Issue link: http://www.e-digitaleditions.com/i/58912
Building on Success For Legg Mason's CEO Raymond "Chip" Mason, business success is about taking chances. But only years of experience, says Mason, will give students the confidence to know which chances are foolhardy and which ones are worth the risk. by Tricia Bisoux Raymond "Chip" Mason's shrewd, often unorthodox business deals have built Legg Mason from a small brokerage firm to a mighty force in finance. His two latest deals—last year's $3.7 billion "asset swap" with Citigroup and the $1.39 billion acquisition of the French hedge funds manager Permal—doubled the size of the company's asset management operations to $868 billion. The firm is now the sixth-largest asset man- ager in the world. Many analysts view the "Citi swap," in which Citigroup offered its asset man- agement division in exchange for Legg Mason's brokerage business, as an extraor- dinary event and possible harbinger of changes to come in the finance industry. With the mutual fund scandals of a few years ago still in investors' memories, firms like Legg Mason are choosing to manage mutual funds in-house or sell shares of them—not both. In this climate, says Mason, it made sense to listen to Citigroup's unusual proposal. Ultimately, he says, the swap "was the right thing to do." As Mason continues to guide the company through the biggest transition in its history, he ironically also prepares it for a future without him as CEO. The com- pany recently chose James Hirschmann as president and Mason's eventual succes- sor. Once the company acclimates to its new identity as a global fund manager, Mason plans to retire knowing that Legg Mason has the right talent and direction for the future. Mason began his career as a broker in 1959 after earning a bachelor's degree in economics from the College of William and Mary in Williamsburg, Virginia. He worked for his uncle's brokerage firm for three years and then started his own. In 1970, he merged his company with Legg and Company, based in Baltimore, Maryland. He has served as Legg Mason's CEO ever since, building a reputation of impeccable ethical conduct and innovative strategies that have led to steady and substantial growth for his company. In 2004, he was named CBS Marketwatch's CEO of the Year, not only for delivering blockbuster returns for investors, but also for staying far above the fray of the mutual fund scandals. A staunch supporter of education, Mason chairs the board of trustees at Johns Hopkins University and serves as a trustee on the Johns Hopkins Medicine execu- tive committee. He also serves as a senior advisor to the College of William and Mary's Business School Foundation. He has been a generous supporter of business education, making a $4 million donation to his alma mater last year. In November 2005, the business school at the College of William and Mary was renamed the Mason School of Business. Mason emphasizes that a solid education is vital to any manager's success, but it must be accompanied by a steady accumulation of solid experience. After all, the future is coming with a vengeance, he says, and business students must be capable of quick, effective, and creative decision making. More important, he adds, it takes many years and many lessons learned to know which deals to make, what strate- gies will win, where the ethical lines are drawn—and when it's time to move on. 16 BizEd SEPTEMBER/OCTOBER 2006