Legg Mason CEO stepping down, turnaround elusive

Mark Fetting's four-year run as chief executive of Legg Mason Inc. — along with his efforts to turn the big mutual fund company around — is coming to an end. Legg Mason announced Tuesday that Mr. Fetting will be stepping down Oct. 1 from the post he took in January 2008. Joesph Sullivan, head of global distribution, was named interim CEO while the firm's board of directors searches internally and externally for a replacement. Legg Mason's stock rose 5% in early morning trading on news of the leadership change. But at around $26 a share, the stock is still a far cry from its 2006 peak of $136. Its share value was in the mid-$70s when Mr. Fetting took over. Legg Mason has struggled with performance issues that have led to massive outflows from its mutual funds over the past few years. Since Mr. Fetting assumed the head position, nearly $100 billion has exited Legg Mason mutual funds. Legg Mason is the parent company of Legg Mason Capital Management, Western Asset Management Co., Royce Funds and ClearBridge Advisors. Mr. Fetting took over as CEO after founder Raymond “Chip” Mason retired at the end of 2008 amid the financial crisis. Legg Mason's troubles began two years before that when star manager Bill Miller's 15-year streak of beating the S&P 500 as portfolio manager of the Legg Mason Capital Management Value Trust (LGVAX) came to an end. Around the same time, Legg Mason's fixed-income affiliate Western Asset Management Co. started to stumble. The performance struggles of Western Asset lead Legg Mason to largely miss out on the rush into fixed income in the wake of the financial crisis. Western has since had a strong turnaround in performance.