One CEO hire looks like it has clear the decks at two of the nation's largest mutual fund shops. Thursday evening London-based Amvescap said it had hired Martin L. Flanagan away from Franklin Resources where he had been CEO. Both firms are stock exchange listed and word of the hire initially sent shares of both firms down.

Investors apparently interpreted Flanagan's hiring at London-based Amvescap as a signal that the fund firm will not accept buyout offers. Earlier this month Canadian fund firm CI Financial made an unsolicited offer for Amvescap only to be rejected by Amvescap's board.

The hiring also clears the lines of succession at San Mateo, California-based Franklin Resources. Flanagan had been that firm's president and co-CEO, sharing the top job with Greg Johnson, son of Franklin Chairman and Founder Charles Johnson. Flanagan took that post in January of 2004. At that time analysts speculated that the elder Johnson made the appointment in order to help prepare his son for the top position after recognizing that he needed more seasoning.

At Amvescap Flanagan will likely have a clearer mandate of authority when he takes over on August 1 from Charles Brady (Brady will stay on as chairman of Amvescap). He will also face challenges as Amvescap refocuses on its portfolio management capabilities following its settlement with regulators that officers in its former Invesco Funds unit had allowed improper trades in those funds.

After the trading scandal came to light Amvescap merged the Invesco Funds with its AIM Funds group and sold its U.S. defined contribution business to Merrill Lynch.

Flanagan, who is just 45 years old, started his career at Templeton in 1983. He joined Franklin Resources when it purchased Florida-based Templeton in 1992. He took the president and Co-CEO job in 2004.

Amvescap, which has $375.4 billion in assets under management, is similar in size to Franklin Resources, which claims $425.4 billion in assets under management.

Amvescap's share price fell 5 percent in trading on the London exchange on word of Flanagan's hire. It then regained about half those losses. Franklin Resources shares also traded as much as 2.3 percent lower Friday morning.

Franklin officials said that Greg Johnson would remain as Franklin's president and CEO.

"We are all sorry to see Marty leave, and we wish him well," said Chairman Charles B. Johnson. "The co-CEO model has worked well for us, but thanks to Greg's leadership and our very capable senior management team, we anticipate a smooth transition. We will continue our tradition of focusing on delivering strong investment results to our shareholders and clients around the world."

"As co-CEO and president, Greg has proven his ability to lead Franklin Templeton. Over the past two decades, he has had experience in managing all major aspects of the business. Greg has been instrumental in developing the company's overall strategic direction and executing on our strategy," he added. 

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