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Family Ties Ripped at Franklin Resources

Its former president, a member of the controlling Johnson clan, is let go amid wife-beating charges.

It's always been a family affair at

Franklin Resources

(BEN) - Get Franklin Resources, Inc. (BEN) Report

, but the ties are riven after one of the clan pleaded no contest to domestic abuse charges.

Two weeks ago, Franklin cut ties with the firm's former co-president, Charles E. Johnson, after he entered a plea agreement over allegations he brutalized his wife at the couple's home last October. Johnson is the son of the fund company's co-chairman, Charles B. Johnson.

The company, which has 9.6 million customers and $248 billion in assets under management, has said little about the incident and Johnson's June 12 plea agreement with California prosecutors.

A company spokeswoman's only comment was that Johnson's "administrative leave" from Franklin ended on the day the deal was struck. She also noted that the company quickly moved to distance itself from Johnson once the allegations of spousal abuse came to light.

Johnson resigned from his post at Franklin last October, after San Mateo police arrested him following an incident in which his now-estranged wife, Melodie, was beaten so badly that the orbital bones surrounding one of her eyes were fractured. The company placed Johnson on an administrative leave shortly after the arrest.

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A company spokeswoman on Tuesday declined to comment on whether Franklin continued to pay Johnson during his leave of absence. The spokeswoman said the issue is a private matter.

In 2001, the most recent information available from the company, Johnson earned $1.18 million in salary and bonuses at Franklin. As of last summer, he owned approximately 300,000 shares of the company's stock, worth about $11.7 million at Franklin's current $39-a-share price.

A 2001 proxy statement also reports that Johnson had options to purchase an additional 123,781 shares. It's not known what happened to those options.

Several Wall Street analysts said the company acquitted itself as well as could be expected in the incident by quickly pushing Johnson aside despite his family ties.

Franklin was founded in 1947 by Johnson's grandfather Rupert Johnson Sr. Besides his father, the chairman, his uncle, Rupert Johnson Jr., is vice chairman, while his brother, Gregory, is co-president of the firm.

"These guys did exactly what you would hope they would do,'' said Mark Constant, a Lehman Brothers financial services analyst.

William Katz, a Putnam Lovell analyst, said he was glad the company "didn't look the other way because he was a Johnson.''

Johnson, meanwhile, could be sentenced to up to a year in jail under the plea agreement. His attorney could not be reached for comment.

Johnson and his wife are in the process of getting divorced.