Legg Mason new head, Joseph Sullivan, faces tall order

Executive and the company must deal with huge drop in assets and Nelson Peltz

By Jeff Benjamin

Feb 13, 2013 @ 10:31 am (Updated 4:32 pm) EST

Joseph Sullivan, Legg Mason
Sullivan: Board meetings should prove interesting

Legg Mason Inc.'s new chief executive Joseph Sullivan faces several challenges as he takes the helm, including a significant drop in assets and the presence on the company's board of activist investor Nelson Peltz.

The company made it official this morning that it has appointed Mr. Sullivan, who had been interim chief executive, as president, chief executive and director of the asset management firm.

The firm also said that asset management industry veteran Dennis Kass will join Legg Mason's board in April.

Mr. Sullivan, 55, who has been affiliated with Legg Mason since 1994, has been serving as interim chief executive since October, when Mark Fetting resigned from the position he had held since 2008.

Legg Mason and its half-dozen affiliates have a combined $650 billion under management, which is down from $1 trillion in 2008.

The drop in assets is the most obvious evidence of challenges facing Legg Mason and Mr. Sullivan, according to fund industry consultant Geoffrey Bobroff.

“Now that the decision has been made, hopefully this will free [Mr. Sullivan] up to start making some decisions on how to move things along at Legg Mason,” Mr. Bobroff said.

Another challenge is Mr. Peltz, founding partner of Trian Fund Management LP, Mr. Bobroff said.

“The question is, how will they now deal with the private-equity investor who sits on the board?” Mr. Bobroff said. “As a board member, [Mr. Peltz] had a hand in selecting the new CEO, but will he give the CEO the time it takes to do what has to be done?”

Trian owns 9.5% of Legg Mason stock.

A representative of Mr. Peltz couldn't be reached for comment.

Mr. Kass retired last year as chief executive of Jennison Associates, an asset management company wholly owned by Prudential Financial Inc.