the Baird
difference
At Baird, we’re committed to
continuity our clients can
count on. Values that endure.
Great outcomes. Done well.
2010trusted.
Annual Report
Advice that’s
Teamwork
that delivers. Every single day.
In every type of market.
2 Focus
4 Expertise
6 Culture
8 A Message from Paul Purcell
12 Businesses at a Glance
14 Private Wealth Management
2010 Annual Report
18 Equity Capital Markets
24 Private Equity
28 Fixed Income Capital Markets
32 Asset Management
36 Our Community
38 Financial Information
40 Managing Directors
42 Corporate Offices
We believe that great outcomes begin
with a clear focus on the best interests of
clients and associates, every day, in every
type of market. That trust grows from deep
expertise and objective advice. And that
strong partnerships are built when a culture
is dedicated to real teamwork and enduring
values. That’s the Baird Difference.
Baird 2010 Annual Report
1
Success
Middle Market
Focus
Continuity
2
Baird 2010 Annual Report
Clients
Partnership
Long Term
We’re focused on what our clients value
most. Like creating a strong partnership
that centers on their needs for deep
expertise and objective advice. One with
a clear emphasis on their long-term goals.
A partnership defined by continuity in
relationships and disciplined execution
they can count on year after year.
Staying focused means staying true to
our core strengths. That’s why Baird is
financially conservative, committed to
the middle market and always guided by
the values that form the bedrock of our
client relationships.
.
“What attracted me to Baird was its focus on building
the whole business around the best interests of
clients. Associates across Baird support me so that
I can provide truly customized wealth management
solutions to my clients.”
Karen Ogard, Financial Advisor
Quintin Lai Associate Director of Research
Mike Liang Partner, Baird Venture Partners
Karen Ogard
Financial Advisor, Denver
Baird 2010 Annual Report
3
Collaborative
Trusted
Solutions
Expertise
Performance
4
Baird 2010 Annual Report
Objective
Accessible
We believe that objective advice is trusted
advice. That means expert advice rooted in
rigorous analysis and aligned to the needs
of clients. It means developing solutions
that are effective and appropriate as well
as creative.
At Baird, expertise is also accessible. From
managing directors to senior portfolio
managers, from industry conferences to
white papers, Baird’s experts are readily
available to provide the depth of insight
that contributes to great outcomes.
“Our advice comes from years of experience and
a deep understanding of each client’s needs.
We’re thoughtful and disciplined in our approach,
so we can make recommendations best suited to
their goals.’‘
Gary Elfe, Director of Research, Baird Advisors
Laura Thurow Co-Director of Private Wealth
Management Research
Gary Elfe Director of Research, Baird Advisors
Steve Janaszak
Fixed Income
Institutional Sales
Baird 2010 Annual Report
5
Authentic
Community
Culture
Teamwork
6
Baird 2010 Annual Report
Dedicated
Integrity
Caring
For the past eight years, Baird has been
recognized as a great place to work through
some of the best, and the most challenging,
market conditions our clients and industry
have ever experienced. That’s because the
values we share as Baird associates are the
heart of everything we do. Our values drive
honest communication, caring and real
collaboration on behalf of clients, each
other and the communities in which we live.
“How we do things – with integrity, teamwork and
caring – is as important to us as the results we achieve
for clients. The alignment of our practices with our
values is the real strength of the Baird culture.”
Leslie Dixon, Chief Human Capital Officer
Sheryl Lenzke Best Practices Consultant, Private Wealth Management
Peter Kies
Co-Director,
Equity Capital Markets
Heidi Engelhardt International Partner, Human Capital
Alan Bago
New Accounts
Representative, Operations
Baird 2010 Annual Report
7
Paul Purcell
Chairman, President &
Chief Executive Officer
“Because Baird is independent and employee-owned, we
determine our own strategic priorities. We can take a
conservative, long-term view of what is in the best interests
of our clients and our businesses.”
8
Baird 2010 Annual Report
A Message
from Paul Purcell
By many objective measures, 2010 was a dramatic
improvement over the two preceding years of global
economic decline. Investors’ confidence, however,
remained challenged. Volatile equity markets, historically
low interest rates and uncertainty about the sustainability
of the economic recovery continued to raise concerns
for many clients. More than ever, they sought advice
and perspective from Baird.
We deeply appreciate the trust our clients place in us.
Baird associates work hard to earn that trust every day,
through a deep understanding not only of financial
markets and investment banking transactions, but also of
what matters most to each client. That is why, across all
of our businesses, our goal is to provide expert advice and a
long-term view of financial markets and clients’ objectives.
Preserving that bond of trust is also why Baird’s first
priority during the challenges of the last several years
was to protect and serve the interests of our clients.
We believed this required two forms of investment on
our part. The first was to keep our teams together, not
only to ensure continuity of service to clients, but also
to maintain the partnership culture for which Baird is
recognized. The second investment was to take advantage
of the opportunity to hire many talented professionals
who were looking for Baird’s combination of a collaborative,
client-focused work environment and strong financial
condition. Over the past three years, Baird has increased
employment 15%, including many new associates who
are senior-level industry veterans. Meanwhile, many
competitors have restructured or downsized, and U.S.
securities industry employment has dropped 6%.
While expertise and relationships are important in
hiring, they cannot trump values. The values we share
both distinguish Baird in the marketplace and help
make Baird a great place to work. That is why we are
deeply honored to be recognized – for the eighth
consecutive year – as one of the FORTUNE 100 Best
Companies to Work For.® We placed No. 14 on the
2011 list, released in January, our third consecutive year
among the top 15.
Core strengths. Our ability to make a substantial
commitment to hiring during some of the most difficult
markets in 70 years speaks to our core strengths. These
investments are made with our own money at stake.
Because Baird is independent and employee-owned, we
determine our own strategic priorities. We can take a
conservative, long-term view of what is in the best interests
of our clients and our businesses. What’s more, we are
aligned behind that view as an organization. Nearly half
of all Baird associates own shares in the firm, and those
shares have grown in book value at a compound annual
rate of 11% over the past decade. This growth is strong
confirmation that working in our clients’ best interests is
always in our own best interest.
Baird 2010 Annual Report
9
A Message
from Paul Purcell
We can also afford to stay focused on what matters most
because we have a strategic balance of complementary
middle-market businesses – Private Wealth Management,
Equity Capital Markets, Private Equity, Fixed Income
Capital Markets and Asset Management. Terrific
results from Fixed Income Capital Markets and Asset
Management in 2009, for example, helped offset declines
in other businesses. That balance of revenues gave us the
leeway to hire top talent while maintaining Baird’s
excellent financial condition.
In 2010, the commitment we made to both maintain and
deepen the team enabled Baird’s businesses and financial
performance to rebound more quickly than many in the
industry. All five businesses performed very well last year,
and some, like Investment Banking and Private Equity,
improved dramatically. Net revenues for 2010 grew 18%
over 2009 results to a record $847 million. Operating
income increased 35% to $84 million.* We ended the year
as we began it: in excellent financial condition, with
modest debt and a very strong capital base.
Other important investments. During 2010, we also
completed a record year of investment in Baird’s
information technology capabilities. We not only expanded
the team and expertise, we added momentum to the rollout
of new systems and client capabilities across our businesses.
This is an ongoing program of substantial, incremental
investment in IT and a key component of Baird’s strategy
to become the leading middle-market financial services
firm in the world.
*Financial results do not reflect the consolidation of certain private
equity partnerships.
10
Baird 2010 Annual Report
Among the 2010 highlights to be found throughout this report:
For the seventh consecutive year, Baird ranked No. 1 for
“most trusted” research in Greenwich Associates’ annual
survey of U.S. small-cap and mid-cap fund managers.
