Feb-03	Multi-Cap Core Funds	74	671 / 909	12	76 / 646	—	—	—	—	31	176 / 582
International/Global Funds
Janus Overseas Fund	Jun-03	International Funds	1	1 / 968	1	1 / 798	8	51 / 650	4	9 / 260	1	1 / 758
Janus Worldwide Fund	Jun-04	Global Funds	56	211 / 381	96	288 / 302	96	221 / 230	68	66 / 97	81	250 / 309
Janus Global Technology Fund	Jan-06	Science & Technology Funds	39	111 / 291	37	97 / 262	50	119 / 238	—	—	‡
Janus Global Life Sciences Fund	Dec-98	Health/Biotechnology Funds	89	160 / 179	38	60 / 159	63	84 / 134	—	—	41	20 / 48
Janus Global Opportunities Fund	Jun-01	Global Funds	97	368 / 381	93	279 / 302	52	120 / 230	—	—	27	58 / 216
Value Funds
Janus Mid Cap Value Fund - Inv(2)	Aug-98	Mid-Cap Value Funds	57	169 / 296	54	119 / 222	46	76 / 166	—	—	6	4 / 68
Janus Small Cap Value Fund - Inv.(1,2)	Feb-97	Small-Cap Core Funds	73	507 / 702	77	413 / 542	75	318 / 425	—	—	15	20 / 135
Income Funds
Janus Flexible Bond Fund	Dec-91	Intermediate Inv Grade Debt Funds	40	192 / 486	53	221 / 419	18	62 / 357	33	49 / 151	4	2 / 52
Janus High-Yield Fund	Dec-03	High Current Yield Funds	25	114 / 457	38	147 / 388	60	189 / 315	16	19 / 118	38	147 / 388
Janus Short-Term Bond Fund	Jun-03	Short Investment Grade Debt Funds	45	105 / 235	33	64 / 195	44	62 / 140	36	26 / 72	26	47 / 180
Janus Federal Tax-Exempt Fund	Feb-05	General Muni Debt Funds	57	145 / 257	77	193 / 250	67	151 / 227	81	117 / 145	52	131 / 251
Asset Allocation Funds
Janus Smart Portfolio-Growth	Dec-05	Mixed-Asset Target Alloc. Growth Funds	8	45 / 587	—	—	—	—	—	—	8	45 / 591
Janus Smart Portfolio-Moderate	Dec-05	Mixed-Asset Target Alloc. Mod. Funds	12	51 / 425	—	—	—	—	—	—	12	51 / 425
Janus Smart Portfolio-Conservative	Dec-05	Mixed-Asset Target Alloc. Cons. Funds	5	14 / 337	—	—	—	—	—	—	5	14 / 341

	Percent of JIF Funds per Lipper Quartile based on Total Returns
	1-Year	3-Year	5-Year	10-Year	Since PM Inception
1st Quartile	51.9%	50.0%	42.9%	50.0%	65.2%
2nd Quartile	11.1%	22.7%	28.6%	28.6%	26.1%
3rd Quartile	22.2%	9.1%	23.8%	14.3%	4.3%
4th Quartile	14.8%	18.2%	4.8%	7.1%	4.3%

Lipper Inc. – A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives.  Rankings are historical with capital gains and dividends reinvested. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.

Data presented reflects past performance, which is no guarantee of future results.

Notes:

(1)Closed to new investors

(2)Ranking is for the investor share class only; other classes may have different performance characteristics.

‡The Fund’s since PM-Inception ranking is not available.