Baltimore money manager Legg Mason Inc. reported Monday that Chief Executive Officer Mark R. Fetting's total compensation for fiscal 2009 was $6.5 million during a year when the company reported a huge loss and struggled with weak performance of its flagship mutual funds.
Fetting's pay for the year ending March 31 includes a $500,000 base salary, according to a proxy filed with the Securities and Exchange Commission. Fetting was named chief executive in January 2008 and became the company chairman in December.
Legg's compensation committee, however, cut Fetting's cash bonus to $950,000, compared with $1.9 million a year ago, to reflect a difficult year that included large costs for propping up its money market funds invested in toxic investments and clients withdrawing their investments.
In March, the company wiped out the last of the toxic securities from its money market funds, which had troubled the money manager for almost two years. Legg reported a total loss of $1.9 billion for the fiscal year.
In a letter to shareholders in Legg's annual report released Monday, Fetting said "2008 represented one of the most difficult economic periods in modern financial history and certainly the worst that I have witnessed."
Fetting's restricted stock awards and option grants for fiscal 2009 were valued at $3.4 million and $1.6 million, respectively, which included awards that vested in fiscal 2009 but were granted in previous years, the company said.
That's higher than the $936,422 and $1.48 million from the previous year.
While the company measures Fetting's compensation at $6.5 million, he may not realize the full value.
That's because some of the stock and option grants granted in previous years are now under water, or worthless. For Fetting to gain value for his equity awards, the stock and option grants must reach or exceed a certain exercise price.
Legg's stock has fallen more than 70 percent since January 2008. Shares of Legg fell $1.77, or 7.4 percent, to close at $22.20 Monday.
"We believe that this provides an additional incentive for those option holders to manage and grow the business to the benefit of all shareholders," spokeswoman Mary Athridge said, referring to the equity awards under water.
Reflecting only equity awards that were granted in fiscal year 2009, Fetting's compensation would be valued at $3.57 million, a 29 percent decrease from the previous year, the company said.
Other compensation, including retirement contributions, totaled $32,416.
Fetting's compensation package was worth $4.7 million a year ago.
The chief executive of Baltimore's other money manager, T. Rowe Price, James Kennedy, received $5.57 million in 2008, a decrease of 28 percent to reflect the company's shrinking assets under management.
Legg's annual shareholder meeting is scheduled for July 28 in Baltimore.