Monday Business Briefing: Former GLI CEO Joe Reagan under fire in St. Louis over pay

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Welcome to the October 7 Monday Business Briefing.

This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post at 7 a.m.

As we prepare for our Insider’s Meetup this afternoon at Vincenzo’s, we’ll have multiple topics for discussion.

Once again, we’ll predict the front-of-mind business topic today and for a long time to come will be Greater Louisville Inc., our economic-development agency/Chamber of Commerce.

• MBB contributors talked to everyone in town about GLI, or at least it seemed like we did. And two quotes are indelibly seared into our consciousness.

The first was first from a former GLI executive, though it was restated various ways in various conversations: “What does it say about a city when its economic development arm is bankrupt?”

On Fri, Sept. 27, GLI President and CEO Craig Richard cut 10 positions out of 46, or 20 percent of his staff, then instituted a hiring freeze and financial controls.

The other quote was from an insider who said, “This is a town of bystanders. If anyone in any way bucked the establishment by trying to publicly address an obviously broken (GLI), you were ostracized. (Former GLI CEO Joe Reagan) punished you through his relationships with Bill Samuels and that group. That’s how this happened.”

Samuels and a coterie of businessmen, including former Doe-Anderson executive Dave Wilkins, supported Reagan, including supplementing his income.

In dozens of interviews, we heard about excessive spending and other issues that started when Reagan became GLI CEO in 2005, expenditures that are still dragging down GLI finances.

For instance, multiple people with direct knowledge of the deal tell Insider Louisville GLI was negotiating to move to the Landmark Building from its current space in Fenley Real Estate building at 614 W. Main Street. Those sources tell Insider Louisville that then-GLI board member, now chairman of the board, Kerry Stemler stepped in and stopped the move.

That didn’t stop GLI executives from spending hundreds of thousands of dollars on remodeling offices, including new furniture, furniture scheduled to be delivered to a space that is much larger than the organization needs after 10 of 46 GLI employees were laid off, or resigned.

In addition to poor financial stewardship, insiders describe an internal GLI culture where executives focused on consultant-led branding pushes such as the “Idea Capital of the World” campaign, along reliance on consultants including Lance Secretan, who markets himself as “one of the world’s great thinkers.”

Finally, sources questioned what, exactly, Louisville got for all that money and drama.

We’ll have a complete post Tuesday.

When IL was reporting about all the companies that dropped GLI memberships, more than one person in economic development begged us to stop, else Louisville get stuck with Joe Reagan. Which we thought about when we got this story Friday (courtesy of a former GLI executive) from the St. Louis Business Journal, part of the same Charlotte, N.C.-based American City Business Journals chain that owns Business First.

The St. Louis Business Journal is reporting Reagan is now being scrutinized for his unwillingness to disclose his salary as CEO of The St. Louis Regional Chamber, as well as questions about his leadership stemming from media reports here.

From that post:

It’s been more than a year and a half since the St. Louis Regional Chamber hired Joe Reagan to be its president and CEO, and it still won’t say exactly how much money he makes.

Louisville’s main economic development organization, formerly run by Reagan, recently laid off more than 20 percent of its staff, and now some are raising questions about executive compensation at Greater Louisville Inc., as the organization looks to cut costs.

Reagan made $302,111 as CEO of Greater Louisville Inc. in 2011. He also received a supplemental income of more than $100,000 from a group of businessmen led by Bill Samuels, retired president of Maker’s Mark, according to Insider Louisville. Still, that’s less than former St. Louis Regional Chamber (formerly Regional Chamber and Growth Association, RCGA) President and CEO Dick Fleming’s $744,999 compensation the same year.

For a little perspective, Papa John’s International’s founder and CEO John Schnatter was paid $714,000 in 2012 base pay (exclusive of performance bonuses and stock options) for running a multi-national, publicly traded pizza chain with 20,000 employees, dozens of franchisees and $1.3 billion in top-line revenue.

Which inspires us to say, “Maybe we could entice Schnatter to leave his meager pay and run GLI,” which has 36 employees and somewhere south –most likely way south – of $8 million in collected membership fees.

• The Courier-Journal lost yet another long-time staff writer. And again, the poaching party was a property owned by the Toledo, Ohio-based Block Brothers, whose privately held Block Communications media empire owns WDRB in Louisville.

From an internal CJ email from Metro Editor Mike Trautmann announcing the exit of Peter Smith, the paper’s religion reporter:

I regret to announce that Peter Smith has decided to take a position as the religion reporter with the Pittsburgh Post-Gazette.

Peter has been an invaluable staff member and colleague during his tenure with the Courier-Journal, working on important stories such as the priest-abuse cases, fallout for Muslims from 9/11 and, more recently, Kentucky’s uneven handling of child abuse cases. He also filled in adeptly as an occasional Saturday editor, and his weekly Faith & Works column and periodic blogs had a faithful and growing following.

Peter’s last day will be Nov. 1.

So far, Block-held companies have hired away six CJ reporters during the past 16 months: Smith, sports columnists Rick Bozich and Eric Crawford, and general assignment reporters Marcus Green, Chris Otts and Jason Riley. Several other CJ staffers have left for Louisville Public Media, or for jobs outside journalism.

• Company-wide, Courier-Journal parent company Gannett Co. Inc. is dropping conventional reporters for “continuous content reporters” who work out of McDonalds and Starbucks locations, with no desk in the newsroom.

Here’s a summary from an internal ad for continuous content reporters:

This reporter will thrive and deliver on the news of the day, writing and producing compelling content for our specific audiences for online and print. No day is like the one before it, and the successful candidate looks forward to the variety that comes with an unpredictable news cycle. The reporter will be versatile and ready to shift from a police story to a protest to any other news of the day with ease.

