Jan 7 Two internal candidates have emerged in
Legg Mason Inc's search for its next chief executive,
said people familiar with the matter.
Sales chief and interim chief executive Joseph Sullivan and
senior executive vice-president Ronald Dewhurst, who currently
oversees affiliate relations, are on a slate of about half a
dozen candidates being considered to replace Mark Fetting, who
stepped down as CEO in October, said these people who did not
want to be named because of the sensitivity of the situation.
The Baltimore fund firm has struggled to keep investor cash
and faces tensions among its affiliates. The 114-year-old
company also has an activist investor on its board, Nelson
Peltz, known for shaking up companies in which he hold shares.
Legg Mason's board has already given Sullivan some room to
run, said Gabelli & Co analyst Mac Sykes, noting how last month
Legg Mason's Permal unit agreed to buy a London financial firm.
The deal "shows some confidence in his execution capability" on
the part of the board, Sykes said.
Considering Dewhurst for the role meanwhile suggests Legg
Mason's board is squarely focused on improving on affiliate
relations. Dewhurst, named Head of Global Investment Managers at
Legg Mason at the end of 2010, has been in charge of strategic
efforts to build business at the affiliates, each of which has
its own unique deal to split revenue with the parent.
Like rivals Affiliated Managers Group and the
Boston-based asset management unit of Old Mutual PLC,
among others, Legg Mason operates autonomous investment units.
But business partners have complained of a lack of co-ordination
among the Legg Mason divisions, while some of the affiliates
want more help selling funds from Legg Mason's central
distribution group. These tensions hastened Fetting's
Meanwhile, Legg Mason's share price has not recovered after
the financial crisis. Performance fell off at divisions like its
big Western Asset Management bond shop and at Legg Mason Capital
Management, leading investors to pull money out.
Performance has since come back and in October Legg Mason
reported its first quarterly net inflow since 2007. To keep
moving forward, Legg Mason's next leader will have to sort out
just what help the central company can provide the affiliates,
The Permal deal struck last month hints that Sullivan and
Dewhurst share the goal of repairing the relationships. When
Permal said on Dec. 13 that it would buy London-based hedge fund
firm Fauchier Partners, for instance, Legg Mason also said it
had revised its terms with the affiliate. Legg Mason agreed to
share some compensation costs in exchange for a greater share of
revenues if Permal's business grows.
In its latest proxy filing Legg Mason credited Dewhurst with
"improving the relationships and communications with the
managements of Legg Mason's asset managers and continuing to
develop the role of Legg Mason's global investment managers
oversight group." Dewhurst has been at Legg Mason for five years
and previously led the firm's international efforts from offices
in London and Melbourne, Australia.
Sullivan, meanwhile, was credited with "successfully
reorganizing Legg Mason's centralized global distribution
operations, developing new compensation plans for sales
personnel and launching several successful products over the
fiscal year," according to the same proxy filing.
Legg Mason spokeswoman Mary Athridge said board chair Allen
Reed, Sullivan and Dewhurst all declined to comment.
"We're continuing to work toward making a decision in an
expeditious manner," she said of the CEO search process.