Fidelity Investments establishes 2 organizations, hires BNY Mellon CEOc to run 1

Fidelity restructures; outsider to run 1 unit

BOSTON — Fidelity Investments said Monday it is creating two organizations to oversee its far-flung financial services operations, hiring an outsider to run one, and naming the daughter of the company’s 79-year-old CEO to run the other.

The restructuring of the 37,000-employee company will put Ronald O’Hanley, president and CEO of BNY Mellon Asset Management, in charge of Fidelity’s new asset management and corporate services unit. That includes Fidelity’s core mutual fund business.

Running distribution and sales of Fidelity’s financial products will be Abigail Johnson, a longtime Fidelity executive and daughter of Edward “Ned” Johnson III. Abigail Johnson, 48, has been rumored for years to be an heir apparent to Ned Johnson, who has held the CEO and chairman titles since 1977 at privately held Fidelity. The Johnson family owns a 49 percent stake in the Boston-based company, with key employees owning the rest.

Fidelity spokesman Vin Loporchio said Ned Johnson has no immediate plans to retire and remains “very actively involved” in running the company. Fidelity says it has a succession plan in place, but won’t disclose details.

Tuesday’s restructuring came nearly four months after Fidelity announced the retirement of its No. 2 executive, Rodger Lawson, who stepped down as president at age 63. Fidelity said then it was uncertain whether it would name a new president, or eliminate the post.

Monday’s restructuring assigns Lawson’s former responsibilities to O’Hanley and Abigail Johnson.

O’Hanley, 53, will join Fidelity in midsummer. In addition to overseeing various corporate functions, O’Hanley’s responsibilities will include Fidelity Management & Research Co., which serves as investment adviser to Fidelity’s mutual funds; Pyramis Global Advisors, serving institutional investors such as corporate and public retirement funds; and Strategic Advisers, which provides investment advisory services.

Jacques Perold, whose name also has been mentioned as a possible successor to Ned Johnson, will remain head of FMR Co., reporting to O’Hanley.

Abigail Johnson has held several executive roles at Fidelity, including leading Fidelity’s personal and workplace investing unit and its predecessor organization the past five years. Effective immediately, she is president of a new unit known as Fidelity Personal, Workplace and Institutional Services. That unit will oversee personal and institutional investing businesses, as well as workplace savings plans such as 401(k)s.

Abigail Johnson will remain a vice chairwoman and director of FMR LLC, the holding company for Fidelity’s businesses.

Ned Johnson said in a news release that the restructuring will “position Fidelity strategically for the future” by folding a wide array of distribution businesses into one unit.

O’Hanley joined Mellon Financial Corp., the predecessor to BNY Mellon, in 1997. BNY Mellon Asset Management is one of the nation’s largest asset managers, with more than $1 trillion under management.

Fidelity managed about $1.5 trillion as of March 31. The 64-year-old company was founded by Ned Johnson’s father as a mutual fund provider. It has since branched out into a wide array of other financial services.

Ned Johnson and Lawson guided the company through the market turmoil of 2008 and early 2009, when falling stock prices and plunging asset values ate into revenue the company earns from money management fees. The company’s work force total is down about 9,000 from its peak of 46,000 in 2007.

Fidelity’s operating profit rose 5 percent last year, boosted in part by job cuts, although revenue continued to lag after two years of market volatility.