Legg Mason Inc. plans to hire an executive search firm to help find a new CEO who would lead the Baltimore money manager once its revered founder Raymond A. "Chip" Mason retires, elevating the prospect that someone outside the company will be tapped.
The company has been without a successor to Mason since James W. Hirschmann, who was offered the post, bowed out in April, saying he wanted to remain in California with his family as head of Western Asset Management, Legg Mason's largest subsidiary.
Replacing a legacy is no small undertaking. Mason, who is 70 years old, has been at the helm since 1970 when he merged a brokerage he founded in Virginia with Legg & Co., which dated to the turn of the century in Baltimore. Since then he has built the investment company into one of the world's largest, managing nearly $1 trillion for clients. Board members have said they hope to find someone who would continue the corporate culture created by Mason.
A number of consulting firms that specialize in the business of matching top-level executives with potential employers are vying for the assignment of discovering the next successor. The job is a high-profile one on Wall Street, and the payoff could be one-third of the new CEO's first year of salary plus bonus, a standard fee in the industry. For Mason last year, those earnings totaled $6.5 million.
"This would be a plum assignment," said Barry Nathanson, a longtime executive recruiter, who runs his own firm in New York but is not in the running at Legg Mason. "It's a big company at a very high level, and it comes with a significant fee. Any search firm would want it."
Contenders include Spencer Stuart, one of the largest executive search firms, with offices from Buenos Aires to Shanghai, and Jamesbeck Global Partners, a boutique that specializes in finding executives in the investment business, from mutual funds to hedge funds, according to sources familiar with the process.
A four-member committee on Legg Mason's board has been tasked with finding someone to take over for Mason. Harold L. Adams, one of the committee members and former CEO of Baltimore architecture firm RTKL Associates Inc., confirmed that the company is in the process of choosing a search firm but declined to comment on the process further.
"It's too early to even discuss it," Adams said.
Company officials have declined to give a timetable for the search, though Mason said in April that he is prepared to stay at least two more years. He recently told Bloomberg Television that before Hirschmann relinquished the role of heir apparent, he had figured that the company's annual meeting in July would mark his "last day of having to be in the office every hour of every day."
"And that didn't pan out," Mason said. "Could I be here for two years? Sure I could."
The board had plucked Hirschmann from a pool of executives without the aid of a search firm. The fact that the company is looking to hire one now points to the board's willingness to broaden the search, said Michael King, a corporate recruiter in New York for the financial industry. He said his firm wouldn't compete for the job because it doesn't work in the asset management arena.
"Certainly if they had an internal candidate, either they aren't going with that person, or they haven't decided and would like to see what's out there," King said. "It's a very important position, and there will be a lot of attention paid to this."
Legg Mason spokeswoman Mary Athridge said that hiring an executive search firm is part of a "thoughtful" process that the board is spearheading. She declined to comment on whether the search is now focused on outside candidates.
Rumors have been floated for years about who could be in line to succeed Mason, including executives Peter L. Bain and Timothy C. Scheve. But Scheve, who served as chief administrative officer, said in June he would leave to run the Philadelphia brokerage Janney Montgomery Scott. Bain, a senior executive vice president, remains at Legg Mason; he could not be reached to comment.
Once a search firm is chosen, recruiters describe a highly confidential process in which they mine their databases of potential candidates and hit the phones to develop a target list, careful not to jeopardize a candidate's standing with their current employer. Later on, interviews are conducted, as are background checks for regulatory and criminal histories.
Legg Mason sent out invitations to several search firms to submit proposals. The questionnaire asked firms to compare the Legg Mason position to CEO posts at other global asset managers, to list personal and professional attributes the board should consider and to explain why they would be best qualified for the search.