OF OUR DIRECTION
A MESSAGE FROM
PAUL PURCELL AND STEVE BOOTH
Uncertainty. The word alone can inspire concern or anxiety. At Baird, we know a strong, dependable partner is essential for navigating uncertain times. While 2015 was a year of measured growth, it was also marked by volatile markets and geopolitical concerns. Clients turned to Baird for expertise, perspective and advice they could trust. That's why we are deeply committed to providing them with honest insights, reliable service and a long-term view that can help them navigate the increasing complexity of today's environment.
Our partnership with clients is guided by our ambitious mission: To provide the best financial advice and service to our clients and be the best place to work for our associates. We live out our commitment by staying true to our guiding principles – honesty, integrity, transparency and teamwork – because we believe that how we do business is as important as the business we do. These principles are also intrinsic to being a great workplace. When our associates are passionate about their work and focused on delivering great outcomes to clients, we know our clients feel the difference.
The importance of our client focus and core values is reflected in two key measures of how successfully we are fulfilling our mission. At the end of 2015, client assets totaled $151 billion, an 83% increase over the past five years. And in early 2016, we were honored to be recognized for the 13th straight year among Fortune's 100 Best Companies to Work For®. We ranked No. 6 in our third straight year among the top 10 companies.
OF OUR CAPABILITIES
Our five businesses form a powerful complementary platform of expertise and capabilities.
CONTINUED GROWTH AND EXPANSION
Our focus on providing clients with objective advice and exceptional service also led to another year of strong financial results. Our 2015 revenues increased to $1.3 billion – a 7% gain over 2014's results and our sixth straight year of record results.1 Operating income grew to a record $154 million, up 14% over the prior year. Baird's return on book value, including the cash dividend paid to shareholders in December, was 13.2%. This strong performance again surpassed most of our competitors and was attained without the significant leverage used by many financial services firms to lift returns.
Baird has operated profitably for 144 consecutive quarters, a remarkable achievement in a cyclical industry. Our platform of five complementary businesses diversifies our revenues and has proven durable through multiple market cycles. Three of our businesses – Private Wealth Management, Equity Capital Markets and Asset Management – generated record revenues in 2015. Other notable highlights across the firm:
- Private Wealth Management expanded its national footprint to 85 offices serving clients coast to coast.
- Global Investment Banking's M&A advisory business posted record transaction volume.
- Baird's Institutional Equities & Research team was once again recognized as the No. 1 "important small-/mid-cap research advisory firm" in Greenwich Associates' annual survey of fund managers.
- Baird Capital invested $130 million in seven new and 36 follow-on investments. The business also successfully exited eight investments and realized $272 million, primarily through these exits.
- For the seventh consecutive year, Fixed Income Capital Markets ranked as the No. 1 municipal underwriter in the United States, based on number of issues, according to Ipreo MuniAnalytics and Thomson Reuters.
- Asset Management continued its growth streak. Assets under management soared 24% across the business.
1Financial results do not reflect the consolidation of certain private equity partnerships.
Baird provides the resources our clients need most in ever-changing markets: dependable service, customized advice and a long-term view.
Baird stock performance is based on the annual change in book value per share for Baird Financial Group common stock and includes cumulative cash dividends per share of $7.50, $1.60, $1.65, $1.85 and $2.00 paid in December of 2011, 2012, 2013, 2014 and 2015, respectively. Baird is privately held and no public market exists for its shares. Baird can repurchase shares of Baird stock at book value when associates leave the firm. Past performance does not guarantee future results.
The Standard & Poor's 500 Stock Index and Standard & Poor's 500 Financials Sector Index are unmanaged common stock indices used to measure and report value changes in the stocks comprising these indices. Indices performance information is obtained from Capital IQ and excludes dividends paid during the periods shown. Baird stock is not included in these indices.
OF OUR PEOPLE
We are proud Baird has been recognized for 13 consecutive years as one of Fortune's 100 Best Companies to Work For®.
THOUGHTFUL, STRATEGIC GROWTH
The quality of our team is the foundation of Baird's strength. During 2015, we continued to deepen our capabilities by attracting highly skilled professionals. In Asset Management, we welcomed a team specializing in taxable and tax-exempt municipal bonds and, in early 2016, acquired Chautauqua Capital Management, a firm focused on international and global equity asset management. We also made progress on several other key initiatives that broadened our international talent and capabilities. Global Investment Banking attracted bankers of all experience levels across its sectors of focus, product teams and geographies. Institutional Equities & Research added to its international trading capabilities and corporate access services. And Baird Capital strengthened its global platform with new operating partners who will help drive value growth in smaller, high-potential companies across the United States, Europe and Asia.
Despite slow-to-recover market conditions, we continued to invest in our Fixed Income Capital Markets business, forming a team specializing in investment-grade corporate debt. This is a key addition to our platform. In Private Wealth Management, our 2014 acquisition of McAdams Wright Ragen in the Pacific Northwest has proven to be a powerful addition, and we continued to attract veteran Financial Advisors across the country in 2015.
Our team of more than 3,300 associates has a true passion for helping clients succeed. In addition to strategic additions to our business capabilities, we foster our associates' growth with the training, tools and technology they need to excel in their roles, deepen their expertise and ultimately enhance our clients' experience with Baird. As an independent and employee-owned firm, we value our associates' innovation, entrepreneurial spirit and creativity.
Source: SIFMA Securities Industry Employment Report
We believe strongly in the power of extending the rewards and responsibilities of ownership to our associates, and we have steadily expanded the opportunity for them to become owners. Today, Baird is one of the largest employee-owned financial services firms in the United States. Approximately 63% of our associates are shareholders, with broadly distributed ownership across the business.
We believe employee ownership is a powerful advantage. It allows us to be deliberate and nimble in how we build the firm. Because we have a personal stake in the firm's success, we care deeply about how we grow. Our business is helping our clients succeed. This alignment of focus and objectives gives us the perspective and ability to grow our business to meet our clients' evolving needs – to help them succeed in an uncertain world. We are deeply grateful for our clients' trust and support, and we are determined to earn them every day.
PLANNING FOR TOMORROW
Since we opened our doors in 1919, Baird has worked hard to build powerful partnerships with our clients, our associates and our communities. A steadfast commitment to delivering exceptional advice and service to our clients, in all environments, guides every decision we make. We believe there is a powerful certainty in true partnership.
We are committed to working closely with our clients to navigate today's uncertainties and tomorrow's opportunities in ways that meet their unique objectives.
On January 1, 2016, Steve became Baird's Chief Executive Officer, completing our multiyear leadership transition. Paul will remain actively involved as Chairman and is continuing his longtime commitment to serving numerous community causes. The two of us have worked side by side for more than 25 years and we are very enthusiastic – and optimistic – about the years ahead. We look forward to continuing to collaborate with our associates to pursue Baird's future opportunities. We're certain that together, with our clients' trust and partnership, we can achieve great outcomes, done well.
From FORTUNE Magazine, March 15, 2016 ©2016 Time Inc. Used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Baird.