Legg Mason Inc.’s (LM) Chairman and CEO Mark R. Fetting’s total compensation, including a cash bonus, had been raised to $5.9 million in fiscal 2011. This represents a hike of 28% from $4.6 million received in prior fiscal year, according to a regulatory filing on Wednesday.
For fiscal 2011, Fetting’s pay package includes salary of $500,000 unchanged from 2010, a cash bonus of $2.9 million (up from $950,000 in 2010) and stock awards of $1.9 million (up from $407,143 in 2010). He has also received stock options worth $625,000, declining from $2.7 million in 2010. There was other compensation including insurance premiums, totaling $21,272 in 2011.
Legg Mason has raised the compensation of its CEO, following 24% year-over-year increase in net income to $253.9 million during fiscal 2011, driven by higher revenue.
For fiscal 2011, Legg Mason recorded total revenue of $2.8 billion, up 6.0% year over year, reflecting higher advisory fee yield due to a more favorable asset mix and better performance fees, partially offset by decline in average AUM.
As of March 31, 2011, Legg Mason’s AUM was $677.6 billion, up 0.9% sequentially from $671.8 billion driven by market appreciation, partly offset by net outflows of $8.7 billion. On a year-over-year basis, AUM inched down 1.0% from $684.5 billion. Fixed income included 53% of consolidated AUM as of March 31, 2011, liquidity represented 19% and equity comprised 28%.
Among the employees of Legg Mason, former Senior Executive and Vice President David R. Odenath, who joined the company in 2008 and resigned in December, received the highest pay package of $10.7 million.
Increasing CEO package reflects Legg Mason’s confidence with respect to its financials and future performance.
We believe 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 market. However, in the near term, assets outflows will remain a significant headwind.
Legg Mason currently retains its Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Moreover, considering the fundamentals, we maintain a long-term Neutral recommendation on the stock. However, Legg Mason’s closest competitor – BlackRock Inc. (BLK), retains a Zacks #1 Rank (a short-term Strong Buy rating).
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