(Reuters) - Money manager Legg Mason Inc (LM.N) said Chief Executive Mark Fetting will resign effective October 1 and named Joseph Sullivan interim CEO, as the firm grapples with customer withdrawals.
Legg Mason reported its 19th straight quarter of outflows in July and investors have been increasingly frustrated waiting for Fetting to improve the performance of the firm’s funds after losses during the financial crisis.
Legg Mason’s stock remains stuck at about one-quarter of its price of around $100 in mid-2007 before the crisis hit. Shares of rivals like BlackRock (BLK.N) and T. Rowe Price Group (TROW.O) have already recouped all their losses and more.
For years, the company was best known as the home of star stockpicker Bill Miller, whose fund outperformed the Standard & Poor’s 500 index 15 years in a row. But Miller’s performance tailed off starting in 2006 and led to outflows. Miller stepped down from his best-known fund earlier this year.
The financial crisis also blew up a bet that Legg Mason founder and prior CEO Raymond “Chip” Mason made in 2005 when he swapped its brokerage unit for Citigroup’s asset-management business.
Mason retired at the start of 2008 and was replaced by Fetting. Fetting has spent much of his tenure trying to restore the company’s competitiveness through layoffs and cost-cutting efforts, and new products, such as exchange traded funds.
Fetting had conceded that despite his turnaround efforts, the company was still not delivering on all fronts and faced problems.
Legg Mason’s board cut Fetting’s compensation by 17 percent to $4.94 million, in its latest fiscal year, to reflect lagging stock price and lackluster returns.
Legg Mason said that while Fetting had decided to resign, he would remain as a consultant until the end of the year.
Baltimore-based Legg Mason’s shares closed at $25.47 on the New York Stock Exchange on Monday.
Reporting by Jochelle Mendonca in Bangalore; Editing by Akshay Lodaya