Nelson Peltz to join Legg Mason board

Peltz's appointment avoids a possible proxy fight. Legg Mason said on Monday the appointment reflects an agreement with Peltz's Trian Fund Management.

A Legg Mason spokeswoman, Mary Athridge, said Trian agreed not to accumulate more than 9.9 percent of Legg Mason's stock over the next two years.

Trian also agreed to vote in favor of Legg Mason's board nominees over the next two years and agreed to refrain from "things that could initiate a proxy fight," she said.

"We welcome Nelson, whose firm is a significant investor in Legg Mason," Legg Mason Chief Executive Mark Fetting said in the statement.

Trian holds about 6.94 million Legg Mason shares, or 4.3 percent, Legg Mason said in a statement.

The shares were up 3.1 percent to $32.90 in morning trading on the New York Stock Exchange.

A British newspaper reported in June that Baltimore-based Legg Mason, home of famed fund manager Bill Miller, could face a shareholder challenge from Peltz.

Peltz is known for his bruising battles with corporate management, including his 2007 fight with Cadbury Schweppes that resulted in it spinning off a beverage division.

Legg Mason's 13-member board agreed to elect Peltz to the board on Tuesday, expanding the board to 14 seats.

(Reporting by Ajay Kamalakaran; Additional reporting by Ross Kerber in Boston; Editing by Muralikumar Anantharaman and John Wallace)