Joseph Sullivan has Legg Mason affiliates' backs. And in the past five months, he worked to let them know that.
Mr. Sullivan's appointment as chief executive of Baltimore-based Legg Mason Inc., announced Feb. 13, came with the support of CEOs at Legg's affiliate money managers who saw that, as interim CEO, he knew what each subsidiary needs and wants from the parent while also granting autonomy.
“I'm a big supporter of Joe,” said William Elcock, Boston-based CEO of Legg affiliate Batterymarch Financial Management Inc. “We (the affiliates) were involved in the selection.”
“Joe got right into the thick of it and in five months (as interim CEO), we got a lot done,” added Isaac Souede, chairman and CEO of another affiliate, Permal Group, New York.
Mr. Sullivan's new job won't be easy. He takes permanent control of a firm whose total assets under management of $648.9 billion as of Dec. 31 grew only 3% from a year earlier, with a net loss of $453.9 million in the fourth quarter and, except for the third quarter of 2012, experienced six years of net outflows. He also leads an array of traditional performance-based money managers in an industry that is moving toward more outcomes-based business.
“It's no secret that first and foremost, one, two and three, we need growth, growth, growth,” Mr. Sullivan said in an interview Feb. 13. “We need sustained positive flows. This is a big organization — institutional, retail, global. We have lots of moving parts we want to go in the same direction.”
In Legg Mason's fourth-quarter earnings call on Feb. 1, Peter Nachtwey, senior executive vice president and chief financial officer, said long-term outflows that totaled $7.5 billion in the fourth quarter were driven by three redemptions at its largest affiliate, Western Asset Management Co.: $2.4 billion from a large state pension client he did not identify, $1.1 billion from the wind-down of its participation in the U.S. Treasury's Public-Private Investment Program through the RLJ Western Asset Public/Private Master Fund and $1.6 billion in ongoing redemptions related to low-fee global sovereign mandates.