Baird Financial Advisors managed or oversaw $63 billion
in client assets at the end of 2010. As a firm, we managed
or oversaw more than $82 billion in client assets.
Investment Banking completed a record number of
financings and M&A advisory transactions, which had a
combined value of $26 billion.
Baird Capital Partners was again named a top
“Consistent Performer” in Private Equity
Intelligence’s 2010 survey, moving up to No. 7
in the global ranking of buyout managers.
For the second straight year, Baird ranked No. 1 in
the United States for the number of municipal bond
issues it lead-managed during the year, according to
Thomson Reuters.
Strong inflows to our bond mutual funds during the past
two years drove Baird Funds’ assets under management
to $4.7 billion at the end of 2010, a 142% gain since the
end of 2008.
“Baird associates have proven that their commitment
to ensuring the best possible outcomes for clients can
help transcend some of the most challenging economic
conditions in the history of our business.”
Our diversity efforts continue to get a great deal of attention
at all levels of the firm, and deservedly so: they remain a
key priority. Our four associate resource groups – women’s
issues, African-American perspective, community
involvement and the environment – are doing a terrific job
of furthering their mandates, as well as giving additional
voice and leadership opportunities to more associates
throughout the organization. We’re strengthening our
talent acquisition strategies and continuing to develop
our robust internship and scholarship programs to create
more opportunities for women and people of color. As I
have said in the past, the gains do not come quickly enough,
but we are making progress toward achieving a workforce
that, over time, will be more representative of the clients
and communities we serve.
I am privileged, and proud, to lead a remarkable team of
associates at Baird. Our associates have proven beyond
any doubt that their commitment to ensuring the best
possible outcomes for clients – and for each other – can
help transcend some of the most challenging economic
conditions in the history of our business. They have
also shown that, while markets may redefine how great
outcomes are measured at times, they will remain focused
on delivering outcomes that are done well – with expert
advice, honest communication and genuine caring. That
will always be the Baird Difference.
Paul E. Purcell
Chairman, President &
Chief Executive Officer
Baird 2010 Annual Report
11
Structured
for Success
Baird’s independence and employee
ownership give us the freedom to
do what we believe is in the best
Private Wealth
Management
Equity Capital
Markets
Equity Research – Institutional Equity Services –
Investment Banking
long-term interests of our clients.
Despite extremely challenging
markets in recent years, we have
made significant investments in our
team and global reach, while
maintaining substantial capital and
a strong balance sheet. Nearly half
of all Baird associates own shares
in the company, which promotes
a very strong alignment with the
interests of our clients.
Baird’s Private Wealth Management
professionals provide comprehensive
wealth management strategies
and solutions for high-net-worth
individuals and their families across
the United States.
• $63 billion in client assets overseen or
managed by 680 highly skilled Financial
Advisors and their teams
• More than 60 in-house specialists
provide advice for all aspects of wealth
management, retirement planning,
charitable giving and wealth transfer
• Serves clients coast to coast from 71
locations in 23 states
• Barron’s Top Wealth Managers list,
2007–2010
Private Wealth
Management
Revenues
Financial Advisors
Our Equity Capital Markets team
delivers expertise in research and
sales and trading to domestic and
international institutions. Baird’s
Investment Banking group provides
equity underwriting and mergers
and acquisitions advisory services to
middle-market companies.
• 633 companies under research coverage
• Ranked No. 1 once again for “most trusted”
and “most important” research firm in 2010
Greenwich small/mid-cap survey*
• Advised on more than 125 financing and
global M&A transactions in 2010 with a
total value of $26.4 billion
• A Top 10 U.S. underwriter of initial public
offerings in 2010, according to Dealogic
Equity Capital
Markets Revenues
Institutional
Shares Traded
($ millions)
(billions)
($ millions)
339
298
3.2 3.3
352
320
660 680
255
591 592 600
296
224
188
183
06
Baird’s culture is a true competitive advantage.
In January 2011, we were recognized as one
of the FORTUNE 100 Best Companies to Work
For® for the eighth consecutive year. Ranked
No.14, we celebrated our third straight year
among the top 15.
FORTUNE is a registered trademark of Time Inc. and is used under
license. From FORTUNE Magazine, February 7, 2011 © 2011 Time Inc.
FORTUNE and Time Inc. are not affiliated with, and do not endorse
products or services of, Licensee.
12
12
Baird 2010 Annual Report
Baird 2010 Annual Report
07
08
09
10
63
06
07
08
2.9
09
10
billion
dollars in
client assets
06
07
08
2.1
173
09
No.
10
1
06
2.3
07
08
09
10
most trusted
research in 2010
Greenwich survey*
*Greenwich Associates U.S. Equity Investors – Small/Mid-Cap Funds,
April 2010. Surveys conducted with 93 U.S. small-cap and mid-cap fund
managers. Rankings based on top 10 research firms in survey.
Baird is a privately held, employee-owned financial
services company that oversees or manages more
than $82 billion in client assets. Over our 91-year
history, we’ve built a strong platform of five
complementary businesses that help diversify and
balance revenue through all types of market
conditions. These advantages give us the financial
strength to make ongoing investments in the
professional expertise and distinctive culture that
make Baird a trusted partner for corporations,
institutions and individuals across the United
States, Europe and Asia.
Private
Equity
Fixed Income
Capital Markets
Asset
Management
Baird Capital Partners – Baird Venture Partners –
Baird Capital Partners Europe – Baird Capital
Partners Asia
Fixed Income Sales and Trading – Public Finance
Baird Advisors – Baird Investment Management –
Baird Public Investment Advisors
Baird Private Equity makes venture
capital, growth equity and buyout
investments in lower middle-market
companies in the Manufactured
Products, Business Services and
Healthcare/Life Sciences sectors.
Baird’s Fixed Income Sales and
Trading team provides investment
ideas and trade execution
for institutional clients in the
United States and Europe. Our
Public Finance professionals
meet the debt underwriting and
advisory needs of public- and
private-sector clients.
Baird’s experienced fixed income
and equity portfolio managers offer
disciplined investing and outstanding
service to institutional investors
and high-net-worth individuals
through customized portfolios and
mutual funds.
• $2.7 billion in capital raised since inception
and investments made in 244 portfolio
companies
• Baird Capital Partners ranked as a Top 10
“Consistent Performer” in 2010 Preqin survey
of 570 private equity funds worldwide
• 61 investment and operating professionals
in the United States, Europe and Asia
• 15 operating professionals in Beijing, Hong
Kong, Shanghai and Bangalore support our
portfolio companies
• 100+ institutional sales, trading and
analytics professionals in 25 offices
• $233 billion in face value of taxable and
tax-exempt bonds traded in 2010
• 30 Public Finance bankers in 11
offices nationally
• A leading U.S. municipal underwriter: in
2010, No. 1 in issues of $50 million or less
and No. 5 in competitive underwritings
of all sizes, based on par value, according
to Thomson Reuters
Private Equity
Revenues
Cumulative Capital
Raised and Managed
Fixed Income Capital
Markets Revenues
($ millions)
($ billions)
($ millions)
47
2.4
2.5
2.6
2.7
Sales Professionals,
Traders and Bankers
128
211
1.8
90
23
Asset Management
Revenues
Total Assets Under
Management
($ millions)
($ billions)
29
105
170
30
28
133
• $15.2 billion in institutional fixed income
portfolios and mutual funds under
management by Baird Advisors
• Nearly $1.1 billion under management
for municipalities and school districts by
Baird Public Investment Advisors
• $550 million in mid-cap and largecap equity portfolios and mutual
funds managed by Baird Investment
Management
• Minority interest in RiverFront Investment
Group, which manages $2.5 billion
23
96
16.6 16.9
29
24
25
13.8
15.3 15.0
110
15
06
07
08
09
10
2.7
06
07
08
09
10
billion
dollars raised
and managed
54
57
06
07
08
No.
