Trian Partners’ Nelson Peltz and Ed Garden have been granted board seats at Legg Mason as the asset manager agreed to expand its board to 12 directors to avoid a proxy fight by the shareholder activist fund.
Trian was also granted the choice of a third independent director, while the board will pick at least two more directors, for election at Legg Mason’s upcoming annual shareholder meeting as part of a board overhaul.
Those nominees will replace three incumbent directors, two of which have reached the age at which they are required to retire from the board of the asset manager, which oversees $768bn.
The activist fund, which has been invested in the company before, holds a stake of 4.5 per cent of Legg Mason’s shares, worth about $135m based on today’s market capitalisation.
Legg Mason shares closed the day up 1 per cent at $35.66 prior to the announcement. The shares performed dismally last year, losing 39 per cent of their value, markedly worse than the 26 per cent drop in fund managers included in the S&P 500 basket of stocks.
This year the stock price has roared back, gaining 39.7 per cent, in part due to speculation that Mr Peltz had bought a stake in the company. The stock has outperformed the stocks of fund managers in the S&P 500 index by 31 percentage points on a normalised basis this year.
Mr Peltz, the chief executive of Trian who sits on the board of Procter & Gamble and several other portfolio companies, and Mr Garden, the fund’s chief investment officer who is also a director at General Electric, called Legg Mason “an industry leader consisting of a strong group of affiliate companies”.
“We look forward to working again with [chief executive] Joe Sullivan and his team, together with a refreshed board, to further build and execute on the company’s three most important priorities — significantly reducing costs, driving revenue growth organically and through acquisition, and increasing profitability,” the two men said in a statement.
Mr Sullivan said: “We welcome Trian’s return as a significant Legg Mason shareholder and the addition of Nelson and Ed to our board of directors. Their experience in the asset management industry will be valuable as we pursue our common goal to increase value for Legg Mason clients and shareholders. We look forward to working closely and constructively with Nelson and Ed to achieve this objective.”