* Search is down to four candidates-sources
* Employees believe Sullivan is the frontrunner-sources
By Jessica Toonkel
NEW YORK, Jan 28 Legg Mason's board of
directors is expected to meet Tuesday to discuss - and possibly
decide - who will be its next chief executive officer, according
to two people familiar with the situation.
The Baltimore-based mutual fund company has whittled its
list of candidates to four, said one of the people and another
person familiar with the situation. These people declined to be
identified because they are not allowed to speak publicly about
the matter. It is unclear when the board might announce its
Among senior Legg Mason employees, the feeling is that
Joseph Sullivan, the firm's sales chief and interim CEO, is the
favorite for the job, said two other people who asked to be
anonymous because they are not allowed to speak to the press.
Sullivan has served as interim CEO since Mark Fetting stepped
down last October.
Mary Athridge, a Legg Mason spokeswoman, declined to
Legg Mason hired recruiting firm Korn Ferry International
in September to find a replacement for Fetting after he
announced his departure. Fetting joined Legg in 2004 and was
promoted to CEO for in 2008.
The job description Legg Mason's board worked up stated it
was looking for an executive "who can align the affiliates
toward the common goal of growth," a person familiar with the
search process, told Reuters in November [ID: nL1E8LOMN4].
Going with an internal candidate like Sullivan would help
Legg work out some of the issues it has been having with its
affiliates, three of the sources familiar with the search
Legg Mason has been built over the years through a patchwork
of deals, resulting in eight main independent asset management
units, each having separate revenue sharing agreements. . A
pending merger between Legg Mason's two equity-focused units
ClearBridge Investments and Legg Mason Capital Management, will
soon reduce that figure to seven.
Tensions have emerged in a number of areas, such as gripes
from some affiliates that they should get more help from the
parent with selling and marketing their funds given how much of
their revenues they turn over to the firm, these people said.
"(Sullivan) has been really focused on the affiliates," said
one of the sources familiar with the situation. "You haven't
seen noise from the affiliates over distribution for the last
In December, Legg Mason said it was acquiring Fauchier
Partners, a fund-of-hedge-funds firm with $6 billion in assets,
from BNP Paribas Investment Partners, and merging it with its
own $17 billion funds-of-funds firm, Permal.
As part of that deal, Legg Mason said it had revised its
employment deals and revenue sharing agreements with Permal,
which could become a model for additional changes aimed at
resolving tensions among its affiliated investment units
While several senior leaders inside the company believe
Sullivan is the frontrunner, the board could still decide to go
with one of the three other candidates, all of whom are
external, the source said.