James A.C. Kennedy, who oversaw T. Rowe Price Group Inc. as it navigated the financial crisis of 2008, announced Wednesday that he will step down at the end of the year.
During his nine-year tenure as its president and CEO, the Baltimore-based money management firm more than doubled its assets under management.
In keeping with the company's track record of well-planned management transitions, it named a successor: William J. Stromberg, a 28-year veteran of the firm who will take over on Jan. 1.
Kennedy, 61, said he and Stromberg, Price's head of global equity and global equity research, had worked very closely for the last 28 years, speaking on average more than once a day.
"Bill's ready," Kennedy said.
"It just feels like the right time to be passing the baton to the next brain," he continued. "I think collectively we've worked to broaden our talent base here. I think across this firm we have a lot more depth to our talent than we did 10 or 20 years ago. As we've grown, we've had to grow up as a company: better long-term planning, better succession, better talent."
Since Kennedy assumed leadership at the beginning of 2007, assets managed by the company rose from about $335 billion at the end of 2006 to about $773 billion as of March 31. Its stock price has risen from about $44 a share to over $80, though it dipped into the low $20s during the financial crisis.
Today, the company has more than $1.8 billion in cash and no debt, with earnings of $1.2 billion in 2014, up 17 percent over the year before.
Stromberg, 55, said he saw himself as part of a long-planned, smooth transition that wouldn't shake up the company.
"I think we have a very strong company and don't need a lot of new direction," Stromberg said. "I think the culture is an essential differential factor about T. Rowe Price. It's collaborativeness, it's meritocratic in nature. Driving that culture, sustaining that culture across the enterprise is a real challenge, and I think were on our way to real success there."
The biggest challenge facing the money manager is an industrywide embrace of passive investing, while Price actively manages most of its funds, he said.
Kennedy spent his entire career with Price, apart from a stint in General Electric Co.'s financial management training program. He joined the firm as an equity analyst in 1978 after earning his MBA from the Stanford Graduate School of Business. He enjoyed investing but reluctantly joined management in 1987, becoming director of equity research.
Kennedy was elected to the board of directors in 1996, named director of equity in 1997, and joined the management committee in 2000. He became president and CEO in 2007.
Kennedy took over a little more than a year before the investment industry foundered in the financial crisis, undermining investors' confidence in the markets. As the crisis mounted, clients withdrew money from many managers, but the company weathered the storm and rebounded better than many of its competitors, retaining and attracting new investors as many of its funds outperformed those of its rivals.
Last year, Kennedy took home about $8.9 million in compensation after a boost in his incentive pay, up from $8.5 million in 2013. That included a $350,000 base salary, $1.5 million in stock and option awards, and a $7 million cash bonus. As of February, Kennedy reported he owned 3.3 million shares, or 1.3 percent of the company, worth nearly $268 million at Wednesday's closing price.
Analysts echoed Stromberg in predicting that the transition wouldn't mean a big shake-up.
Jonathan Casteleyn, an analyst for investment research firm Hedgeye, said he saw the choice of Stromberg as keeping with the company's old-fashioned values.
"He's been there for 28 years, he's head of global research. I think it's apparent as to where his allegiances lie," Casteleyn said. "He runs the most important product at the firm, which is analysis of companies."
Casteleyn said Kennedy's legacy would be building on the firm's strengths while shying away from more aggressive Wall Street trends.
"I think he's arguably the best mutual fund manager of his time," he said of Kennedy. "It's becoming more of a passive [investment] world, it's becoming more of an alternative [investment] world, so they're going to skip or sidestep that theme. But for its time and place in the past 20 years, T. Rowe has undoubtedly been one of the blue-chip companies of the mutual fund industry."
Kennedy also opted to keep the firm's headquarters in downtown Baltimore at 100 E. Pratt St. after weighing a move in 2013.
Kirby Fowler, head of the Downtown Partnership, said Kennedy's decision "really triggered renewed commitments on the part of other businesses and developers to rehabilitate the core" downtown area. The firm has about 5,870 employees, many of whom work out of its Owings Mills campus.
Jay A. Perman, the president of the University of Maryland, Baltimore, said he was impressed by Kennedy's decision to stay in Baltimore and thought it meant a lot to the city to keep the headquarters here.
"He is a down-to-earth person, he's very approachable, he makes friends easily, he's very crisp and forthright in his thinking, he's very articulate," said Perman, who served with Kennedy on the Downtown Partnership board. "I admire him."
Kennedy, who plans to formally retire at the company's annual meeting in April 2016, said he had been talking with his family about starting a foundation, but otherwise hadn't had much time to think about his retirement plans.
Brian C. Rogers, the company's chairman and chief investment officer, credited Kennedy with evolving and growing the company.
"I think the way the company was run in the '80s, we were a very small company and it was an easier job back then," Rogers said. "So we needed somebody to bring us into the 20th and 21st century, and I think Jim's responsible for a great deal of that."
Stromberg would take the company "full speed ahead," he said.
"Bill is a great leader because he's straight with everybody," Rogers said. "Everyone knows he's honest and everyone knows he's very good at what they do, so he has expertise in terms of dealing with the investment organization. I think Bill probably has as good as a basic knowledge of the whole company coming into this job as any of us did back in the day."
Baltimore Sun reporter Jessica Anderson contributed to this article.