Asset manager Legg Mason on Tuesday announced that chairman and chief executive Mark R. Fetting will step down at the end of the month, as the firm struggles with cash outflows and faces pressure from activist investor Nelson Peltz.
Lead independent director Allen Reed will assume Fetting’s role as nonexecutive board chairman, while Joseph A. Sullivan, head of global distribution, will become interim chief executive as the company begins a search for Fetting’s successor.
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Fetting, 56, will remain as a consultant through the end of the year, according to a news release.
Jeffrey Hopson, an analyst at Stifel Nicolaus, said hedge fund manager Peltz, who owns a stake in Legg Mason, might have played a role in Fetting’s departure.
Peltz’s Trian Fund Management owns more than 10 percent of Legg Mason’s shares, and its standstill agreement not to buy more shares or force a merger or other event expires at the end of November.
“I don’t know what Peltz is thinking, but he has a reputation as being an instigator,” Hopson said. “From what I’ve heard, he is a very active member of the board. It would be hard to believe he’s not a part of the reason this happened.”
Spokesmen for Legg Mason and for Peltz declined to comment.
Fetting’s departure marks the second major personnel change at the Baltimore-based financial services firm in less than a year. Star investor William H. Miller resigned as chief investment officer of Legg Mason’s signature Value Trust Fund in April. The fund, once a darling of the mutual fund industry, had sustained years of dismal performance.
Publicly traded Legg Mason has $636 billion in assets under management as of July 31.
Reed has been a director at Legg Mason since 2006 and previously served as chief executive of General Motors Asset Management. Sullivan has more than 30 years of experience in capital markets.
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