Johnson Family Solidifies Hold on Franklin
Mutual fund giant Franklin Resources Inc. moved Thursday to ensure that the founding Johnson family’s dynasty would continue, naming Greg Johnson as sole chief executive.
Martin Flanagan, who had been co-chief executive of the San Mateo, Calif., firm with Johnson, said he would leave to become CEO and president of a rival fund company.
Flanagan and Greg Johnson had succeeded the latter’s father, Charles B. Johnson, last year. The elder Johnson stepped down as CEO after 46 years at the helm but remained chairman of the firm, which manages the Franklin and Templeton mutual funds.
Franklin Resources was founded by Charles B. Johnson’s father, Rupert, in 1947. The company, which manages $425 billion in assets, is the fourth-largest U.S. mutual fund operator. The Johnson family owns one-third of the company’s stock.
Greg Johnson, 44, and Flanagan, 45, became co-presidents of the company in 1999.
On Thursday, Flanagan said he had agreed to take the top post at Amvescap, which manages $375 billion in assets, including the AIM mutual funds. He will succeed Charles Brady, 70.
The Johnson family’s grip on Franklin meant Flanagan “never really felt like he was a true No. 1,” said CIBC World Markets analyst Kenneth Worthington. “Now he can go to a place where he can really be the No. 1 guy.”
Greg Johnson’s elevation as sole CEO of Franklin follows a rocky year for him and the company.
The Securities and Exchange Commission in February 2004 said it might take action against Greg Johnson for his role in approving an allegedly improper trading relationship between Franklin and a Las Vegas broker. The investigation was part of the SEC’s crackdown on so-called market timing and other abusive trading strategies that many fund companies had allowed for favored clients.
In March 2004, however, Franklin said the SEC had informed the company that the agency no longer planned to file a case against Greg Johnson.
Later that year, the company agreed to pay $55 million in fines and settlements to resolve federal and state allegations involving abusive trading.
The company also agreed to pay nearly $40 million to resolve separate federal and state probes into so-called revenue-sharing agreements between the firm and brokerages that sell its funds.
Franklin didn’t admit or deny wrongdoing in the settlements.
Greg Johnson joined Franklin in 1986 after working as an auditor for a major accounting firm. He has held a number of positions at the company over the years, including heading its sales and marketing.
The company’s stock was unchanged at $83.75 on Thursday. The announcement was made after markets closed.
At Amvescap, Flanagan will head a struggling company that is trying to fend off an unsolicited takeover bid from a Canadian fund firm.
