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The decision by Legg Mason to appoint Peltz to the board comes after his company, Trian Fund Management LP in New York, accumulated a 4.3 percent stake in Legg Mason.
The addition of Peltz will expand the company's board to 14 members. Under an agreement between Legg and Peltz, Trian has agreed to vote its shares in favor of Legg's director nominees, among other commitments. Trian has also agreed not to accumulate more than 9.9 percent of Legg Mason's stock over the next two years. The company owns about 6.95 million Legg Mason shares, up from 727,142 shares at the end of March,
The news, which was announced before the markets opened Monday, comes four months after a British newspaper reported that Peltz planned to increase his stake in Legg to gain some board seats so that he could eventually push for the company's sale or breakup. Legg struggled with huge losses last year because of costs related to propping up its money market funds invested in toxic assets. The company returned to profitability in the spring.
Peltz is known as an agitator who targets companies with good brands and assets that are underperforming. Peltz pushed for the sale of fast-food chain Wendy's to Triarc Cos. Inc., the parent company of Arby's owned by Peltz, and pressured candy maker Cadbury to split itself in two.
Peltz wasn't taking media calls, a spokeswoman said Monday.
Trian released a statement saying: "We are pleased Nelson Peltz will be joining the Legg Mason Board, and look forward to continuing to work with management and the Board to build shareholder value."
Peltz said in a separate statement that he and his firm have been "engaged in constructive dialogue" with Legg Chief Executive Mark Fetting during the past several months.
"We share their view that Legg Mason's recent strategic initiatives are improving the Company's operating performance and I look forward to contributing as a Board member and working with the management team and the Board to help this great company achieve its full potential," he said.
Legg spokeswoman Mary Athridge said the company believes Peltz can better help the company as a board member.
"Clearly we want to work with him," Athridge said. "I think the board in spending time with him concluded that he could help make some improvements. He's done some good things."
In a statement, Fetting said the company welcomes Peltz to the board.
"We look forward to benefiting from his insights and experience as we work together to build greater value for our clients and our shareholders," he said.
Gregorry Warren, an equity analyst with Morningstar, said he doesn't see Peltz's appointment causing much immediate change. In an analyst note he said that Peltz "has traditionally used his board seats to influence the management teams of the firms he is targeting; this has tended to lead to changes in management, sales or spin-offs, and in some instances no changes at all."
"Honestly, I don't think it means much at this point," Warren said in a separate phone interview. "It sounds like Nelson is on board with their current game plan for getting the ship right."
"He's obviously interested in contributing to the board and making money for himself as well as other investors," Warren added.
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