09
10
1
06
07
08
09
10
municipal bond
underwriter
nationwide*
*Based on number of issues, according to Thomson Reuters
06
07
08
09
10
16.9
06
07
08
09
10
billion
dollars in
assets under
management
Baird 2010 Annual Report
13
In Private Wealth Management, sound advice
begins with active listening by our Financial
Advisors. Because genuine caring backed by deep
expertise is the foundation of comprehensive
solutions for high-net-worth clients.
Jim Furletti
Financial Advisor and Associate Branch Manager Baltimore
14
14
Baird 2009
2010 Annual Report
Baird 2009 Annual Report
Ana Ebaugh
Administrative Office Manager
Baltimore
Mike Levin
Financial Advisor
Baltimore
Private Wealth
Management
Responding to real concerns and changing priorities
Several years of equity market volatility and low interest rates, combined with uncertainty
over income tax and estate tax legislation, have caused significant concern for many investors.
That has led them to not only question their ability to meet long-term goals, but also to
re-evaluate their tolerance for risk in their investment portfolios. Baird Financial Advisors
have actively engaged clients to deepen their understanding of clients’ changing preferences
and reaffirm long-term goals for retirement, charitable giving and wealth transfer. Our
Financial Advisors are well qualified to do so. Half have earned at least one professional
designation or qualified as a Baird Senior Investment Consultant through our program at the
University of Chicago Booth School of Business, which focuses on the specialized needs of
high-net-worth families and business owners.
As the planning needs and asset-allocation concerns of our clients become more complex,
we continue to deepen the advice we provide to help them achieve their financial goals.
Baird Financial Advisors have ready access to a highly skilled, in-house team of more than
60 specialists in areas such as investment research, tax and estate planning, and riskmanagement strategies, as well as services for business owners and corporate executives.
It is a fully cross-functional team that brings a broad understanding of the complex wealth
management issues facing many of our clients.
“The talent pool at Baird is
very deep. We get quality
service from people who are
bright, motivated and
experienced, and who really
want to help us and our
clients. Coming from a much
larger firm, it was a very
pleasant surprise.”
Jim Furletti, Associate
Branch Manager, Baltimore
Katie Schoen Todd Parrish
Research Analyst
Research Analyst
Private Wealth Management
Baird 2010 Annual Report
15
Private Wealth
Management
The Epstein Calvelli Group, Milwaukee
Chris Calvelli
Senior Investment Consultant
Monica Mullen
Registered Client Relationship Associate
Elizabeth Kendall
Registered Client
Relationship Associate
David Epstein
Financial Advisor
Baird Financial Advisors managed
or oversaw $63 billion in client
assets at the end of 2010, a 13%
increase over the prior year. Half
of all Financial Advisors work on
teams to leverage each other’s
expertise and broaden the service
they provide clients.
Advice and solutions for today’s markets
Baird’s in-house specialists
continue to garner national
media attention from
publications such as The
New York Times, The Wall
Street Journal, USA Today
and BusinessWeek for their
insights into tax, estate and
investment planning.
16
Baird 2010 Annual Report
Just as our Financial Advisors seek to understand the needs of their clients, Private Wealth
Management’s team of products and services specialists continues to expand resources
available to our Financial Advisors. Our specialists operate as an integrated team to
communicate, for example, how legislative changes or market conditions will impact
wealth management strategies. Their mandate is to provide timely, client-centered advice
on broad issues, as well as thoughtful solutions for individual investors, so that Financial
Advisors can help clients achieve their long-term goals.
Baird Financial Advisors are skilled at customizing the allocation of assets to meet clients’
specific wealth management objectives through the many stages of their financial lives.
During 2010, Baird continued to expand its product offerings beyond traditional asset
classes to include investments that have the ability to be effective in dynamic market
conditions. Our advisory programs also have been enhanced to include tactical portfolio
and alternative strategies, as well as traditional asset classes.
• Select Baird Financial Advisors
and Branch Managers were
included in 2010 rankings of
“Top 100 Financial Advisors”
and “Branch Manaagers of
the Year” by Barron’s and
On Wall Street.
• Baird is very committed to
increasing the number and role
of women advisors. The Baird
Network of Women Financial
Advisors provides a forum to
connect, share best practices
and promote the profession as
an attractive career choice.
Barbara Griffin
Senior Investment Consultant
Grand Rapids
Kim Haws Falasco
Financial Advisor
Akron 18
Our Financial Advisors
average more than 18 years
of industry experience, and
half have earned at least
one professional designation
or qualified as a Baird Senior
Investment Consultant.
Approximately 75% of our
Client Relationship Assistants
are licensed professionals.
Mike Schroeder
President, Private Wealth Management, talks with Baird’s
Network of Women Financial Advisors
Expanding our platform
In Private Wealth Management, as in all Baird businesses, we place great importance on the
continuity of our relationships with clients. In contrast to many larger firms in recent years,
we enjoy strong retention of senior Financial Advisors with long service at Baird. We have
also had continuing success in attracting experienced advisors who appreciate Baird’s
entrepreneurial approach, distinctive culture and financial stability. During 2010 – our
second-best recruiting year ever – we hired 62 Financial Advisors and Branch Managers.
Almost all are industry veterans overseeing substantial client assets. We are selectively
growing our national presence as well. Private Wealth Management opened six new offices
in 2010 in the Mid-Atlantic and Midwest regions and Texas.
Designing and implementing a complex wealth management strategy requires ready access
to useful information. Baird Financial Advisors and their clients are supported by a wide
array of world-class account management tools. Baird HouseholdView, for example,
provides clients a comprehensive look at their investment assets across multiple generations,
up to the previous business day. This information positions clients to work with their
Financial Advisors to make timely, informed investment decisions. Baird client statements
also achieved a ranking of “excellent” in the 2010 review by DALBAR, a leading firm
analyzing the financial services industry.
Private Wealth Management
Baird 2010 Annual Report
17
In Equity Capital Markets, great outcomes are
founded on best-in-class research and deep expertise
in trading, capital markets and advisory services.
Great relationships are built by a strong, stable team
and an unrelenting focus on our clients’ interests.
Bob Graham
Institutional Investment Officer
18
18
Baird 2009
2010 Annual Report
Baird 2009 Annual Report
Bill Walker
Managing Director, Mason Street Advisors
Co-Portfolio Manager, Small Cap Portfolios
Dan Steffes
Institutional Trader
Erika Maschmeyer
Senior Research Analyst
Equity
Capital Markets
Committed to being the best for clients
Baird has made substantial investments in recent years to deepen the expertise and broaden
the skills we provide our Equity Capital Markets clients. We dramatically expanded our
research coverage while many firms were decreasing theirs. We added to the strength of our
trading desks, the breadth of our market making and the scope of our electronic execution
capabilities. Throughout a challenging business downturn, we kept our global Investment
Banking team intact and active to ensure that clients received the advice and continuity
that are essential for strong partnerships and great outcomes.
