Legg Mason Inc. patriarch Raymond A. "Chip" Mason officially retired yesterday from the company he led for nearly four decades when Chief Executive Officer Mark R. Fetting was elected to immediately replace Mason as chairman of the board.
The move is part of a leadership succession that began when Fetting was named chief executive in January, the company said.
Mason, who had served as nonexecutive chairman since Fetting's appointment, will continue to serve as senior adviser.
Fetting, 54, said he is honored to succeed Mason as chairman.
The board acknowledged Mason's leadership in building a stock brokerage he started in Newport News, Va., 46 years ago into a global, Baltimore-based business that manages $842 million in assets for its clients.
"Chip's integrity and vision remain at the core of Legg Mason's success," the board said in a statement.
Mason, 72, was chief executive officer and board chairman from 1975 until Fetting's appointment, which capped a long search for Mason's successor.
Mason's initial heir apparent, James W. Hirschmann, stepped down as company president last year to stay in California with his family and to remain head of Legg's largest subsidiary, Western Asset Management Co. At that time, Mason indicated he would remain for at least two more years. But spokeswoman Mary Athridge said Mason planned to stay on as nonexecutive chairman for about a year after Fetting's appointment.
Mason was not available for comment yesterday.
"He's put together the framework for a great brand that has the makeup of several managers I think will have staying power in this market," said Daniel T. Fannon, who follows Legg Mason for Jefferies & Co. and has a "buy" rating on the stock.
"While he's not leaving on a high note, the framework has been put in place for them to come out of this as a potential gainer over a longer period of time."
Mason built Legg through acquisitions and transformed the company into a purely money manager in a $3.7 billion deal he orchestrated with Citigroup in late 2005. Legg swapped its brokerage firm for Citigroup's asset management business.
"Chip has certainly been the consummate civic and business leader in the Baltimore community for many years," said Don Fry, president of the Greater Baltimore Committee, a business group.
"It's an incredible success story - starting off relatively small in Baltimore and becoming an international financial power. And I think that says volumes about his vision and volumes about his intellect. Legg Mason has been a great asset to Baltimore for many years."
But Legg is struggling amid a sour economy and market volatility. The company has reported three consecutive quarterly losses - something it had never previously done as a public company - because of the costs of shoring up some of its money market funds. And it is expected to take a $523 million charge in the quarter ending Dec. 31.
Last week, the company announced plans to cut about 200 jobs from its corporate work force, on top of about 50 previous layoffs at its subsidiary, Legg Mason Capital Management.
Speaking for the board, W. Allen Reed, lead independent director, said Fetting's leadership during a difficult time in the asset management industry "has earned him the respect of everyone on the board. Since taking on the CEO role, he has built an impressive management team and laid out a compelling plan that draws on Legg Mason's successful business model to drive the company's future growth on a global scale."
Added Fry, "[Fetting's] got big shoes to fill, but he's certainly very qualified and capable."
Baltimore Sun reporter Jay Hancock contributed to this article.