Exhibit 10.1

August 29, 2008

Mr. David R. Odenath, Jr.

30 Spring Hill Road

Mendham, NJ 07945

Dear David:

This letter will confirm the offer of employment that Legg Mason has made to
you. We have offered to employ you as Sr. Executive Vice President- Head of the
Americas at a semi-monthly salary of $14,583.33 ($350,000 annually). We would
expect your start date to be in September with the exact date to be mutually
agreed. You will be eligible for all company benefits generally available to
similarly situated Legg Mason executives and be subject to all policies and
practices of the firm as articulated in the Legg Mason employee handbook, and
other communications.

 

We will recommend to the Compensation Committee of the Board of Directors that
you receive (i) a one-time stock option award consisting of that number of stock
options (black-scholes value) equal to $2,500,000 and (ii) a restricted stock
award with a value of $1,700,000, both to be awarded and valued at the first
Compensation Committee meeting following your date of employment, currently
scheduled for October 27, 2008. The restricted stock award will vest over three
years and the stock option award will vest over five years.

Should your employment terminate for reasons other than your resignation or your
termination for "Cause" between the date of the above one-time grants and the
date of their full vesting, we will, at Legg's election, either accelerate the
unvested portion or calculate the value of the remaining unvested grants and
compensate you in cash for that value.

For the performance year ending March 31, 2009, the total value of your cash
compensation will be no less than $3,750,000, inclusive of any incentive and
base pay earnings at your current employer for the current year. The bonus
portion of this will be paid when normal bonus payments are made for the
performance year ending March 31, 2009 currently expected to be May 18, 2009.
You will also receive a deferred compensation award of no less than $2,500,000
in May 2009 split equally in value between stock options and restricted stock.

For the performance year ending March 31, 2010, the total value of your cash
compensation will be no less than $3,000,000. The bonus portion of this will be
paid when normal bonus payments are made for the performance year ending March
31, 2010 currently expected to be May 17, 2010. You will also receive a
restricted stock or other deferred compensation award for which you are eligible
under the program(s) then in effect of no less than $2,000,000 in May 2010. The
compensation guarantees listed above are guaranteed provided your employment
does not terminate as a result of your resignation or your termination by Legg
for "Cause" prior to March 31, 2010.

Thereafter, you will be eligible for an annual incentive award. Any incentive
compensation will be awarded pursuant to the incentive and restricted stock or
other deferred compensation program(s) in effect

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at the time of payment, and may consist of a cash bonus, or a combination of
cash and shares of restricted stock or other deferred compensation. The
incentive plan terms and conditions will be the same as those that are
applicable to similarly situated Legg Mason executives.

For the purposes of this letter, "Cause" shall include (i) a violation by you
of, or an act taken by you or your failure to act which causes Legg to be in
material violation of any government statute or regulation or of the
constitution, by-laws, rules or regulations of the securities or commodities
exchange or a self-regulatory organization, or of the policies of Legg; (ii) the
entering of an order or decree or the taking of any similar action with respect
to you which substantially prevents you from performing your duties; (iii) your
willful insubordination or dishonesty in any material respect; (iv) your
conviction of a misdemeanor of moral turpitude or felony; (v) your failure to
devote substantially all of your professional time to your assigned duties
according to the reasonable standards established by management for similarly
situated employees and communicated to you; (vi) your gross misconduct or gross
negligence in the performance of your duties; (vii) your disability for a period
of six months or more; or (viii) your failure to remain licensed to perform your
duties: provided that in the case of sub clauses (iii), (v) and (vi) above no
such event shall constitute Cause unless you have been provided with notice and
if such event is capable of being corrected within thirty (30) calendar days, a
reasonable opportunity to cure such event.

In the event that Legg Mason materially diminishes the level of your overall
duties and responsibilities without your consent such that, when your duties and
responsibilities are considered as a whole, they would be deemed to be
inconsistent with those customarily associated with your positions at Legg
Mason, such diminishment is not corrected within 30 days of your providing Legs
Mason written notice of the diminishment, and you terminate your employment
within 90 days of the date such diminishment occurs, then we will at Legg's
election, either accelerate the unvested portion or calculate the value of
unvested equity grants and compensate you in cash for that value.

Legg Mason will also arrange for a temporary housing in Baltimore for your use
for the first six months of your employment. We will also assist with your
relocation in 2009. Benefits include, among other items, movement of household
goods and reimbursement of brokerage commissions.

While you are employed by Legg Mason, its successors and affiliates, and for a
twelve (12) month period following the termination of your employment for any
reason, you agree that you will not directly or indirectly solicit any business
from any client of the Company with whom you had substantial contact during your
employment for the purpose of terminating or reducing any business that the
Company has with any such client. Your agreement not to solicit means that for
twelve (12) months following your termination date, you will not initiate
contact or communication of any kind for the purpose of inviting, encouraging or
requesting any such client to (a) transfer an existing account from the Company
to you or any third party or (b) surrender, redeem or terminate any product,
service or relationship with the Company.

Further, in consideration of the compensation terms set forth herein, you agree
that during your employment with Legg Mason and for a period of twelve (12)
months following the termination of your employment for any reason that you will
not, directly or indirectly, for yourself or on behalf of a third party, solicit
or induce any employee of Legg Mason or its related entities to terminate
his/her employment or to become employed elsewhere.

While it is our hope and expectation that you will have a long and rewarding
career at Legg Mason, you should understand that this constitutes an offer of
"employment at will," which means that at any time after the commencement of
your employment and for any reason or for no reason at all, you may voluntarily
terminate your employment, and Legg Mason may terminate your employment without
further obligations to you. Any oral statements or representations to the
contrary are expressly

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Exhibit 10.1

disavowed. We are confident that there are many challenges and opportunities
here at Legg Mason and we look forward to working together. The compensation
package including deferred and future payments is, of course dependent upon your
continued employment at the time of payment as mandated by all State and Federal
laws.

This offer is contingent upon the following:

.

Receipt of acceptable references

.

Proof of right to work; satisfaction of (1-9) requirements

.

Verification of the information you have provided

David, we are truly excited about your joining Legg Mason. Should you have any
questions, please do not hesitate to call me at (410) 454-3245.

Sincerely,

/s/ Mark R. Fetting

Mark R. Fetting

President and Chief Executive Officer

Legg Mason, Inc.

ACCEPTED By: /s/ David R. Odenath

Date: September 3, 2008