Imagine the Possibilities. Imagine Baird.
President & Chief Executive Officer
A message from Steve Booth and Paul Purcell
To imagine is to embrace possibility – to see beyond barriers; to be inspired by the inherent potential of the future; to begin to pursue a personal dream or objective. At Baird, we partner with our clients to imagine, define and achieve their financial goals. Our mission is very succinct: "To provide the best financial advice and service to our clients and be the best place to work for our associates." While this is a very straightforward statement, it alludes to an ambitious goal. In order to be the best possible partner to our clients, we must continue to embrace innovation, creativity and the evolution of our industry – that is, we must continue to imagine and pursue possibilities.
2016 was a year of slow economic growth, market volatility and geopolitical tumult, and in many ways, uncertainty reigned. We know these changing times have a heavy bearing on our clients' goals and aspirations. That's why we remain wholly focused on providing strong partnerships, objective advice and exemplary service they can count on in changing times. We take our clients' trust very seriously, and we believe we need to earn it every day. It is reflected in the assets entrusted to us. At the end of 2016, client assets at Baird totaled $171 billion – a record for Baird, and a 96% increase over the past five years.
Baird ranked No. 4 in 2017 – our fourth straight year among the top 10 companies.
We were also humbled to be honored as one of the FORTUNE 100 Best Companies to Work For® in early 2017. The firm ranked No. 4 in 2017, our 14th consecutive year on the list and fourth straight year among the top 10 companies. This recognition speaks to the quality, dedication and skill of our global team of more than 3,400 associates.
As an independent firm, Baird is able to grow our businesses for the benefit of our clients – not outside shareholders.
A Strong Year
Our steady clients-first focus led to another year of strong financial results for the firm. Baird's 2016 revenues totaled $1.4 billion – an 8% increase over our 2015 results and our seventh consecutive year of record revenues.1 Operating income increased to $155 million, a new record for the firm.
Baird's most distinct advantage comes from being privately held and employee-owned. This not only enables us to be strategic and nimble in how we invest in our business – it means we have a vested interest in our clients' success. And despite a marked decline in stock value across our industry over the past ten years, Baird's stock value has increased 168% over the same period. We believe this is a strong validation of our business model and steadfast client focus.
Baird's return on book value, including a cash dividend paid to shareholders in December, was 12.5%. This strong result again surpassed many of our competitors, and we believe it is among the highest in our industry. The firm achieved these results without the leverage used by many financial firms to drive returns.
Our platform of five complementary businesses provides a strong foundation and driver for these results. This model diversifies and balances our revenues across all types of market conditions. Each of our businesses performed well in 2016, and we continue to gain market share in a competitive environment. We're pleased to report that three of our businesses – Private Wealth Management, Equity Capital Markets and Asset Management – posted record revenues in 2016. There were many other notable highlights across the firm:
- Private Wealth Management posted strong results. Its assets under management grew to $117 billion, a record for the business.
- Asset Management continued to grow its businesses. Total assets under management rose to $51 billion, a 29% increase over 2015.
- Equity Capital Markets' revenues exceeded $400 million for the first time, largely driven by record M&A activity in our Global Investment Banking business.
- Baird Capital invested $72 million in six new and 20 follow-on investments. In addition, the business successfully exited 10 investments and realized approximately $256 million.
- For the eighth consecutive year, our Fixed Income Capital Markets team ranked as the No. 1 municipal underwriter in the United States, based on number of issues, according to Ipreo MuniAnalytics. The business' revenue also grew by 16%.
1 Financial results do not reflect the consolidation of certain private equity partnerships.
Our business is our clients' success. We manage our firm prudently in order to grow consistently.
Baird's client assets total $171 billion, a 140% increase over the past 10 years.
Baird stock performance is based on the 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, $2.00 and $7.50 paid in December of 2011, 2012, 2013, 2014, 2015 and 2016, 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.
Baird's stock value has grown 168% during the past decade.
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.
For 14 consecutive years, Baird has been honored as one of the FORTUNE 100 Best Companies to Work For®.
With an Eye to the Future
As employee-owners, we are incredibly focused on how we manage our business and how well we perform for our clients. Our independence also affords us the flexibility to continuously build our capabilities for our clients. We have made a number of strategic investments over the past few years and continued to build on that momentum in 2016:
- Private Wealth Management acquired Seattle-based McAdams Wright Ragen in 2014, welcoming 75 talented professionals to Baird. Since then, the business has recruited and trained 196 additional industry veterans and driven individuals.
- Fixed Income Capital Markets has significantly broadened its platform by adding seasoned teams specializing in investment-grade corporate debt, public finance advisory and securitized products. In total, the business has added 78 professionals since 2014.
- Institutional Equities & Research continues to enhance its suite of trading capabilities, including the addition of options and event trading teams in 2016. Global Investment Banking's recruitment of bankers of all levels, across its sectors, products and geographies of focus, has driven four consecutive years of record revenues.
- Baird Equity Asset Management broadened its global and international equity offerings with the addition of Chautauqua Capital Management in early 2016.
- Baird Advisors, our fixed income asset management business, welcomed a nationally recognized municipal bond team in 2015. The team has proven to be a powerful addition to the business' municipal offering.
- Baird Capital completed the alignment of its U.S., Europe and Asia private equity teams into a single global platform that collaborates to support portfolio companies and drive investment results. It also added a partner to help lead the business's investment efforts in Asia.
Our global team plays a major role in our success. Our associates' deep expertise, passion for what they do and genuine commitment make it possible for Baird to pursue new opportunities and serve our clients in new ways. More than 2,200 talented professionals have joined the firm since the end of 2007 – a 55% increase in our employment.
We value our associates' spirit of innovation, collaboration and passion for what they do. Our team's talent makes our firm's growth possible, which is why we firmly believe in extending the opportunity of employee ownership to our associates. Today, more than 63% of Baird associates are shareholders in the firm, with broadly distributed ownership across the business, and we are very proud to be one of the largest employee-owned financial services firms in the United States.
We're very optimistic about the possibilities ahead for the firm and for our clients. While our industry is rapidly changing, we welcome changes and challenges because we know that – thanks to our incredibly talented team, our distinct culture and our strong client partnerships – Baird is positioned to imagine and achieve for many years to come.
Steve G. Booth
President & Chief Executive Officer
Paul E. Purcell
Our employment has grown more than 23% over the past five years.
Source: SIFMA Securities Industry Employment Report