Legg Mason Picks a New CEO, Ending Founder's 37-Year Tenure
Tuesday, January 29, 2008
Legg Mason, the money-management firm based in Baltimore, promoted Mark Fetting to president and chief executive yesterday, ending a drawn-out process to name a successor to Raymond "Chip" Mason.
Mason's retirement marks the end of an era. Mason, 71, has been at the helm since 1970, when Mason & Co., a Virginia-based broker-dealer, merged with Legg & Co. of Baltimore to form Legg Mason.
Mason orchestrated a series of acquisitions during his 37-year tenure, eventually expanding the business to become the second-largest publicly traded money manager in the United States, with $1 trillion of assets under management. Although the past few years have been bumpy for the firm, civic leaders in Baltimore last night lauded Mason and his company as an anchor in a city that has been abandoned by major employers.
Mason is to stay on as non-executive chairman. The changes are effective immediately.
Fetting's appointment concludes a months-long executive search. The board engaged an outside firm to help it look for a new chief after James Hirschmann relinquished his responsibilities as president and chief operating officer in April, throwing the firm's succession plans into question. Hirschman was chosen as heir apparent in 2006, but said less than a year later that he wanted to stay in California as head of Western Asset Management, a Legg Mason subsidiary. He cited family reasons.
"It's been a very thorough process," Fetting said last night in an interview. He said he had been one in a long list of candidates that included both outsiders and executives at the firm and its affiliates. "The board basically concluded that . . . an internal change agent will work well."
Fetting, 53, who joined Legg Mason in 2000 and most recently oversaw the firm's worldwide mutual fund and managed-account businesses, is taking over at a challenging time for the company.
Investors are losing confidence in a $3.7 billion dollar deal in which Legg Mason in 2005 swapped its brokerage for Citigroup's asset management unit, doubling the assets under management. Clients are pulling money out of Legg Mason's mutual funds by the billions. The company's star money manager, Bill Miller, has been underperforming the market since 2006, when his 15-year winning streak against the Standard & Poor's 500-stock index came to an end.
Most recently, the company has been hit with losses in some of its money-market funds that invested in complicated structured investment vehicles, which fell in value during the subprime crisis.
Fetting said he understood that he did not have a long honeymoon period. He said clarity on the succession front would help the firm move more quickly as it deals with its immediate challenges.
In the longer term, he said he plans to focus on marketing the firm's capabilities more efficiently in the aftermath of the Citigroup deal. He also wants to expand its business abroad. "Expanding our presence globally will be a high priority in my tenure," he said.
Fetting will also become a member of the board.