Profile | Fidelity CEO Johnson just not the retiring kind

BOSTON — Seventy-six-year-old Edward "Ned" Johnson III has spent the past three decades of his 50-year career at Fidelity Investments as CEO and chairman, turning the Boston-based company into a huge presence on Wall Street and quietly building a personal $7.5 billion fortune.

So outsiders expected the next executive-personnel move at the nation's largest mutual-fund company would be an announcement of Johnson's successor.

Instead, one of Johnson's potential replacements recently announced his retirement in a management reshuffling that leaves Johnson more in charge than ever.

Observers who follow the privately held, insular company say the latest changes suggest Johnson is in no hurry to turn over leadership of the business that his family has run since his father founded it in 1946.

"I think Ned has got one speed: engaged," said John Bonnanzio, an editor of an independent newsletter called Fidelity Insight. "All these changes are Ned Johnson's handiwork."

Some suggest Johnson may be staying on this long to try and turn investment performance around before leaving, since the company has seen only middling returns in recent years from key mutual funds that fueled its growth in the late 1980s and early '90s.

But Eric Tyson, author of the book "Mutual Funds for Dummies" and a former management consultant, believes Johnson simply likes his work too much to depart now from a job overseeing 41,000 employees and $1.4 trillion in managed assets.

Johnson "is a bit of a control freak" whose passion for keeping Fidelity profitable by expanding into new areas of financial services appears not to have waned, Tyson said.

"He could have ridden off into the sunset 10, 15 or 20 years ago, and done something else with his time and money, and groomed successors," Tyson said. "I presume he enjoys doing what he does."

Paul Guzzi, president of the Greater Boston Chamber of Commerce, said local speculation about Johnson's plans are rife in part because Fidelity's top executive strives to stay out of the spotlight and leaves others guessing.

Johnson has managed to stay active in local philanthropic causes such as the arts and medicine despite making very few public appearances, Guzzi said.

"Ned Johnson is a reserved and very private giant in this community," said Guzzi, who first met Johnson in the late 1970s.

Johnson doesn't grant interview requests, and his public comments are largely limited to Fidelity news releases and statements in the firm's annual report. Fidelity didn't make other executives available to comment on Johnson's future.

Company spokeswoman Anne Crowley said Johnson "continues to be in excellent health," working full time and putting in plenty of business travel.

Succession planning is ongoing, Crowley said, but no decisions have been made.

Johnson began at Fidelity as a research analyst in 1957, 11 years after his father, Edward Johnson II, started the business.

From 1963 to 1971, the younger Johnson managed the Fidelity Magellan Fund, which subsequent manager Peter Lynch led to stellar returns in the 1980s and 1990s, fueling much of Fidelity's growth. Johnson became Fidelity's president in 1972 and added the chief executive and chairman titles five years later.

The company weathered the 2001 recession and resulting stock-market downturn better than most rivals. But the market-beating investment returns that Fidelity once prided itself on have been harder to come by in recent years, with middle-of-the-road results for many funds.

And Fidelity's profit fell 11 percent in 2006 because of advertising costs and higher employment overseas, the company said in February.

"Growth stocks, in which many Fidelity funds had a large exposure, performed poorly," Johnson said in the company's annual report. "This pulled down several funds, including Contrafund and Magellan, our two largest domestic-equity portfolios."

Observers say any desire for more personal wealth likely won't be a big a factor for Johnson as he decides when to step down.

His family holds a 49 percent ownership stake in the company, with Fidelity's employees holding the rest. Forbes magazine last month estimated Johnson's wealth at $7.5 billion and ranked him No. 97 among the world's richest people — figures eclipsed by daughter Abigail Johnson's $13 billion in assets and No. 42 ranking on the Forbes list.

Because the recent management reshuffling — Robert Reynolds, 55, retired as Fidelity's vice chairman and chief operating officer and his position was left unfilled — only appeared to add to Ned Johnson's power, Jim Lowell, a former Fidelity employee who runs the newsletter Fidelity Investor, expects it will be one to three years before Johnson steps down.