Legg Mason's new CEO draws lessons from hockey

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.