NEWSMAKER-Fidelity's outgoing Lawson oversaw major shakeup

Wed Jan 20, 2010 5:37pm EST

*Lawson's second Fidelity stint ends quickly

*Lawson shook up executive ranks

By Aaron Pressman

BOSTON, January 20 (Reuters) - Rodger Lawson, the outgoing president of Fidelity Investments, did not last long in his second stint at the mutual fund giant.

Lawson, 63, was hand-picked by Fidelity chairman Edward C. "Ned" Johnson III as his right-hand man, and took up the reins in August, 2007. But less than two-and-one-half years on the job, and with Johnson about to turn 80 years old in June, Lawson announced on Wednesday he was stepping down. [ID:nN20177972]

British-born, outgoing and known to favor pin-striped suits and cufflinks, Lawson provided a stark contrast with chairman Johnson, a reticent Boston Brahmin, who was photographed with badly worn shoe soles. Johnson inherited the top from his father in 1972.

"I picked my moment well. This has been a tough two-and-a-half years," Lawson said in an interview.

As Johnson's number two, Lawson moved quickly to put his stamp on Fidelity, which was suffering from poor fund performance and sales. Less than two months on the job, he oversaw one of the largest reorganizations in the company's history.

He also revamped executive pay and pushed out much of the "old guard" that had run units under his predecessor, Robert Reynolds. Departures included Ellyn McColgan, former head of Fidelity's brokerage and sales operations, who had been mentioned as a possible successor to run the entire firm.

The new team was "more attuned around competitiveness," Lawson said.

Still, the performance of Fidelity's funds was uneven during his tenure. Equity fund performance beat 72 percent of rivals in 2007, just 36 percent in 2008 and improving to 66 percent in 2009, for example.

Lawson also emphasized cost-cutting and oversaw several rounds of layoffs during a tumultuous period for the financial services industry when most of Wall Street also slashed jobs.

Noting that expenses had risen more quickly than revenues for several years before he arrived, Lawson asked rhetorically: "Can you imagine what it would have been like if that had continued?"

Total headcount at Fidelity dropped to 38,100 as of June 30, 2009 from 46,800 at the end of 2007.

Financially the strategy seemed to work, helping Fidelity survive the economic shocks that began in 2008 in relatively better shape than its peers. In a filing for a private placement in the fall of 2009, Fidelity disclosed its net income fell 7 percent to $1.4 billion in the first nine months of that year.

Among Fidelity's largest competitors, BlackRock Inc. (BLK.N) saw its operating income drop 29 percent to $889 million for the first nine months of the year.

But Lawson also oversaw a period of instability at Fidelity, an issue for employees and clients as its controlling Johnson family prepares for the inevitable transition.

A number of Lawson's key appointments left after just short stints including Marvin Adams, who ran its technology and real estate operations, and Larry Renfro, once in charge of new business development.

Lawson and several top lieutenants also kept their New York area residences, raising doubts among some employees about their commitment to the Boston-based firm.

Lawson's second tour of duty came 16 years after he left Fidelity to join Bankers Trust and, later, Prudential Financial (PRU.N), where he rose to the rank of vice chairman before resigning in May, 2007. (Reporting by Aaron Pressman, Ross Kerber and Svea Herbst, editing by Leslie Gevirtz)

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