Putnam’s CEO ‘fine’ with stepping down

BOSTON — Charles “Ed” Haldeman Jr. said that it’s “fine” with him if his soon-to-be bosses at Canada’s Power Financial Corp. want to replace him as chief executive of Putnam Investments.
“Very often, a new owner after a period of time wants to make a change in CEO, and if that’s what they want to do, that’s fine with me,” he said in an interview last Thursday.
“If they don’t, that’s even more fine with me. I’m really happy with this job,” Mr. Haldeman said.
Boston-based Putnam is expected to close on its $3.9 billion sale to Great-West Lifeco Inc., a Winnipeg, Manitoba, unit of Montreal-based Power Financial, sometime next month, he said.
‘Deep’ bench
Mr. Haldeman has assembled what he calls a “deep” management team of 12 to 13 individuals who are capable of keeping the company going, “even if one of us moved on, had to move on or something happened,” he said.
Mr. Haldeman, 58, who was appointed to Putnam’s top post in 2003, acknowledged that he won’t be the company’s president and chief executive indefinitely.

“It’s unusual for somebody to have all of those titles forever, so I think at some point, there should be a transition based on age,” he said. “I understand that a new owner sometimes wants to do something differently, and I’m very open to that, if that’s their choice.”
Although Mr. Haldeman’s fate remains to be seen, Power Financial is unlikely to make any dramatic moves soon after the acquisition, analysts said. It has a reputation for being a savvy acquirer that prefers not to meddle in the affairs of the businesses it buys, they said.
“Right off the bat, I think you’ll see nothing,” said Ben Phillips, a managing director at Putnam Lovell NBF Securities Inc., a New York-based investment bank. “Part of the appeal, I think, on everybody’s side is the fact that Power was quite willing to let Putnam’s current management dictate the way forward.”
Power Financial also is unlikely to make changes that would upset Mr. Haldeman or John Hill, chairman of Putnam Funds’ board of trustees, said Burton Greenwald, a Philadelphia-based mutual fund consultant.
“It’s pretty clear from the outset that Putnam — both [Mr.] Haldeman and [Mr. Hill] — were very, very clear that they wanted to continue [with] the present organization, the present manpower,” Mr. Greenwald said. “Power is very desirous of having a base here in the United States, and they are not going to do anything to upset Haldeman’s plans.”
Mr. Haldeman said he is “very happy” that Power Financial emerged as Putnam’s buyer.
“They can add value, because they know our business,” he said. “Unlike many people that were interested in Putnam, they have no overlap with us, [and] there was increased job security for Putnam people because of the lack of overlap.”
Great-West Lifeco is buying Putnam “with the idea that they are acquiring a pretty good investment management firm [that is] on the rebound,” said Steve Charlton, a managing partner at Cambridge, Mass.-based New England Pension Consultants.
“They could come in and change a lot of things, but I doubt it,” said Mr. Charlton, whose firm advises clients, including corporations with 401(k) plans, on how to allocate about $250 billion in assets.

If, after a year or a year and a half, Putnam’s sales don’t improve, Power Financial may exert more influence, however, he said.
Investors yanked $3.5 billion more out of Putnam’s stock and bond funds than they put in during the first three months of this year, compared with $3.8 billion of outflows during the first quarter of 2006, according to Financial Research Corp. of Boston.
Putnam’s “primary problem” stems from its underperformance earlier this decade, said Geoff Bobroff, a fund industry consultant based in East Greenwich, R.I.
“This is a firm that became a growth-equity shop,” he said. “They overstayed in technology, and their performance suffered mightily.”
Power Financial is likely looking to leverage Putnam’s 401(k) brand and international presence, analysts said.
“Great-West has very big record-keeping businesses,” Mr. Charlton said. “I would expect that to be in a place where they are able to insert Putnam products.”
Putnam secured $6.2 billion of international institutional mandates last year, Mr. Haldeman said.
“For sure, one of the things [Power Financial] has seen very attractive at Putnam is the great international business and the momentum we have in it,” he said.
Mr. Haldeman also cited opportunities surrounding 401(k)s.
Noting Power’s strength in the recording-keeping business, he said: “We would hope that there are many chances that we can become an investment-only participant on 401(k) clients they might have.”
Putnam said last week that shareholders in all 105 of its funds have endorsed the sale by approving new management contracts that take effect when the deal is complete.