This reporter’s smartphone is as important as his or her notebook – it allows him or her to shoot quick, on-scene or look-live video, record interviews, shoot and email photos and push updates via twitter and email.

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Luckett & Farley Architects has been very active lately. Last week, the Louisville-based architect unveiled renderings for the renovation of Waterstep’s new headquarters in Old Louisville during an event at Ivy Tech Community College.

More on the Waterstep plans later.

Luckett & Farley also submitted a very cool contemporary design for the proposed Angel’s Envy distillery on Main St., though Joseph & Joseph got the commission.

Matthew Antonovich, who was briefly atop the Louisville restaurant scene with Mozz and Mozzeria – along with multiple plans that never went anywhere – has resurfaced in California. A peripatetic insider bumped into Antonovich at the chi-chi Hotel Del Coronado resort in San Diego. Said our source, “He’s hoping to get back to Louisville.” Said our restaurant sources, “A return would be ill-advised.” “Gonetonovich,” as IL’s Steve Coomes has dubbed him, has left investors in the lurch from Dallas to Louisville. A year ago, he was the subject of one of IL’s best-read posts after pulling his disappearing act once again. To quote a Dallas food blogger, “This guy is a lunatic.”

• We’ve been trying to work this into MBB for weeks since we got it from The Ethics Reporter, the newsletter of the Kentucky Legislative Ethics Committee.The newsletter gives a great snapshot of lobbying activity, which is increasing.

Lobbying spending in Kentucky continues its upward trend, as businesses, organizations, and their lobbyists spent $4.18 million in the recent four-month reporting period;

Lobbyists have spent over $126,000 on receptions, meals, and events for members of the General Assembly. Recent events gave lobbyists the chance to talk with legislators in Atlanta, Chicago, Mobile, and Philadelphia, as well as the State Fair and Churchill Downs

The top ten spenders in the May 1 to August 31 period were:

Kentucky Chamber of Commerce ($90,184); Altria Client Services ($76,878); Kentucky Hospital Association ($46,881); Coal Operators & Associates ($45,000); Houchens Industries ($44,000); Kentucky Justice Association ($41,134); Buffalo Trace Distillery ($40,000); Hewlett-Packard ($40,000); Century Aluminum of Kentucky ($40,000); and Kentucky Medical Association ($38,056).

The next ten biggest spenders include: National Tobacco Company ($30,000); Jefferson County Public Schools ($26,758); Atmos Energy ($26,000); Churchill Downs ($25,251); KentuckyOne Health ($25,198); LifePoint Hospitals ($25,064); Home Builders Association of Kentucky ($24,913); Bluegrass New Directions ($24,660); Kentucky Cable Telecommunications Association ($24,520); and Coventry Health Care ($24,233).

• While it has slipped off IL’s radar, Kentucky’s Medicaid crisis continues. A legal source tells us that U.S. Senior District Judge Karl Forester has issued more rulings favorable to health care providers in their struggles with Kentucky’s switch 20 months ago to a Medicaid managed care organization system.

In a recent ruling we’re only now getting to amid GLI’s shakeout and the duel between Norton Healthcare and the University of Louisville over Kosair Children’s Hospital, Forester ruled against a Cabinet for Health and Family Services motion to be dismissed from a suit by Appalachian Regional Healthcare.

In a highly entertaining 2012 injunction, Forester ruled that one of those MCOs, Bethesda, Md.-based Coventry Healthcare, had to resume living up to its contract with ARH, and placed the blame squarely on the state for rushing its switch to MCOs from a fees-for-services system.

From our source:

This is an important decision for hospitals and other health care providers as now there is the potential for enforcement of Prompt Pay violations through an action in the federal courts. The Cabinet has not been allowed out of the case. And CMS has been added as a party to this action on claims it failed to follow statutory standards in approving the Medicaid Waiver.

Bottom line – the state tried to take the position that sovereign immunity insulates it and the court disagreed. Forester also found that their contempt  was intentional and noted the Cabinet’s recent history of disregarding court orders.

• Hotel sources are telling us that hotelier Mary Moseley has settled on a number of rooms for the Embassy Suites Hotel planned for the renovated former Stewart’s Dry Goods building at Fourth and Muhammad Ali. Look for the hotel to have 289 rooms.

That would put about 775 rooms within four blocks of Fourth and Muhammad Ali including the Seelbach Hilton, the Brown Hotel and the Hilton Garden Inn under construction at Fourth and Chestnut. Add the Downtown Marriott at Third and Jefferson and Moseley’s Galt House complex on Main Street, and that would total 3,000 hotel rooms in a 1-mile-square section of downtown. So we should finally be approaching a density sufficient to land the largest conventions and corporate meetings.

• Speaking of which, hotel sources tell IL that John Deere & Co., the Moline, Ill.-based tractor and equipment company, is considering Louisville for its annual John Deere & Co. Aftermarket Expos for 2015 and 2016. The convention, which currently is in Orlando, generates about 16,000 room nights and 4,500 attendees.

• Just across the street from the Stewart’s building/Embassy Suites project, insiders passed on to us the building at 313 to 315 W. Muhammad Ali Blvd. was sold by Brian Lowe to Andrew Owen for $6 million-plus. The building houses a number of Jefferson County offices including Child Support.

Actual MBB briefs:

• Multiple sources, including Louisville econ-dev types, are telling IL to take the time to drive around U of L ‘s Belknap Campus and write an overview of all the projects planned, or under way. Consider it done.

• Insiders are telling us KentuckyOne Health officials are conducting more layoffs related to budget cutting. Those leaving include the “mission advancement” leader.