Legg Mason CEO to step down, temporary CEO named
BALTIMORE (AP) — Legg Mason's chairman and CEO Mark Fetting, who led the money manager through the difficult years during and after the financial crisis, will step down Oct. 1.
The asset management company said Tuesday that Joseph Sullivan, Legg Mason Inc.'s head of global distribution, will become interim chief executive as it searches for a new CEO. The company's lead independent director, W. Allen Reed, will become non-executive chairman
Fetting will remain as a consultant to the Baltimore-based company through the end of the year. He became CEO in January 2008, a month after the Great Recession began, and was named chairman that December.
Like many money managers, Legg Mason has navigated rocky territory in the wake of the recession as Americans pull billions from U.S. stock funds nearly every month. In July, Legg Mason posted its first quarterly loss in three years as it paid charges to lighten its debt and investment fees fell. Its level of assets under management has yet to return to levels from before the 2008 financial crisis — $636 billion as of July 31, compared with about $1 trillion that the company managed in late 2007.
The company's stock has also been constrained. In summer 2007, shares traded above $100. But they've remained below $40 since late 2008.
On Tuesday, the stock rallied after the company announced Fetting's departure. Shares rose $1.55, or 6.1 percent, to $27.02 in late morning trading.
A new leader with fresh strategies could help the company rebound faster, said Citi Investment Research analyst William Katz said in a note to clients. He said that he expects a gradual recovery in Legg Mason's ability to attract new cash from investors.
To replace Fetting, the company's board has formed a search committee that will look at company executives and outside candidates in the search. It will hire an executive search firm to help with the process.
Sullivan was named as the company's head of global distribution in 2010, after serving as its chief administrative officer since 2008. He has more than 30 years of experience in investment management and capital markets, the company said.
Reed, who has been a director since 2006, is the former CEO of General Motors Asset Management Corp., which had been the automaker's investment-management arm.