|
|
During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
Get Four
|  | NOVEMBER 4, 2003
The Putnam Shakeup: Why It Took So Long With longtime CEO Larry Lasser out, it falls to successor Charles Haldeman to put the beleaguered mutual-fund outfit back on course In retrospect, it seemed only a matter of time -- the question was when. The vultures started circling around longtime Putnam Investments CEO Larry Lasser as soon as news broke two weeks ago that federal regulators were preparing civil fraud charges against the mutual-fund company. And on Nov. 3, Marsh & McLennan (MMC ), Putnam's parent, replaced Lasser with veteran money manager Charles "Ed" Haldeman (see BW Online, 11/4/03, "Putnam's New Boss on the Task Ahead"). While many believe it was the right move, just as many in the industry wonder why Marsh & McLennan head Jeffrey Greenberg waited as long as he did to act. A quicker shakeup, the theory goes, could have limited the damage to Putnam, the country's fifth-largest fund company. As it is, several state pension funds have announced that they plan to pull out a combined $4 billion in assets from the group. "CONTINUED EROSION." Federal and state regulators filed their charges last week. Putnam's new chiefs "are under the gun, and if they don't do a good job, there will be continued erosion," says Bill Doherty, a Boston-based mutual-fund consultant. Jim Fingeroth, a spokesman for Putnam, said Greenberg declined to comment for this story. Lasser has declined requests for interviews. Lasser's departure ends a 33-year career at Putnam -- one marked initially by spectacular growth. When he took the helm in 1985, Putnam was known as a bond shop. In the 1990s, he quickly jumped onto the equity bandwagon, pulling in retirement money that had been flowing largely to crosstown rival Fidelity Investments. By its peak in August, 2000, Putnam had $425 billion under management, up from $25 billion in 1990, according to the Financial Research Corp. Lasser was amply rewarded for Putnam's blistering performance: He raked in more than $100 million in salary and bonus for the last five years. His best year came in 2000, when he made $34 million in salary and bonus, nearly 13 times more than Greenberg. TECH CASUALTY. Then the bubble burst. Putnam funds had loaded up on tech stocks and crashed along with them. Assets under management are now down to $272 billion -- and falling. Last year, $15 billion flowed out of the company. An additional $8 billion followed this year through the end of August. And it's likely to get worse now that Putnam is facing fraud charges (see BW Online, 10/29/03, "How Putnam Landed in This Pickle"). Why didn't MarshMac, as it's called, move sooner to turn Putnam around? The riches Lasser brought in may explain why Greenberg was slow to act, say former Putnam executives. In 2000, Putnam contributed about one-third of the parent company's $10.2 billion in revenue and nearly half its operating earnings of $2.2 billion. They suspect this bought Lasser time to turn Putnam around after its performance crashed in 2001 and 2002. Lasser brought Haldeman in late last year as a change agent to try to turn around the performance of Putnam's 55 retail funds. The 55-year-old Haldeman has been managing money his entire professional life -- a fact that has helped him win the confidence of Putnam's all-important fund managers. Before joining Putnam, Haldeman was CEO of Delaware Investments in Philadelphia. STEADY HANDS. In the past year, Haldeman has been working to revamp Putnam's structure and culture. He has placed more power in the hands of fund-management teams, taking it away from centralized group of money managers, traders, risk managers, and researchers. He has driven home a core principle that managers are there to protect the money of investors. And instead of asking them to swing for the fences, he has asked them for consistent, dependable performance that can lead to superior performance results over the long term. That means ranking in the top half of the class of mutual-fund peers, not the top 10%, and staying out of the bottom quartile. Haldeman's work is only beginning. This much is clear: Putnam now has a stain on its name that will take a lot of elbow grease to remove.  By Faith Arner in Boston Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2003, Bloomberg L.P.Terms of Use | Privacy Policy |
Printer-Friendly Version