Our commitment to providing trusted, objective advice and best execution again earned
important third-party recognition for our Equity Capital Markets teams in 2010. Research
and Institutional Equity Services once again achieved No. 1 rankings for “most trusted”
and “most important” research firm in Greenwich Associates’ 2010 survey of small-cap and
mid-cap fund managers.* Prominent industry publications also recognized our Investment
Banking team with numerous major awards for innovative advisory transactions on behalf
of middle-market clients. We were recognized for the sixth year in a row by The M&A
Advisor, earning four awards. In Europe, Acquisitions Monthly called out our bankers’
expertise for the fourth consecutive year with its “Support Services Adviser Award.”
*Greenwich Associates U.S. Equity Investors – Small/Mid-Cap Funds, April 2010. Surveys conducted with
93 U.S. small-cap and mid-cap fund managers. Rankings based on top 10 research firms in survey.
In October 2010, Baird
served as lead book runner
for the $202 million initial
public offering of Vera Bradley,
Inc., a leading designer and
retailer of accessories for
women. The transaction was
one of the top-performing
IPOs of a U.S.-based company
during 2010.
Patricia Miller
Vera Bradley Co-founder
Chris Sciortino
Investment Banker
Michael Ray
Vera Bradley CEO
Equity Capital Markets
Barbara Bradley Baekgaard
Vera Bradley Co-founder
Baird 2010 Annual Report
19
Equity
Capital Markets
Peter Lisnic
Senior Research Analyst
Tristan Gerra
Senior Research Analyst
For the seventh consecutive year,
Baird ranked No. 1 for “most
trusted” research in the 2010
Greenwich Associates’ survey of
small-cap and mid-cap fund managers –
a testament to our commitment
to provide expert, objective advice.
Research
Three Baird analysts received
“Best on the Street” awards
in The Wall Street Journal’s
2010 survey. Our analysts also
garnered 13 awards for
earnings accuracy and stock
picking in the StarMine
awards published by the
Financial Times.
During the past five years, Baird has expanded its research coverage by 40%. Our 112
analysts followed 633 companies at the end of 2010 – representing 37% of the total U.S.
market capitalization – and published more than 12,000 reports during the year. We
continue to deepen our expertise to serve clients better. In late 2010, we added three senior
research analysts and a senior associate to broaden our Energy sector coverage to master
limited partnerships and Exploration and Production companies. This new group also
adds depth to our Clean Technology and Energy and Environmental Policy research and
banking teams.
The durability of our partnership with clients can be seen in third-party rankings. In the
2010 Greenwich Associates’ survey of small-cap and mid-cap fund managers, our Research
and Institutional Equity Sales team ranked No. 1 for the seventh consecutive year for
“greatest knowledge of companies and industries.” We also extended our record of
providing “best direct access” to company management. In 2010, we held five major investor
conferences – including our largest-ever, hallmark Industrial Conference and an inaugural
Clean Technology Conference – at which more than 490 companies presented. Baird also
hosted more than 475 corporate management trips, including 100 to Europe.
20
Baird 2010 Annual Report
Research:
Companies Covered
• Our institutional sales team
based in London has continued
to expand coverage to
institutional investors in
Europe, Australia and Asia,
increasing revenues by 22%
in 2010.
616 633
506 497
06
07
535
08
09
10
Steve Holt
Institutional Investment Officer
16
• In early 2010, Baird was named
the No. 1 firm in the United
States – and had the No. 1
salesperson worldwide – in
First Coverage’s “2009 Top
Performer Rankings.” The
survey recognizes the best
institutional equity salespeople
and sell-side firms worldwide.
Great ideas,
continuous coverage
and quality execution
are driving strong market
share gains in the domestic
and international markets
that Baird serves. Institutional
Equity Services posted its
16th consecutive year of
record revenues in 2010.
Greg Gaynor Institutional Trader
Gregory Greenhouse
Institutional Trader
Institutional Equity Services
Our consistency of focus on the needs of clients and the continuity of experienced
personnel on our desks – even when market volumes are down – have made Baird a trusted
partner for domestic and international institutional investors around the world. For eight
consecutive years, U.S. small-cap and mid-cap fund managers surveyed by Greenwich
Associates have ranked Baird’s Institutional Equity Services team as No. 1 for “overall
sales quality” and “provides best insights that generate alpha” – a strong endorsement of
our belief that great outcomes begin with solid investment ideas geared to clients’ portfolios
and backed by quality trade execution.
During 2010, we experienced strong client adoption of our expanded execution capabilities
available on the Baird trading platform. Our strategic partnership with Fox River
Execution provides institutional clients with a top-performing – and conflict-free – suite
of customizable execution products for algorithmic and electronic trading solutions. Our
desks offer program trading that combines buy-side and sell-side perspectives and an agency
model to fulfill clients’ orders. In addition, we offer CSA/soft dollar execution services.
Our desks traded 3.3 billion shares for institutional clients in 2010, a 75% increase in volume
during the past five years. Baird currently makes a market in more than 2,000 stocks.
Equity Capital Markets
Baird 2010 Annual Report
21
Equity
Capital Markets
Chris McMahon
Head of Global M&A
During 2010, we completed a
record 76 financing transactions,
raising $14.2 billion. We advised
on a record 51 M&A transactions
with a total value of $12.2 billion.
Investment Banking
Baird ranked among
the top 10 most-active
underwriters of initial
public offerings for
U.S.-based companies,
according to Dealogic,
based on priced or
pending transactions
for 2010. We managed
three of our largest
book-run IPOs ever in 2010.
Baird’s Investment Banking group brings an intense rigor and discipline to the needs
of middle-market clients. We provide a full range of advisory, equity financing and
restructuring services through an integrated, cross-border team based in the United States,
Europe and Asia. We have deep expertise in nearly a dozen major industry verticals, with
dedicated industry bankers supported by top-rated equity research.
Baird made a substantial investment in keeping its Investment Banking team together,
which allowed us to serve clients well during the business downturn of 2008 and 2009.
In fact, since the beginning of 2008, we have added 15 managing directors and directors
and expanded our global footprint to 13 offices. We continued to expand our team during
2010, adding 30 banking professionals, including a well-respected Energy team focused
on Oil and Gas Exploration and Production companies and master limited partnerships.
Throughout the recent downturn, our Investment Banking professionals maintained close
contact with clients to provide advice on their strategic options. The group’s increased
interaction with U.S. and European middle-market financial sponsor firms led to a
substantial increase in transaction volume. As markets improved in 2010, our long-term
corporate and financial sponsor relationships helped drive strong gains in market share.
That led to a record year for the number of financing transactions and initial public
offerings we managed or co-managed and M&A transactions on which we advised.
22
Baird 2010 Annual Report
• In late 2010, Baird served as
co-manager for the $147 million
initial public offering of
American Depositary Shares
for Xueda Education Group,
which came to Baird for the
quality of our research
coverage of the sector. It was
our first underwriting for a
China-based company.
Maria Watts
Investment Banker
245
More robust
markets and strong client
relationships helped drive
a dramatic increase in the
value of M&A advisory
assignments during 2010.
Baird’s average transaction
size was $245 million, a
three-fold increase over
the prior year.
Chris Coetzee
Investment Banker
• Nearly a third of all Baird
M&A transactions involved
an international component
over the past five years. We
have completed transactions
with companies based in 21
countries during that period.
Trisha Hansen
Investment Banker
The global capabilities of Baird’s Investment Banking teams – and our commitment to
provide expert, objective advice – represent a strong value proposition for middle-market
banking clients. So does our experience.
We have advised on 365 M&A transactions over the past 10 years, with a total value of
more than $50 billion. That experience has enabled us to forge strong relationships with
major financial and strategic buyers around the world and accrue a deep understanding of
the specific requirements of a mid-market transaction. Over the past five years, 60% of our
advisory transactions have involved a financial sponsor, while half have involved a public
company. For equity financing clients, we provide effective syndication and excellent
distribution backed by Baird’s commitment to quality equity research. As a result, we have
lead-managed or co-managed more than 370 financing transactions over the past decade,
raising $86 billion for clients.
