UPDATE 2-Legg Mason names interim head Sullivan CEO for turnaround
Feb 13 (Reuters) - Asset manager Legg Mason Inc on Wednesday named Joseph Sullivan as its permanent chief executive, picking an insider to staunch outflows from its funds and smooth relations with its autonomous investment units.
Sullivan had been the company's sales chief and interim CEO, and his appointment was expected. Legg Mason of Baltimore had been seeking a new CEO since Mark Fetting stepped down under pressure last fall.
Sullivan was also named president and a member of the company's board of directors. Legg Mason also named as a new board member Dennis Kass, who retired last year as CEO of Jennison Associates, an asset-management unit of Prudential Financial Inc.
The choice of Sullivan, 55, will signal to investors that Legg Mason is less inclined to embark on a radical restructuring to address its challenges, analysts have said. The company is coming off nearly five years of outflows from its funds, and relations have been strained between the parent firm and some of its eight semi-autonomous investment units.
Legg Mason board chairman W. Allen Reed struck a conciliatory tone in a press release announcing the appointment, noting leaders of affiliates helped in the selection process. Reed said among a broad list of qualified candidates, Sullivan had the best combination of management skills and experience.
"Importantly, Joe has developed a relationship with the affiliate leadership teams that the Board believes will enable a collaborative and mutually beneficial process that begins a new and exciting chapter in Legg Mason's history," Reed said.
Sullivan said in the same release that he will work with the affiliates and others to grow the company. "We will seek to do this organically and through acquisitions of teams and firms that build and diversify our affiliate managers and fill our product gaps. And, as always, we will also continue our efforts to be more efficient across all business functions."
With $654 billion under management at the end of January, Legg Mason is one of the largest publicly traded U.S. asset managers, but the company's shares have lagged peers.
Sullivan's predecessor Fetting took over Legg Mason from its creator Raymond "Chip" Mason in early 2008, just at the start of the financial crisis that hit the company harder than most. Performance stumbles by Legg Mason's one-time star manager Bill Miller also contributed to the net quarterly withdrawals of cash by investors it has reported steadily.
Fetting restructured Legg Mason and slashed its workforce to cut costs. Both moves were in keeping with the usual agenda of the activist shareholder Nelson Peltz, who joined Legg Mason's board in 2009 and holds about 10 percent of its shares.
A spokeswoman for Peltz's investment firm declined to comment on Tuesday evening. She did not immediately respond to questions about Sullivan's appointment on Wednesday after it was announced.