Legg Mason overhauls executive ranks

Following a quarter in which it sustained nearly $13 billion in net outflows, Legg Mason Inc. is reorganizing its senior ranks

Following a quarter in which it sustained nearly $13 billion in net outflows, Legg Mason Inc. is reorganizing its senior ranks.
David R. Odenath, head of operations for the Americas, is leaving the firm just two years after he came on board — causing some analysts to question the stability at the firm.
Under the new structure, Joseph A. Sullivan, the former chief administration officer, will lead global distribution. Ronald R. Dewhurst, the former head of international operations, will head global investment management. Jeffrey A. Nattans, the former head of specialized investment management, will head mergers-and-acquisition activity and business development.
Additionally, Legg Mason announced last week that it tapped Peter Nachtwey — the former chief financial officer at the Carlyle Group — as its new CFO. The CFO role has been expanded to include oversight of many administrative functions, said spokeswoman Mary Athridge.
Officials at Legg Mason said efforts to streamline its business over the past few months, plus the hiring of Mr. Nachtwey, made this a good time to reorganize its senior ranks. In May, Legg announced 350 job cuts as part of a plan to streamline much of its corporate operations to its affiliates.
With this new structure, the firm hopes to coordinate its international and Americas businesses better, Ms. Athridge added. There will be no job reductions as a result of the new reorganization.
But the realignment has some analysts worried about what the executive turnover means for Legg Mason. The firm lost C.J. Daley, its former CFO, in July. Then in August, Kim Mustin — who was the co-head of distribution for Legg Mason’s retail, subadvisory and institutional businesses — left the firm.
Now, the departure of Mr. Odenath — who was one of the first executives that Mark Fetting brought on after becoming Legg’s CEO in 2008 — has analysts openly questioning the firm’s stability.
“I was under the impression that [Odenath] was brought on to improve distribution, so at first glance, it just seems a little strange that he is leaving so quickly,” said Douglas Sipkin, an analyst at Ticonderoga Securities LLC.
Another analyst who covers Legg Mason agreed the timing of the reorganization was surprising. “This is the kind of thing I would expect from a CEO in his first three to six months, not this long after,” said the analyst, who requested anonymity because he hadn’t spoken to the firm yet.
“When the CEO started, we were in the midst of a financial crisis and he had to resolve a lot of issues,” Ms. Athridge said. “In 2010, we did a number of streamlining activities and this is the move being made now.”
According to one person familiar with the situation, the decision for Mr. Odenath to leave was mutual, noting that there had been a lot of overlap between his role and the role of other senior executives.
“His departure gave the firm an opportunity to take a look at the management structure,” the person said.
Ms. Athridge declined to comment on the terms of Mr. Odenath’s departure. Mr. Odenath was not available for comment, she said.
Some observers believe the new management structure may help to rejuvenate Legg Mason, which suffered $12.7 billion in net outflows last quarter.
“I think this is a stabilizing move,” said David Trevena, managing director at executive search firm Westwood Partners LLC. “The global marketplace has gotten very sophisticated and there are a number of constituencies out there, so you really need a global traffic cop.”