Investment Banking has approximately 175 professionals operating through dedicated sector
teams in the United States, London, Frankfurt and Shanghai. More importantly, as a fully
integrated team, we are able to leverage deep, sector-specific strengths and the ongoing
involvement of senior bankers to provide seamless execution for middle-market clients.
Equity Capital Markets
Baird 2010 Annual Report
23
Baird Private Equity uses deep sector knowledge, an
experienced investment team and extensive global
resources to drive growth in smaller, high-potential
companies in the United States, Europe and Asia.
That’s the basis of our consistent performance.
Dennis Hall
Portfolio Director
Baird Capital Partners Europe
24
24
Baird 2009
2010 Annual Report
Baird 2009 Annual Report
David Fraser
Operating Partner
Baird Capital Partners Europe
James Benfield
Director
Baird Capital Partners Europe
Private
Equity
Capturing the potential of the lower middle market
New economic realities demand a focused, proactive strategy for success. For Baird Private
Equity, that means a focus on lower middle-market companies aligned with a deep
understanding of the Healthcare, Manufactured Products and Business Services sectors
across the United States, Europe and Asia. It involves an extensive global platform that
enables us to accelerate revenue growth and drive operating efficiencies. And it means
proven discipline, not only in how we invest, but in how we structure transactions, align
interests and manage for the long term.
For the third consecutive year, Baird Capital Partners – one of four fund families run
by Baird Private Equity – was named one of the top “Consistent Performers” by Private
Equity Intelligence Ltd. In its 2010 survey, Baird Capital Partners ranked No. 7 of the
more than 570 international funds analyzed, making it the U.S. leader among all lower
middle-market funds.
The resumption of global economic growth in 2010 led to significant improvements in
performance across our business. Revenues for Baird Private Equity nearly doubled to
$29.6 million. It was also a much more active year for both new investments and exits.
Across all funds, we invested a total of $82.0 million in six new investments and in add-on
acquisitions, and we realized total proceeds of $44.6 million on the exit of six investments.
Paddock Holdings, a
portfolio company of
Baird Capital Partners
Europe, employed Baird
Asia resources extensively
to reduce manufacturing
costs and develop its first
sales into Asia. Initiatives
like these drove a 2.7×
gross return on investment.
Martyn Ngo
General Manager
Baird Asia
Derek Ooi
Deputy General Manager
Baird Asia
Private Equity
Janet Ni
Deputy General Manager
Baird Asia
Baird 2010 Annual Report
25
Private
Equity
Tom Costello
Vice President
Baird Capital Partners
Gordon Liao
Vice President
Baird Capital Partners
Aaron Lillybridge
Principal
Baird Capital Partners
Baird Private Equity’s global team
includes 29 investment and 32
operating professionals, all of
whom share a deep commitment
to superior execution. The average
tenure of our investment
professionals is nearly 10 years.
A global platform for growth
The Baird Asia team has a
rich mix of industry expertise,
technical knowledge and
project management
experience. It has a proven
track record of delivering
value for Baird Private Equity
portfolio companies.
Baird Private Equity has developed a global investment platform that is among the most
extensive in the lower middle market. Our experienced investment professionals operate
in four discrete teams from offices in Chicago, London and Shanghai. We complement
the skill set of our portfolio companies’ entrepreneurial management teams with talented
senior executives who have extensive industry experience and operating expertise. Our
Portfolio Management Program supports our investment teams and operating companies
by implementing portfolio-wide programs such as global sourcing, supplier/vendor
management, working capital reduction and acquisition integration. We also leverage
Baird’s broad network of global contacts to provide our management teams access to
industry relationships, management talent and strategic buyers and sellers in the United
States, Europe and Asia.
Our private equity platform is ideally positioned to take advantage of the increasing
role of emerging markets in the global economy. With 15 professionals in Beijing,
Hong Kong, Shanghai and Bangalore, India, we have one of the largest operating teams
in Asia supporting a lower middle-market investment group. Baird Asia works extensively
with our portfolio companies, leveraging its on-the-ground presence to develop and
implement strategies such as creating sourcing relationships, building supply chains,
establishing Asian operations and selling in Asia.
26
Baird 2010 Annual Report
• Private Equity’s sectorfocused advisory boards,
which provide strategic and
operating advice to our
portfolio companies in the
United States, United Kingdom
and Asia, include approximately
40 current and former senior
executives of leading
manufacturing, healthcare and
business services companies.
Jim Pavlik
Benedict Rocchio
PartnerPartner
Baird Venture Partners Baird Venture Partners
244
Since Baird
Private Equity’s founding in
the 1980s, our partnerships
have invested in 244 portfolio
companies. At the end of
2010, the Funds held
investments in 47 companies.
Hock Goh
Operating Partner
Baird Capital Partners Asia
• Cumulative capital raised
and managed by Baird Private
Equity totaled $2.7 billion at
the end of 2010. During the
year, Baird Capital Partners
Asia closed fundraising on its
first fund.
Brett Tucker
Partner
Baird Capital Partners Asia
Huaming Gu
Partner
Baird Capital Partners Asia
Building value for companies and investors
Baird Private Equity makes venture capital, growth equity and buyout investments
through a series of limited partnerships. Each of our partnerships is supported by a
strong investment team with complementary experience and skill sets and a powerful
platform of resources to help execute our investment strategies. During 2010, we examined
approximately 1,700 potential acquisitions for new or add-on investment in our funds.
United States. baird capital partners makes buyout investments in lower middlemarket companies in the Business Services, Healthcare and Manufactured Products sectors.
baird venture partners invests in early-stage and expansion-stage U.S. companies in
the Business Services and Life Sciences sectors.
Europe. baird capital partners europe makes buyout investments in lower middlemarket companies in the Business Services, Healthcare and Manufactured Products sectors
in the United Kingdom.
Asia. baird capital partners asia provides growth equity capital to smaller, highpotential companies in China or to those with substantial operations and growth
opportunities in China.
Private Equity
Baird 2010 Annual Report
27
Our Fixed Income Capital Markets teams deliver
investment expertise, financing solutions and
quality execution, year after year. It’s a partnership
that our clients have come to value in all types
of markets.
Jordan Chirico
Asset-Backed Securities Trader
28
28
Baird 2009
2010 Annual Report
Baird 2009 Annual Report
Ariel Dorfman
Mortgage Trader
Alex Ketner
Fixed Income Institutional Sales
Fixed Income
Capital Markets
Committed to growing relationships
Over the past five years, Baird’s Fixed Income Capital Markets group has emerged as a
national powerhouse, while many competitors were contracting. As we expanded account
coverage, analytical skills and product offerings, Fixed Income Sales and Trading has
grown to 25 offices and 127 professionals. This growth has been augmented by additional
capital in the business to ensure a consistent source of liquidity to meet clients’ needs.
Over the same period, Public Finance expanded beyond its Midwestern base to 11 offices
nationally and a team of 61 professionals. Baird’s 30 bankers have deepened their skills
in advising on larger, more complex issues facing their clients and embraced new types of
financings. Our commitment to long-term relationships and quality execution has enabled
Public Finance to move steadily up the national ranks of municipal underwriters, ranking
as the No. 1 lead manager of issues of $50 million or less in 2010, based on both number
and par value of the issues, according to Thomson Reuters.
