Q&A: T. Rowe Price CEO on advising Obama, surviving the recession

BALTIMORE — James Kennedy has reached the point in his career when the White House wants to pick his brain for advice.

The chief executive of T. Rowe Price, the Baltimore mutual-fund powerhouse, has been invited to Washington three times by an Obama administration seeking to revamp the public sector.

He's had dinners with U.S. Treasury Secretary Timothy Geithner and with Lawrence Summers, director of the White House National Economic Council.

Then senior Obama adviser Valerie Jarrett sent him a note late last year, inviting him to join a group of 50 CEOs to brainstorm ways to use technology to make government more efficient.

A longtime T. Rowe executive who became CEO three years ago, Kennedy has helped navigate the company through a rocky decade of mutual-fund scandals, the dot-com bubble and the housing-market collapse and subsequent financial crisis and recession. Through each bout of turmoil, T. Rowe emerged largely unscathed.

Kennedy is steadfastly modest about his top role, preferringinstead to highlight the firm's collaborative leadership structure and the work of Chairman Brian Rogers and Vice Chairman Ed Bernard.

In a recent talk with The Baltimore Sun, he talked a little about himself and more about the company.

Q: You were invited to the White House? What was that all about?

A: You get an invitation like that, you show. (At the last event,) we talked about how to make government more efficient. They wanted to talk about how to use technology. Technology is a tool: It's not the be-all and end-all. That was our chief message, I think. There weren't many in that whole group of 50 [attending the event] in the financial world. There are a lot of companies who are tainted. We have a real clean record. Therefore, they were happy to invite us.

Q: Did you meet the president?

A: Oh, he walked in the room, ran up on stage and talked and was running back to focus on Haiti. [The earthquake] had just happened, so he was focusing on that.

Q: So White House officials will be paying visits to T. Rowe?

A: They seem interested. We've exchanged e-mails. They say they want to come in. I wouldn't say White House officials. I'd say government officials. It's not just White House.

Q: As executive compensation is a perennial controversy, what's your take on your own paycheck? [After this interview, the company reported in a regulatory filing that Kennedy's total pay fell by nearly $1 million last year, to $4.7 million.]

A: Relative to comparable companies, the data would argue that I'm in the bottom third in terms of compensation. If we get greedy in the short term, we may lose our top people if they say, 'How come I'm working so hard and this is what I get paid? And look at you guys way up here.' The bonus pool is finite. We have to worry about fairness within the firm.

We also have to make sure that we're fair with the shareholders, that we're leaving enough so that the underlying value of the company grows over time.

Q: Are there any bubbles forming currently that you're keeping an eye on?

A: There are always mispriced areas of the marketplace. Sometimes they last a short period of time; sometimes they get bigger and bigger. There's nothing egregious at this point.

Q: Do you have a sense of when the housing market will recover?

A: It's starting to recover now. The housing market is bottoming. In certain parts of the country, it has bottomed and is starting to pick up a little bit. A lot of people are still in shock about what's happened. I don't think we'll see another big pop in the market for a long period of time.