Raymond "Chip" Mason first met Joseph A. Sullivan over dinner at a Chicago restaurant, where the founder of Legg Mason Inc. interviewed the young bond trading manager for a job with the Baltimore company.
A lot of the conversation, Mason recalled, was about whether Sullivan and his family were prepared to uproot themselves and move to the Charm City. Mason had seen such moves not work out before.
"He admitted it would not be simple," said Mason, who retired after nearly 40 years at Legg's helm and now spends much of his time in Naples, Fla. But "he thought he could do more with us than anyone else."
He might be right. Nearly 20 years later, Sullivan last week became the new CEO of Legg Mason, one of world's largest asset management firms. Analysts and industry observers consider him a local and unlikely to break up the Baltimore-based money manager to the detriment of the city. Colleagues and friends describe Sullivan as a good listener who can spot and nurture talent, and a natural leader who takes decisive action.
Those traits will be needed to steer Legg, which has struggled for several years to revive its stock price and reverse the flow of money out of its funds.
Sullivan was born 55 years ago in Minnesota, the oldest of four children of a food broker and stay-at-home mom. He grew up mostly in suburban Minneapolis, where he played hockey and baseball. He attended St. Cloud State University, where he met his future wife, Suzie, during their freshman year. They married after college in 1980.
In college, Sullivan sold men's suits at a department store. One Sunday, the customer he was fitting happened to be the economics department chairman at St. John's University, a small, all-male Catholic school in Minnesota. The academic asked Sullivan, an economics major entering his senior year, why he hadn't chosen St. John's.
Sullivan told him it wasn't a choice but a financial reality — he didn't have the money. The man invited him to bring his transcripts to campus the next day, and St. John's offered him the financial aid to finish his studies at the private college, where he graduated in 1979.
"It's one of those things that you realize that almost anything is possible," Sullivan said during an interview at Legg's offices on Friday. "There are different ways to make things happen. There are people who want to help you make things happen."
Sullivan's stint in menswear also came in handy during an internship with Minneapolis brokerage Piper Jaffray his last year of school.
"I knew how to dress. They all thought I was much older than I actually was. They thought I was a broker that had been with a firm a long time," he said.
When Piper Jaffray later looked to hire a bond trader, they turned to the young man who regularly wore a suit and tie. Sullivan remained with Piper until 1986, leaving to join Dain Bosworth, where he managed various bond trading desks in Minneapolis.
By the early 1990s, the Sullivans had four young children — three sons and a daughter. Sullivan said he felt he had grown a bit "stale" at his job and wanted to make a change before the children got much older.
Then he met Mason for dinner. Legg was looking for someone to help build up its bond business and Sullivan was ready for something new to happen. He joined Legg in 1994, initially to oversee its taxable bond business and later running the fixed-income department.
"He was the farthest thing from being sleepy and passive, which was what fixed income was prior," said Richard Cripps, chief investment officer of EquityCompass Strategies in Baltimore who worked in Legg's research department in the 1990s. "He came in to invigorate and lead, and he brought new people in. It was a significant change."
Bill Fusting worked with Sullivan for nearly a decade before retiring.
"Joe is a great listener," Fusting said. "He doesn't mind probing and getting to the bottom of things."
Fusting recalled that Mason entrusted Sullivan with a $100 million line of credit to acquire bonds for trading and selling — an unusually high sum given Legg's size at that time.
"I think I kept him from sleeping for a while," Sullivan said of Mason.
Not that Mason didn't keep an eye on the bond inventory. Mason said he checked the department's position daily, making sure the company didn't have too much at risk with its bonds. A word from the Federal Reserve chairman, Mason explained, could cut the value of bonds by millions of dollars in minutes.
But Mason said Sullivan didn't cause too many worries.
"He thought the way I did," Mason said. "He tried to keep the risk factor down."
Under Sullivan's hand, Legg's bond department tripled its revenues by building up the retail and institutional business.
For Sullivan's family, a priority after arriving in Baltimore was finding a place for the boys to play ice hockey. Passionate about the sport, Sullivan has served as head of Baltimore Youth Hockey and spent years coaching youngsters, including a stint at Loyola Blakefield high school, where his sons went.
"He was a hard-nosed coach, but that's what the kids responded to," said Cripps, whose son played under Sullivan. "He would get so involved in the game, his face would actually be red."
Tim Sullivan, his oldest child, said his father has a knack for spotting potential in players and putting them in positions to succeed. But Coach Sullivan, Cripps said, also demanded the best of his players, not hesitating to let them know if he thought they could do better.
"People are generally capable of a lot more than they recognize or even believe," Sullivan said.
That's as true in business as in hockey, he added.
Sullivan's career with Legg took a detour in 2005. The company had agreed to swap its brokerage unit for Citigroup Inc.'s asset management business in a $3.7 billion deal that turned Legg into the world's fifth-largest money manager.
As part of that deal, Citi acquired Legg Mason's capital markets unit, which included Sullivan's department. Citi later sold it to St. Louis-based Stifel Financial Corp., which kept the operation in Baltimore.
"It was traumatic because, candidly, people loved working for Legg Mason," Sullivan said. "While we understood the logic and rationale … there was enormous disappointment."
But three years later, Chip Mason called out of the blue and invited Sullivan to lunch. Mason had recently stepped down as CEO from Legg, replaced by Mark R. Fetting. Mason — with Fetting's approval — asked Sullivan to join the new CEO's executive team at Legg.
Sullivan wasn't looking to leave Stifel, but, after a career on the bond side of the business, Fetting offered him an opportunity to do something different.
He returned to Legg in 2008 as a senior executive vice president and chief administrative officer, and later headed Legg's global distribution, which works with brokers and financial advisers to market and sell Legg's funds to individuals.
That was Sullivan's job until October, when Fetting, unable to turn Legg's fortunes around, abruptly resigned. Sullivan was tapped to be interim CEO while Legg searched for Fetting's replacement.
Last week, the board made Sullivan's temp job permanent.
Sullivan has different strengths than Fetting, Mason said. Fetting is very analytical and knows the mutual fund business cold. "Joe's skills with people are very strong," Mason said. "People tend to trust him; they tend to like him."
Those traits, Mason said, will allow him to work will with Legg's affiliates, the semi-autonomous firms that manage its mutual funds.
Sullivan already had earned the support of some key affiliates managers who said they liked his decisiveness, citing Legg's pending acquisition of a European money manager and the introduction of an equity incentive plan at one of its affiliates.
"I grew up in the business that if you waited until you had all the information, the upside of the trade was gone. You have to make a decision without 100 percent of the information," he said. "You have to be comfortable being wrong sometimes."
Joseph A. Sullivan
Family: Wife, Suzie; three sons, Tim, Matt and Andrew; daughter, Katie
Education: Bachelor's degree in economics from St. John's University, 1979.
Employment: Worked at Legg Mason from 1994 to 2005, then joined Stifel, Nicolaus & Co., serving as executive vice president and head of fixed-income capital markets. Rejoined Legg in 2008 as senior executive vice president and chief administrative officer; served as head of global distribution before being named interim CEO in October.
Outside associations: Current trustee and former chair of the Securities Industry Institute; chair of the board of trustees at Loyola Blakefield high school; board director of St. Ignatius Loyola Academy; member of the board of trustees at Catholic Charities of Baltimore.
Interests: Hockey, Ravens, baseball, golf