This combination of knowledgeable professionals and continuous commitment to fixed
income markets has enhanced our national presence and ability to provide innovative
solutions to clients. As trading and credit markets normalized in 2010, Sales and Trading
posted its second-best year of results, while Public Finance set a new high-water mark for
both revenues and number of transactions.
Our Institutional Sales and
Trading team has grown 56%
in the past five years. It is
supported by our Portfolio
Strategies and Analytics
group, which provides
comprehensive portfolio
analysis and risk profiles for
institutional clients.
Tommy Wammack
Portfolio Strategy & Analytics Manager
Sang Woo Park
Fixed Income Portfolio Analyst
Fixed Income Capital Markets
Kirill Krylov
Portfolio Products & Integration Group Manager
Baird 2010 Annual Report
29
Fixed Income
Capital Markets
Brian Kelso
Public Finance Banker
Yoon-Sook Moon
Financial Analyst
Brian Colon
Public Finance Banker
Baird ranked as the No. 1
municipal bond underwriter in
the nation in 2010, based on the
number of competitive and
negotiated issues, according to
Thomson Reuters. We also ranked
among the top 10 underwriters of
issues of $100 million or less, based
on the par value of these issues.
Fixed Income Sales and Trading
233
Baird fixed
income desks traded
$233 billion in face value
of taxable and tax-exempt
bonds for institutional and
individual clients in 2010.
The substantial investment we have made in recent years to build our trading desks,
analytics group, institutional sales team and national network of offices continues to drive
impressive results in Fixed Income Sales and Trading. While many competitors downsized
in 2008 and 2009, we increased our commitment to fixed income markets. More than
simply providing liquidity for transactions, however, we used our expanded expertise to
deepen our coverage of accounts. Our professionals stayed focused on growing relationships
through quality ideas and took a long-term approach to understanding and meeting clients’
objectives. This commitment to the fixed income markets has built a strong bond of trust
among Baird and our clients and syndicate partners – a trust we work hard every day to earn.
Today, Baird has 77 institutional sales professionals serving clients across the country and
26 traders on our institutional trading desks. These sales and trading professionals have an
average of 15 years of experience. This includes a senior team of traders and underwriters
who have built Baird into a strong national presence in negotiated and competitively bid
syndicates for municipal underwritings.
30
Baird 2010 Annual Report
• Fixed Income Sales and
Trading has added 11 locations
across the United States since
2006, bringing the total to
25 offices and 127 highly
skilled sales, trading and
analytics professionals.
Holly Powell
Administrative Lead
Brian Lefler
Public Finance Banker
• Baird has an experienced
team of 11 dedicated traders
who work closely with
Private Wealth Management
Financial Advisors to provide
analysis and execution on
fixed income securities for
individual investors.
Michael DiPerna
Public Finance Banker
Public Finance
In 2010, Baird served as
the advisor, underwriter
or placement agent on
municipal bond transactions
valued at more than
$36 billion, 40% higher than
our previous firm record.
The cumulative value of
these transactions over
the past five years exceeds
$110 billion.
In the past five years, Baird has dramatically enhanced its Public Finance capabilities.
We doubled our banking team to more than 60 bankers and analysts, adding experienced
professionals in new areas of financing and new markets. During 2010, we focused on
collaborating across offices to advise on complex financing challenges facing our clients,
which include public, private and non-profit entities. With new types of financings that
can be structured with taxable, tax-exempt and tax-credit components, clients look to Baird
for expert advice on how to structure offerings to best meet their individual funding needs.
In both 2009 and 2010, for example, Baird was the No. 1 underwriter nationwide of
stimulus bonds authorized by the American Recovery and Reinvestment Act, based on
the number of transactions, according to Thomson Reuters. This included an $80 million
underwriting for the Michigan Strategic Fund, which used Recovery Zone Facility Bonds
that enabled The Kroger Co., the nation’s largest traditional grocery retailer, to build and
rehabilitate stores in Detroit’s tri-county metropolitan area. The project will create more
than 250 jobs.
Providing value-added advice remains the core of our Public Finance business. Our clients
look to Baird not only for financing new projects but also for creative solutions to deal
proactively with new fiscal realities.
Fixed Income Capital Markets
Baird 2010 Annual Report
31
The Baird difference in Asset Management rests
on a proven combination – deep experience,
disciplined strategy and consistent performance
against benchmarks, backed by unparalleled service
and direct access to senior portfolio managers.
Meg Dean
Portfolio Manager
Baird Advisors
32
32
Baird 2009
2010 Annual Report
Baird 2009 Annual Report
Charlie Groeschell
Senior Portfolio Manager
Baird Advisors
Asset
Management
Baird Advisors
Baird Advisors has built a very consistent and successful approach to fixed income portfolio
management. The team augments its investment approach with direct access to senior
portfolio managers and quality service that is among the most respected in the industry.
This compelling combination of performance and service has resulted not only in a steady
increase in new clients but also client relationships that span more than 14 years on average.
Assets under management totaled $15.2 billion at the end of 2010.
Baird Advisors has a proven investment approach. Beginning with a duration-neutral
strategy, we focus on adding value over benchmark returns through yield-curve positioning,
sector allocation, security selection and competitive execution. This disciplined – and
risk-controlled – approach has generated consistent, competitive performance over complete
market cycles.
The five Baird Bond Funds are managed with the same discipline, strategy and service
commitment that institutional clients’ portfolios receive, and at very competitive costs. The
funds’ strong value proposition and solid performance continued to attract robust inflows
of assets from both individual and institutional investors. Assets under management in the
bond funds grew 32% in 2010, contributing to a 142% increase over the past two years.
The Baird Advisors team and three of the funds celebrated their 10th anniversaries in 2010.
Baird Advisors’ senior
portfolio managers have
more than 28 years of
experience working together.
Across the entire team, our
portfolio managers average
more than 20 years of
industry experience that
includes numerous fullmarket cycles.
Warren Pierson
Senior Portfolio Manager
Baird Advisors
Sharon deGuzman
Portfolio Manager
Baird Advisors
Asset Management
Baird 2010 Annual Report
33
Asset
Management
Heidi Schneider
Controller & Operations Officer
Asset Management
Jennifer Trowbridge
Portfolio Manager
Baird Public Investment Advisors
Ryan Nelson
Portfolio Manager
Baird Public Investment Advisors
As public officials are asked to
do more with less, demand for
Baird Public Investment Advisors’
services has grown rapidly. Assets
under management have grown
to more than $1 billion since the
group was formed three years ago.
Asset Management initiatives
The BPIA team has extensive
experience in managing
investment portfolios for
public entities. Our portfolio
managers work directly
with client administrative
teams to develop a portfolio
of investments that seeks
to maximize interest earnings
while maintaining safety
and liquidity.
Baird Public Investment Advisors is an innovative and highly successful joint venture
launched in 2007 by Baird Advisors and Baird’s Public Finance banking team. With
municipalities and school districts experiencing ongoing revenue challenges, prudent
investment of public funds is essential for their operations. Baird Public Investment
Advisors provides rigorous analysis of investment policy, risk tolerance, and historical
and expected cash flows. We also conduct investment reviews and provide comprehensive
investment reporting and analysis. Since our sole focus is managing funds for public
entities, we have a thorough knowledge of state investment statutes and client-specific
investment parameters. That enables us to customize investment and fund allocation
strategies for individual circumstances.
RiverFront Investment Group, an employee-owned, independent investment advisor,
was formed in 2008 with Baird as a minority investor. RiverFront offers numerous asset
allocation and exchange-traded fund portfolios designed to address an array of needs for
investment type and risk tolerance. These portfolios are available in a combination of mutual
funds and separately managed accounts. RiverFront also provides indexes for two exchangetraded funds. The performance and flexibility of the RiverFront family of funds have proven
to be very attractive to investors and their advisors. The group has experienced substantial
growth in assets since inception, ending 2010 with $2.5 billion in assets under management.
