Why was Michael R. McFerran terminated?

Michael R. McFerran was involuntarily terminated because an investigation by outside legal counsel found that he engaged in inappropriate personal relationships and interactions with certain employees, which violated company policies, HR policies, codes of conduct, and his agreements with the company. This termination was unrelated to the company's operations or financial controls.

What are the financial implications of Mr. McFerran's termination?

As a result of his termination for cause, Mr. McFerran forfeited all future compensation, unvested Restricted Units, and unvested carried interest. This includes special time-based equity awards valued at over $50 million that were scheduled to vest through 2026.

Who has replaced Mr. McFerran as CFO, and what are his qualifications?

Jarrod Phillips has been appointed as the new Chief Financial Officer. He joined Ares in January 2016 as Chief Accounting Officer and has served as CFO of Ares Acquisition Corp. since May 2020. Prior to Ares, he was a Partner at Deloitte & Touche LLP, specializing in financial services and asset management assurance. He is a CPA and holds a B.S. in Accounting from Virginia Polytechnic Institute and State University.

What is Mr. Phillips' compensation package?

Mr. Phillips will receive a base salary of $750,000. He has also been awarded 20,000 Restricted Units of the Company's Class A Common Stock, which will vest in four equal installments on the second, third, fourth, and fifth anniversaries of the start of the quarter in which the grant date occurs, subject to his continued service. He is also eligible to participate in the company's bonus and long-term incentive programs.

How will the company's operations be managed following these changes?

Following Mr. McFerran's termination, all of the company's business operations functions will now report directly to CEO Michael Arougheti. He will oversee areas including Finance, Legal, Human Resources, Compliance, Investment Operations, and Technology.

ARES/ARES-PB 8-K: Leadership Changes & Regulation FD

Summary

Ares Management Corporation (ARES) filed an 8-K on August 9, 2021, reporting a significant leadership change. The report details the involuntary termination of Michael R. McFerran from his roles as Partner, Chief Operating Officer, and Chief Financial Officer, effective August 4, 2021. This termination followed an investigation by outside legal counsel that found Mr. McFerran engaged in inappropriate personal relationships and interactions with employees, violating company policies. Consequently, Mr. McFerran forfeited all future compensation, unvested Restricted Units, and unvested carried interest, including awards valued at over $50 million scheduled to vest through 2026. In response to Mr. McFerran's departure, Jarrod Phillips, previously Chief Accounting Officer, has been appointed as the new Chief Financial Officer and principal financial and accounting officer, effective August 4, 2021. Mr. Phillips brings extensive experience from his tenure at Ares since 2016 and prior roles at Deloitte & Touche LLP. His compensation package includes a base salary of $750,000 and 20,000 Restricted Units vesting over five years. Following these changes, all business operations functions will now report directly to CEO Michael Arougheti, who previously held COO duties.

Key Highlights

1Involuntary termination of Michael R. McFerran as COO and CFO due to violations of company policy regarding employee interactions.
2Investigation by outside counsel confirmed policy violations, leading to the termination.
3Mr. McFerran forfeited significant unvested equity awards and carried interest, valued at over $50 million.
4Jarrod Phillips appointed as the new Chief Financial Officer, effective August 4, 2021.
5Mr. Phillips' compensation includes a $750,000 salary and 20,000 Restricted Units vesting over five years.
6CEO Michael Arougheti will now directly oversee all business operations functions, resuming prior COO responsibilities.
7The company emphasized swift action and adherence to core values in addressing the misconduct.

Ares Management Corp 8-K Report, Executive Changes (Aug 9, 2021)

Summary

Key Highlights

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