T. Rowe Price CEO James Kennedy has been invited to the White… (Baltimore Sun photo by Jed…)
James A.C. Kennedy has reached the point in his career when the White House wants to pick his brain for advice.
The chief executive of T. Rowe Price Group Inc., the Baltimore mutual fund powerhouse, has been invited to Washington three times by an Obama administration seeking to revamp the public sector.
He's had dinners with U.S. Treasury Secretary Timothy F. Geithner and with Lawrence H. Summers, director of the White House National Economic Council. Then senior Obama adviser Valerie Jarrett sent him a note late last year, inviting him to join a group of 50 CEOs to brainstorm ways to use technology to make government more efficient.
A longtime T. Rowe executive who became CEO three years ago, Kennedy has helped navigate the company through a rocky decade of mutual fund scandals, the dot.com bubble and the housing market collapse that led to this Great Recession. Through each bout of turmoil, T. Rowe emerged largely unscathed.
A Nebraska native, Kennedy is steadfastly modest about his top role, preferring instead to highlight the firm's collaborative leadership structure and the work of Chairman Brian Rogers and Vice Chairman Ed Bernard. In a recent talk with The Baltimore Sun, he talked a little about himself and more about the company.
Question: You were invited to the White House? What was that all about?
Answer: You get an invitation like that, you show. [At the last event,] we talked about how to make government more efficient. They wanted to talk about how to use technology. Technology is a tool: It's not the be-all and end-all. That was our chief message, I think. There weren't many in that whole group of 50 in the financial world. There are a lot of companies who are tainted. We have a real clean record, therefore, they were happy to invite us.
Q: Did you meet the president?
A: Oh, he walked in the room, ran up on stage and talked and was running back to focus on Haiti. [The earthquake] had just happened, so he was focusing on that.
Q: So White House officials will be paying visits to T. Rowe?
A: They seem interested. We've exchanged e-mails. They say they want to come in. I wouldn't say White House officials. I'd say government officials. It's not just White House.
Q: How do you think 2010 will be different from last year for T. Rowe?
A: Our performance has been extremely good, relative to our competition. Our balance sheet is very strong, no debt and $1.4 billion in cash and investments. Can we keep it up? We have to keep performing. That's the priority: people, and then being able to perform for the clients.
Corporately, we have a lot less pressure on us in 2010. ... Now that the market has come back, we have less revenue pressures. ... We're still trying to control our costs on a day-to-day basis, but we're stepping up our hiring selectively. We continue to add more products in our portfolio.
Q: As executive compensation is a perennial controversy, what's your take on your own paycheck? [After this interview, the company reported in a regulatory filing that Kennedy's total pay fell by nearly $1 million last year, to $4.7 million.]
A: Relative to comparable companies, the data would argue that I'm in the bottom third in terms of compensation. If we get greedy in the short term, we may lose our top people if they say, 'How come I'm working so hard and this is what I get paid and look at you guys way up here.' The bonus pool is finite. We have to worry about fairness within the firm.
We also have to make sure that we're fair with the shareholders, that we're leaving enough so that the underlying value of the company grows over time.
Q: Are there any bubbles forming currently that you're keeping an eye on?
A: There are always mispriced areas of the marketplace. Sometimes they last a short period of time, sometimes they get bigger and bigger. There's nothing egregious at this point. .
Q: Do you have a sense of when the housing market will recover?
A: It's starting to recover now. The housing market is bottoming. In certain parts of the country, it has bottomed and is starting to pick up a little bit. A lot of people are still in shock about what's happened. I don't think we'll see another big pop in the market for a long period of time.
Q: It seems as if T. Rowe employees are content. Why do you think that is?
A: There's a lot of pride in what we do. The vast majority of our clients are individuals. There's a lot of pride that we can help these people meet their financial needs.
Through the downturn, we had a decision to make: What do we do about raises in 2009? We made the decision to go ahead and give raises to everyone who makes under $150,000. Those above $150,000 generally did not get raises.
Q: Is T. Rowe sticking around Baltimore?