34
Baird 2010 Annual Report
• Assets under management by
Baird Asset Management –
Baird Advisors, Baird
Investment Management and
Baird Public Investment
Advisors – totaled $16.9 billion
at the end of 2010.
Chuck Severson
Senior Portfolio Manager
Baird Investment Management
19
Our seven portfolio
managers and research
analysts have on average
more than 19 years of
industry experience.
• Baird Investment Management’s
MidCap Fund marked its 10th
anniversary in 2010. The fund’s
experienced management team
continues to build on its track
record, seeking high-quality
companies with above-marketaverage growth and profitability.
Randy McLaughlin
Portfolio Manager
Baird Investment Management
Baird Investment Management
Baird Investment Management is an experienced manager focusing on quality mid-cap
and large-cap growth equities for mutual funds and separately managed accounts, as
well as specialized portfolios for high-net-worth individuals. We pursue investment in
the highest-quality businesses that can increase in strength and value. Our analysts and
portfolio managers conduct detailed, bottom-up research to find companies with positive
fundamentals, relevant industry trends and management quality.
Risk management is also a key component of our process. Our proprietary Tier Board
combines core fundamental and quantitative factors to assess portfolio allocations. This
tool supports team dialogue to better position our portfolios to capture success, while
mitigating potential downside. Our approach has created a long-term record of delivering
consistent, competitive, risk-adjusted returns for clients.
In addition to investment performance, we create value for our clients by providing
access to our senior portfolio managers – a practice that has enabled us to build long-term
partnerships with institutions, corporations and high-net-worth individuals who entrust
their assets to us. Continuing strength in equity markets and growth with core clients
increased Baird Investment Management’s assets under management to $552 million at
the end of 2010.
Asset Management
Baird 2010 Annual Report
35
Our
Community
Communities are
important
beneficiaries of
Baird expertise.
Many of our associates
have leadership
roles in civic and
charitable causes,
bringing considerable
experience and
energy to helping
these organizations
achieve their goals.
36
Baird 2010 Annual Report
Helping our
hometowns
United for
United Way
Organizing to
lend a hand
We encourage Baird offices
to support their
communities by forming
relationships that help
advance the objectives of
local charities and not-forprofit organizations. Last
year, Bill Sewell, our
Raleigh Branch Office
Manager, rappelled from an
office tower to raise money
for Special Olympics – a
novel example of support for
a worthy cause.
In the Milwaukee area,
associate participation in the
2010 United Way campaign
topped 95% for the eighth
consecutive year, and we
raised more than $1 million
for the first time. Chicago
donations grew over 20%
and Cincinnati achieved
100% participation for the
third straight year. Baird
managers in Milwaukee
served lunch to fellow
associates, as thanks for
their generous contributions.
Each month, members of
our African American
Associate Resource Group
help out at area charities,
including Hope House
of Milwaukee. Our
Community Involvement
Associate Resource Group
inaugurated Baird Gives
Back in 2009 to encourage
collaborative volunteering.
We expanded the initiative
to nine cities in 2010 and are
planning a week of events
across the country in 2011.
The caring, service and teamwork that Baird associates share at
work also define our commitment to the communities where we
live and work. That’s a commitment we encourage through our
Baird Cares program, which provides paid time off for volunteer
activities. Through the Baird Foundation, we support associates’
charitable efforts with gifts in the areas of health, education, the
arts and other quality-of-life causes such as diversity.
Judy Villegas
Operations Department
Regina Thompson
Operations Department
Patrice Malone
Investment Banking
Baird 2010 Annual Report
37
Financial
Information
Baird Holding Company: Financial Highlights
Baird Holding Company is the ultimate parent company of U.S.-based Robert W. Baird &
Co. and London-based Robert W. Baird Group Ltd. Our primary businesses are wealth
management, capital markets, asset management and private equity. Baird is fully independent
and employee-owned.
Operating
Results
Per Share
Data
Financial
Position
Capital
Net Revenues
(in millions)
Book Value
(fully diluted)
Total Assets
(in thousands)
Total Capital
(in thousands)
Associates
Financial
Advisors
Private Wealth
Offices
2010
$
847
$31.51
$2,414,331
$741,175
2,629
680
66
2009
$
718
$28.60
$
$
702,713
2,458
660
62
2008
$680
$26.89
$1,140,003
$699,444
2,407
600
58
2007
$
$24.84
$
1,752,307
$613,806
2,282
592
58
2006
$624
$
$
1,681,385
$
556,335
2,191
591
60
2005
$
588
$18.44
$1,311,486
$
554,047
2,234
600
61
2004
$
566
$16.10
$1,331,613
$
475,106
2,309
632
64
2003
$
502
$14.09
$
1,129,875
$
482,594
2,324
664
68
2002
$484
$
12.65
$
857,602
$
446,707
2,402
713
69
2001
$494
$11.94
$
1,204,285
$
418,588
2,574
824
79
729
21.17
2,158,512
Financial results do not reflect the consolidation of
certain private equity partnerships. Revenues have
been restated for comparability as the result of three
transactions: the 2002 transfer of the Northwestern
Mutual Investment Program to Northwestern Mutual,
affecting revenues for 2001; the 2005 sale of our
UK equity capital markets business that focused on
small-cap companies, affecting 2001-2005 revenues;
and the completion of a correspondent clearing
services contract with Northwestern Mutual Investment
Services in 2006, affecting 2002-2006 revenues. Per
share amounts have been restated to give effect for the
NET REVENUES
(millions)
10
09
08
07
06
38
Other Data
Baird 2010 Annual Report
$847
$718
$680
$729
$624
two-for-one stock split, effective February 19, 2008.
Total Capital includes stockholders’ equity, consolidated
noncontrolling interest in Baird Financial Corporation
and Robert W. Baird & Co. (RWB) from associate
ownership, consolidated subordinated debt and other
consolidated debt having a maturity of at least one
year. The regulatory net capital of RWB, the principal
operating subsidiary of Baird Holding Company, was
$279 million at the end of 2010, and RWB’s regulatory
excess net capital was $274 million at the end of 2010,
which is more than 50 times the requirement.
OPERATING INCOME
(millions)
TOTAL CAPITAL
(millions)
10
09
08
07
06
10
09
08
07
06
$84
$62
$71
$105
$94
$741
$703
$699
$614
$556
Baird Recommended Portfolio – Growth of $1,000 Invested
An investment of $1,000 in the Baird Recommended Portfolio at inception on December 31,
1974, would have grown to $74,033 at the end of 2010, compared with $44,333 for the
NASDAQ Composite Index, $18,788 for the Dow Jones Industrial Average and $18,345
for the Standard & Poor’s 500 Stock Index (S&P 500). In the 36 years since inception, the
Baird Recommended Portfolio has achieved a 12.7% annualized return vs. 11.1% for
NASDAQ, 8.5% for the Dow Jones index and 8.4% for the S&P 500.
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$1,000
74
80
84
Baird Recommended Portfolio
88
NASDAQ
92
Dow Jones
All performance data for research recommendations
have been calculated without commissions or
dividends. Details will be provided upon request.
There is no guarantee that future performance of
Baird Research recommendations will meet or
exceed past performance. Returns to clients will vary,
depending on securities purchased or sold. Equity
securities carry risks that should be considered prior
to investing.
