According to a regulatory filing on Wednesday,
Legg Mason Inc
) Chairman and Chief Executive Officer (CEO) Mr. Mark R. Fetting's
total compensation had been decreased to $4.9 million in fiscal
2012 (ending March 31, 2012). This represents a 17% decrease from
$5.9 million given to him in the prior fiscal year.
For fiscal 2012, Fetting's pay package includes salary of
$500,000 (unchanged) and stock awards of $1.4 million (down from
$1.9 million in 2011). He had also received stock options worth
$600,000, down 4% from $625,000 million in fiscal 2011. There was
other compensation totaling $38,695 in fiscal 2012.
The filing states that the CEO's pay cut is based on certain
factors, including the company's weak performance in fiscal 2012
and the decline in its share price. In fiscal 2012, Legg Mason's
net income declined 13% year over year to $220.8 million, driven by
For fiscal 2012, Legg Mason recorded total revenue of $2.7
billion, down 4.0% from the prior fiscal year, reflecting decreases
in average AUM and performance fees. Moreover, as of March 31,
2012, the company's stock price was $27.81, down 22% from the prior
Among other executives of Legg Mason, Senior Executives Vice
Presidents Ronald R. Dewhurst and Joseph A. Sullivan, also received
decreased compensation in fiscal 2012. Dewhurst's compensation
declined from $4.3 million in fiscal 2011 to $3.5 million, while
Sullivan's pay package reduced from $3.4 million in the prior year
to $3.2 million.
Due to the economic slowdown, many of the senior banking
executives had faced a pay slash. Apart from Legg Mason, some other
large U.S. banks such as
Bank of America Corporation
Goldman Sachs Group Inc.
) also trimmed down the compensation of their CEOs for calendar
year 2011. However, the CEO of
JPMorgan Chase & Co.
) still has the benefit of a steady pay structure.
We believe that Legg Mason has the potential to outperform its
peers in the long run, given its diversified product mix and
leverage to the changing demographics in the current market.
However, in the near term, assets outflows will remain a
Legg Mason currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
also maintain a long-term Neutral recommendation on the stock.
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