SAN MATEO, Calif. - Fresh from announcing its most recent merger, Franklin Resources was stung by the resignations of four professionals from its wholly owned subsidiary, Templeton Investment Counsel Inc.
All four joined Hansberger Global Investors, Fort Lauderdale, Fla. That firm was formed more than two years ago by Thomas Hansberger, formerly Templeton's chief executive officer. It has $250 million under management.
Two portfolio manager/analysts, a top marketing professional and a high-level researcher resigned from Templeton, also in Fort Lauderdale, in late June, confirmed Donald Reed, president of the firm.
James Chaney and Loretta "Retz" Reeves resigned their portfolio manager/analyst positions in the global and international group, said Mr. Reed. Wesley E. Freeman, senior vice president of marketing and client services, and Chuck Gulden, head of the research technology group, also resigned.
In another development, Thomas Mistele, vice president, senior counsel and secretary of the Franklin-Templeton Group of mutual funds, resigned to join Dodge & Cox, San Francisco.
The defections followed Franklin's announcement in late June of an agreement to acquire equity manager Heine Securities Corp., Short Hills, N.J., manager of the $17 billion Mutual Series Funds, for as much as $802 million.
The acquisition will swell Franklin's assets under management to $162 billion.
Industry observers say the defections send a wake-up call to Franklin. Most Templeton portfolio managers, they said, didn't receive generous compensation packages following the firm's acquisition. (But stars - such as J. Mark Mobius, who runs Templeton Developing Markets Trust, and Mark Holowesko, chief investment officer, got nice packages, they said.)
A former Franklin employee, who asked not to be named, pointed to a clash of cultures. He said the professionals switching to Hansberger are "a core group that built Templeton into what it is today. They had their own way of doing things. (Franklin) runs it in a different style than they're used to."
He predicts more departures "in the next few weeks or months."
Richard Lannamann, managing director of Russell Reynolds Associates Inc., an executive recruiting firm in New York, said: "Anytime you put two investment organizations together, you almost inevitably have a clash of cultures and a shifting of power and influence."
Templeton's Mr. Reed said client impact from the recent departures will be "minimal because of the depth in the organization." He noted the global and international group has 31 portfolio manager/analysts; the marketing and client services group has about a dozen professionals; and the research technology group has four other professionals.
"The company is bottom-up and research-driven. The departures won't result in Templeton doing anything different," he said.
As for the Templeton/Franklin merger, he said: "The intent to merge with Franklin was four years ago. That has nothing to do with this (the departures)."
As for the Heine acquisition, the former Franklin employee said: "Franklin is notorious for being frugal. The challenge for Franklin is to make the new merger work. Again (it's merging) a maverick-type firm into a very establishment-type company. Heine has a much smaller staff. The key there is to retain the investment talent."
Dan Jacobs left Templeton a year ago to start his own money management firm - Jacobs Asset Management, Ft. Lauderdale, a subsidiary of United Asset Management. He said he left Templeton because "it was getting to be big. That was my beef .... A lot of ex-Templeton people probably left for that reason, too."
Hansberger, which has offices in Hong Kong, Moscow and Dublin, plans to expand its U.S. separate account effort and launch U.S. mutual funds. It now manages money for Canadian clients, offshore clients and, to a lesser extent, U.S. clients.
Mr. Chaney, who was an executive vice president, managed $5.5 billion in global equities in separate accounts and institutional mutual funds. Mr. Chaney said he could not comment at presstime because he was still a Templeton employee until July 3.
Ms. Reeves, a senior vice president who managed $1.5 billion in global equities, didn't return telephone calls requesting comments.
Mr. Hansberger was out of the country and did not return calls.