Baird Recommended Portfolio: Since inception on
December 31, 1974, to December 31, 2010, 1,300
issues were recommended in the Recommended
Portfolio; 760 issues increased in value, while 531
declined and nine were unchanged. Performance
BOOK VALUE
(per share)
10
09
08
07
06
96
00
04
10
S&P 500
results assume each security was purchased when
recommended and sold when removed from the list.
The Standard & Poor’s 500 Stock Index, Dow Jones
Industrial Average and NASDAQ Composite Index are
unmanaged common stock indices used to measure
and report value changes in the various stocks that
comprise those indices. The companies included in
the Baird Recommended Portfolio do not necessarily
correlate to the companies comprising the various
indices described above, either by industry sector,
capitalization or other weightings.
ASSOCIATES
$31.51
$28.60
$26.89
$24.84
$21.17
10
09
08
07
06
2,629
2,458
2,407
2,282
2,191
Baird 2010 Annual Report
39
Managing
Directors
Leadership
With an average of more than 18 years each at Baird, the 14 members
of our Executive Committee represent an extraordinary continuity of
leadership. Together, they have helped guide Baird through numerous
business cycles as well as its transformation into an independent, associateowned firm. Each is a passionate advocate for the core values on which
Baird has built its reputation.
Managing Directors
Baird Advisors
Mary Ellen Stanek
Director
Ghansham Panjabi
Christopher Raymond
David E. Tarantino
Gary A. Elfe
Charles B. Groeschell
Warren D. Pierson
Jay E. Schwister
Daniel A. Tranchita
Fixed Income Capital Markets
Patrick S. Lawton
Director
Baird Investment Management
Reik W. Read
Equity Research
Robert J. Venable
Director
David L. AuBuchon
Peter S. Benedict
Bruce A. Bittles
Eric W. Coldwell
Richard C. Eastman
David A. George
Tristan Gerra
J. Michael Horwitz, Jr.
Craig R. Kennison
Quintin J. Lai
Jon A. Langenfeld
David Loeb
Christopher R. Lucas
Mark S. Marcon
Lawrence H. Neibor
40
Baird 2010 Annual Report
Fixed Income Sales &
Trading
William S. Andersen
Alexander B. Buchler
Robert P. DeBastiani
James P. Healy
Drew A. Kanyer
Kirill A. Krylov
Charles D. Massaro
Michael J. Redmond
John J. Sangervasi
Thomas E. Swift
Tommy T. Wammack
Glenn P. Willett
Institutional Equity
Services
William W. Mahler
Director
James H. Herrick
Director, Equity Trading
Anthony Bond
John F. Byrne
Steven M. Dadmun
Richard W. Dunn
Joseph C. Gerlach
Clare Hasler
Steve Holt
Terence P. Hoy
John T. Kennedy III
Barry L. Kneisel
Ross J. Kopfer
Todd C. Lombra
Gregory J. Lutz
John S. McGregor
John S. McLandsborough
Thomas S. O’Connor
Daniel J. Renouard
John R. Roesner, Jr.
Brian C. Scheller
Todd A. Simons
Patrick H. Spencer
Daniel J. Steffes
Brian C. Timmis
Investment Banking
Steven G. Booth
Director
Joachim Beickler
Leslie Cheek IV
C. Christopher Coetzee
Joel A. Cohen
Richard P. Conklin
Brian S. Doyal
John A. Fordham
Curtis H. Goot
Stephen B. Guy
Jonathan J. Harrison
Gregory J. Ingram
Peter S. Kies
Thomas W. Lacy
Executive Management
Executive Committee
Paul E. Purcell
Steven G. Booth
Chairman, President & Chief
Executive Officer
C.H. Randolph Lyon
Richard F. Waid
Vice Chairmen
Director, Investment Banking
Paul J. Carbone
Director, Baird Private Equity
Leslie H. Dixon
William W. Mahler
Mary Ellen Stanek
Paul E. Purcell
Robert J. Venable
Co-Head, Global Equities
Chief Human Capital Officer
Glen F. Hackmann
Mark A. Roble
Patrick S. Lawton
Michael J. Schroeder
C. Andrew Brickman
Andrew Ferguson
Huaming Gu
Simon W. Havers
Randall A. Mehl
Robert D. Ospalik
Gordon Pan
David P. Pelisek
Michael J. O. Proudlock
Peter K. Shagory
Scott G. Skie
Brett H. Tucker
Laura H. Gough
David A. Hackworthy
Mark L. Hawthorne
Stephen D. Hoch
Leah H. Hoffman
A. Hale Hooper III
Lisa A. Keverian-Press
Michael G. Klein
Peter Klode
Mark D. Laufman
John B. Lewenauer
Marcus C. Low, Jr.
John J. Luy
John M. Mabee
Kenneth J. Meyers
John Mockovciak III
Timothy M. Moore
J. Bary Morgan
William B. Nicholson
Michael H. Perrini
Neil J. Pinsky
Gary S. Pinsly
Patrick W. Powell
Robert C. Ramsey
Kurt A. Rivard
Sheldon L. Rosenberg
Thomas F. Schmid
James Schultz
Paul G. Sittenfeld
Gregory S. Smith
Steven W. Stahlberg
Paul Stscherban
Steven C. Tews
Donald D. Wallace
Director, Fixed Income
Capital Markets
Private Equity
Paul J. Carbone
Director
Russell P. Schwei
Vice Chairman
Chairman, President & Chief
Executive Officer
General Counsel
Thomas E. Lange
John R. Lanza
W. Andrew Martin
Brian P. McDonagh
Christopher C. McMahon
Mark C. Micklem
John M. Moriarty
T. Frank Murphy
Nicholas Pavlidis
Joseph A. Pellegrini
Gary R. Placek
Paul T. Rogalski
Renee C. Ryan
Breton A. Schoch
Christopher J. Sciortino
Nicholas R. Sealy
Jeffrey M. Seaman
David M. Silver
Anthony Siu
Andrew K. Snow
Franklin M. Stokes
William O. Suddath, Jr.
Rodney L. Tyson
Gary D. Vollen
Peter G. Watson
William G. Welnhofer
David M. Wierman
Michael Wolff
C.H. Randolph Lyon
Private Wealth Management
Michael J. Schroeder
President, PWM
Randy R. Beeman
Susan C. Bellehumeur
Timothy P. Byrne
Allen J. Campbell
Larry J. Carter
Gregory S. Collins
Douglas P. Condon
Anthony E. Consiglio
Matthew S. Curley
Erik C. Dahlberg
Philip C. Dallman
Christopher G. Didier
David S. Epstein
Gerald M. Falci
Scott T. Falk
Ronald E. Farley
Lawrence A. Gellman
Gerald L. Gerndt
Matthew A. Glatz
Director, Risk Management
Chief Operations Officer
Director, Asset Management
Co-Head, Global Equities
Dominick P. Zarcone
Chief Financial Officer
President, Private Wealth
Management
Michael J. Welch
J. Eric Wightman
Public Finance
Keith A. Kolb
Director
Todd L. Barnes
Leslie L. Bear
James R. Blandford
Brian H. Colon
David J. Conley
Michael R. DiPerna
Thomas J. Gavin
Ann E. Gifford
William M. Hepworth
Richard D. Layton
Timothy P. Long
John A. Mehan
David W. Noack
Wayne L. Workman
Administration &
Corporate Resources
James D. Bell
Leslie H. Dixon
Jeffry F. Freiburger
Timothy J. Fuhr
Glen F. Hackmann
Lori A. Lorenz
Craig D. Peotter
Mark A. Roble
John D. Rumpf
Paul L. Schultz
Russell P. Schwei
Charles M. Weber
Dominick P. Zarcone
Baird 2010 Annual Report
41
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