Legg Mason close to naming new CEO: Report

Strategy unclear as firm deals with Peltz, who seeks breakup

By Jeff Benjamin

Feb 11, 2013 @ 4:04 pm (Updated 5:07 pm) EST

legg mason, money management, nelson peltz, hedge fund
Legg Mason shareholder Nelson Peltz Bloomberg

Legg Mason Inc. (LM) is rumored to be close to announcing a new chief executive at some point this week, wrapping up a five-month search and putting interim CEO Joseph Sullivan into a new role in the company.

Representatives at the Legg Mason did not respond to requests for comment, but the Wall Street Journal reported Monday that the company could announce its new CEO as early as Wednesday, along with a new independent board member.

The report was described as “puzzling,” by fund industry consultant Geoff Bobroff, who expected Legg Mason to leave Mr. Sullivan in place as the company continues to fend off a growing list of activist investors, including Trian Fund Management LP, which owns 9.5% of Legg Mason’s stock.

Trian founding partner Nelson Peltz has been a Legg Mason board member since 2009. Mr. Peltz did not respond to request for comment.

“I don’t understand why they just wouldn’t leave the interim CEO in place, because Peltz’s whole effort is to break up the company,” Mr. Bobroff said. “Why would anyone take a job that would arguably involve just watching the dismantling of Legg Mason?”

Mr. Bobroff said he did not know who the new CEO will be, but said the job probably would not appeal to a younger executive who could have his or her résumé damaged if the activist investors have their way.

More likely, Mr. Bobroff surmised, the job will go to a “gray hair,” meaning somebody closer to the end of a career.

Legg Mason’s total assets under management were last reported at roughly $650 billion.

According to the Journal report, the assets were at $1 trillion in 2008 when Mark Fetting took over as CEO. He resigned in October.

Legg Mason stock gained more than 1% on Monday, and saw trading volume reach the 2.2 million mark, which compares with an average daily volume of 1.6 million.

The stock, which has gained 7.1% from the start of the year, is up nearly 25% from a May 15 low.