Asset-management firm, Legg Mason, announced on Thursday that its founder, Raymond “Chip” Mason, is stepping down as president.
James Hirschmann, the current chief executive officer of Western Asset Management, Legg Mason’s largest subsidiary by assets under management, will replace Mason in May.
“The board and I are confident that Jim’s outstanding track record at Western Asset, strong character traits and proven management skills will provide Legg Mason with both an outstanding president and future leader. As an experienced executive who knows the global asset-management business, our company and our culture, Jim will play an important role in our future growth,” Mason said in a statement.
Stephen Winks, principal at Senior Consultant in Richmond, Va., says the move is incredibly significant for the Legg Mason. “Chip has had a group of guys that he literally grew up with in college who helped him build Legg Mason. Giving the presidency to someone who was not part of the original group is a very important step. It would argue that perhaps this is a hand-off because Legg Mason is no longer a brokerage firm—it’s an asset-management firm and a different skill status is needed,” Winks says.
In June, in a $3.7 billion dollar deal, the money-management firm agreed to swap its 1,354 stockbrokers for Citigroup’s mutual fund business. The deal also included a three-year global agreement in which Citigroup will became the primary domestic provider of Legg Mason’s domestic equity funds. (For more on the Citgroup/Legg Mason swap, click here)
Daniel Goldberg, an analyst with Bear Stearns, says Mason is likely to remain with the firm an additional one to two years after the May succession date. Furthermore, the move “puts into motion steps for [Hirchmann’s] eventual succession to Chip Mason as CEO and, possibly, chairman,” Goldberg said in a statement.
“From a business standpoint, the time has come for a new regime,” Winks adds.
Mason, 69, who will continue to serve as chief executive officer and chairman of the board, took on the role of CEO in 1970 when his Mason & Co. merged with the Baltimore-based Legg & Co. Today, the firm has $373 billion in assets under management and net revenues of $2.4 billion.