MutualFundWire.com: Fetting Falls; Legg Mason Taps a Temp CEO
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Tuesday, September 11, 2012|
Fetting Falls; Legg Mason Taps a Temp CEO
Legg Mason [profile] has announced that chairman and CEO Mark Fetting will resign effective Oct. 1. Joseph Sullivan has been named interim CEO to help the firm deal with 19 consecutive quarters of outflows.
Several media this morning reported on a public statement, in which Fetting stated:
| Mark Fetting |
The opportunity to lead Legg Mason through a crucial period of its history has
been both challenging and fulfilling. I am very proud of our progress and accomplishments during the past five years. Now is the right time for new leadership to take the baton and continue to move the Company forward into its next phase of growth and development. I look forward to assisting Allen and Joe as we work to ensure a smooth transition.
Meanwhile, lead independent director W. Allen Reed, who will become non-executive chairman, stated that, "During this period, he has been instrumental in reducing the company’s cost structure, improving its balance sheet and liquidity, and positioning the company for future growth."
| Joe Sullivan|
But the non-executive chairman-to-be's comment seems at odds with Fetting's lack of success as a leader. Fetting has long been under fire for his inability to end client withdrawals and reverse a 65 percent decline in the company's share price since he was named CEO in 2008. Currently, its stock still dawdles at around one-quarter of its price of $100 in mid-2007. Meanwhile, Reuters compares Legg Mason with competitors like BlackRock and T. Rowe Price Group, who've recouped their losses and more.
Bloomberg further points out that an agreement with activist investor Nelson Peltz, whose hedge fund sponsor Trian Fund Management LP is Legg Mason's biggest shareholder, expires Nov. 30. The agreement, which was made when Peltz joined the company's board in 2009, prohibits Peltz from forming partnerships to amass more voting interests, or forcing a sale or merger of any investment affiliates.
Meanwhile, an industry source told the MFWire he is "not surprised at all" with the departure, and that the position was a "difficult [one] to begin with."
"He had a very difficult role to hold there that wouldn't have been easy for anybody," he added. "He had pretty tough odds and just couldn't turn it around."
Regarding a new CEO, the firm has stated that it will hire a "leading executive search firm" to find inside and outside candidates. A Legg Mason spokeswoman said she did not know which search firm Legg Mason will use. [Read more here.]
Sullivan has served as head of global distribution since December 2010, and chief administrative officer before that. Prior to Legg Mason, Sullivan was head of fixed income capital markets at Sifel Nicolaus, also serving on the Stifel Financial board of directors.
Reed has been a director of Legg Mason since 2006. Previously, he served as chairman, president and CEO of General Motors Asset Management Corporation, and chairman and CEO of General Motors Trust Bank. He also served as financial advisor for employee benefit fund investments at Delta Air Lines and Hughes Electronics.
This morning, the New York Times, Bloomberg, the Baltimore Sun and Reuters reported on the move. The Baltimore Business Journal also covered the news.
Company Press Release
LEGG MASON IMPLEMENTS CEO SUCCESSION PLAN
Mark Fetting To Step Down On October 1; Lead Independent Director Allen Reed To Become Chairman Of The Board And Joseph A. Sullivan To Serve As Interim CEO As Board Conducts Search
BALTIMORE, September 11, 2012 – Legg Mason, Inc. (NYSE: LM) today announced that Mark R. Fetting, Chairman and Chief Executive Officer, has decided to step down effective October 1, and will remain as a consultant to the company through year end. Lead Independent Director W. Allen Reed will become Non-Executive Chairman and Joseph A. (Joe) Sullivan, Head of Global Distribution, will become Interim Chief Executive Officer while the Board conducts a search for a permanent CEO. The Board has formed a search committee to consider both internal and external candidates and will be engaging a leading executive search firm to assist with the process.
Mark Fetting said, “The opportunity to lead Legg Mason through a crucial period of its history has been both challenging and fulfilling. I am very proud of our progress and accomplishments during the past five years. Now is the right time for new leadership to take the baton and continue to move the Company forward into its next phase of growth and development. I look forward to assisting Allen and Joe as we work to ensure a smooth transition.”
Allen Reed said, “Since early 2008, Mark Fetting has led Legg Mason through a very challenging period of turmoil in the global financial markets and major changes in the asset management industry. During this period, he has been instrumental in reducing the company’s cost structure, improving its balance sheet and liquidity, and positioning the company for future growth. On behalf of the entire Board, I want to thank Mark for his dedication and his many contributions to Legg Mason. As we conduct an expeditious and thorough search for a new CEO, the Board is confident that Joe Sullivan, Head of Global Distribution and a key member of the senior executive team, will provide the continuity of leadership to ensure that Legg Mason continues to meet the needs of its clients, affiliates and shareholders.”
Sullivan has over three decades of experience in the investment management and capital markets industry. He has served as Head of Global Distribution at Legg Mason since December, 2010 and was Chief Administrative Officer from September, 2008 to December, 2010. From 2005 to 2008, he served on the Board of Directors of Stifel Financial and was Head of Fixed Income Capital Markets at Stifel Nicolaus, following its purchase of this business from Legg Mason. Previously, he held senior positions at Legg Mason Wood Walker, Dain Bosworth and Piper Jaffray.
W. Allen Reed has been a director of Legg Mason since 2006. He previously served as Chairman, President and CEO of General Motors Asset Management Corporation and Chairman and CEO of General Motors Trust Bank, N.A. Mr. Reed has more than 35 years of experience in the asset management industry, having served as the financial officer responsible for employee benefit fund investments at General Motors, Delta Air Lines and Hughes Electronics.
About Legg Mason
Legg Mason, Inc. is a global asset management firm, with $636 billion in assets under management as of July 31, 2012. The company provides asset management services to a broad range of investors from its operations in major investment centers worldwide. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).
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