VOL. 38, NO. 40
OCTOBER 2 - 8, 2017
Akron University’s biomimicry researchers achieve a breakthrough. Page 32
Laura Culp, Sikich LLP Page 35
The List Top-paid CFOs at public companies Page 28
Lakewood Hospital site has developer
LET THE REAL SEASON BEGIN Prolific campaign provides another big boost to Indians’ surging business
By STAN BULLARD
By KEVIN KLEPS
A team of Lakewood city officials and residents has selected Carnegie Management & Development Corp. to partner with the city to redevelop the site of the former Lakewood Hospital as a multimillion-dollar mixed-use project. A letter from the team outlining why Westlake-based Carnegie emerged as its potential partner in an eight-month planning process is included on Lakewood City Council’s docket for a meeting on Monday, Oct. 2. Up next in the process: negotiating a term sheet and development agreement for the 6-acre site at Belle and Detroit avenues. The committee chose Carnegie, a residential, retail and office developer, for the project over a joint venture formed by Casto Development of Columbus and North Pointe Realty, a Mayfield Heights firm that operated office properties in Lakewood for decades. The remaking plan follows Cleveland Clinic closing the hospital in 2016 and donating its site to the suburb. A former medical office building on the west side of Belle has been razed for construction of a $30 million family health center by the Clinic. Lakewood Mayor Mike Summers said the committee selected Carnegie for what it felt was greater responsiveness to the city’s goals for the site. “One of the key differences is their personal sense of risk,” Summers said in a phone interview. “They asked for very little in terms of public investment, except the land for nothing or $1. This particular developer has a history of building and holding properties. We have a 50- to 100-year view of the project. We have to get this right. They take a long-term view of this project. That to me was very compelling.” SEE LAKEWOOD, PAGE 30
By the time you read this, the Cleveland Indians will be getting set to face the New York Yankees, Minnesota Twins or Boston Red Sox in the American League Division Series. Maybe you’re hoping for the Yankees, since it’s always fun to take out one of the most storied franchises in sports. But even if it’s the much-less-exciting Twins, you’ll likely be watching — which, for the Tribe, continues a season-long theme. The Indians made significant gains on the business side in 2016, as a World Series run provided a 29% bump to their 2017 season-ticket base, and the club’s 14.6% attendance increase last
year was the second-largest in Major League Baseball. The TV ratings on SportsTime Ohio, meanwhile, were No. 2 in the game and the best for the franchise in 11 years. Well, it turns out a World Series appearance that’s followed by a celebrated, $60 million free-agent signing, the longest MLB winning streak in 101 years and the franchise’s first 100-win season in 22 years is really good for business. The signing of Edwin Encarnacion, coming off a thrilling playoff ride, was the gift that kept on giving for the Tribe. Within a few days of the deal, which was struck two days before Christmas, the Indians’ season-ticket base reached 10,000 full-season equivalents for the first time since 2009. The Tribe added more than 2,000 FSEs in the ensuing months and started the 2017 campaign with 12,300 — or 6,300 ahead of the Tribe’s 2012 total. SEE INDIANS, PAGE 31
The signing of Edwin Encarnacion resulted in a significant jolt to the Tribe’s season-ticket base. (Ron Jenkins/Getty Images)
GOJO is going beyond successful Purell brand By DAN SHINGLER firstname.lastname@example.org @DanShingler
Everyone knows what makes GOJO go — Purell. The hand sanitizer has, in the 21 years since it was introduced, become ubiquitous. A person can hardly go into a bathroom, office,
Entire contents © 2017 by Crain Communications Inc.
grocery store, doctor’s office, coffee shop — or likely their own home — without seeing Purell. If they don’t see it, it might be because they see a knock-off instead. The product is as successful as Kleenex or Xerox and has likewise virtually become its own pronoun. But, what’s going to drive growth the way Purell has for two decades, as
the company has gone from a small maker of mostly industrial and automotive hand sanitizers, to a 2,000-employee consumer products giant and an anchor of downtown Akron? More Purell, but it won’t just be the hand-sanitizing gel going forward. GOJO thinks it has developed new products that are intersecting perfectly with new threats, regulations
and consumer demands. “This is like the Super Bowl for GOJO. It’s the biggest launch in the company’s history,” chief strategy officer Carey Jaros said recently, speaking by phone as she snuck away from a crowded GOJO booth at the International Sanitary Supply Association (ISSA) Trade Show in Las Vegas in September. SEE GOJO, PAGE 30
Finance << The
war for accounting talent reaches a fever pitch. Page 13 Private equity firms grapple with the new normal. Page 14 Huntington guns for growth. Page 18
Go from “Is it possible?” to “What’s next?” With a Business Quick Loan from U.S. Bank, you may be able to finance equipment for your expanding business needs. You may even be eligible for a Section 179 tax deduction up to $510,000. Talk to your local U.S. Bank Business Banker today.
Business Quick Loan interest rates as low as
0LNH6QLGHU 86%DQN%XVLQHVV%DQNLQJ usbank.com/quickloan
*The 3.49% interest rate applies to a new or used equipment Quick Loan up to 80% LTV for loan terms up to 36 months for credit-qualified applicants. Disclosed rate reflects 0.50% discount based on automatic monthly payments from a U.S. Bank Business Checking account. Automatic payment from a U.S. Bank Business package checking account is required to receive the lowest rate, but is not required for loan approval. A $75 origination fee applies to all loans and will impact final APR. Higher rates may apply based on a lower credit score, a higher LTV or not having automatic monthly payments taken from a U.S. Bank Business Checking account. Advertised rate is as of 08/28/2017 and subject to change without notice based on market conditions. Minimum Quick Loan amount is $5,000. Maximum Quick Loan amount is $250,000. Credit products offered by U.S. Bank National Association and are subject to normal credit approval and program guidelines. Some restrictions and fees may apply. Financing maximums and terms are determined by borrower qualifications and use of funds. See a banker for details. U.S. Bank is not offering legal, tax or financial advice. You should consult with your tax advisor for the specific impact of the Section 179 deduction and how it may apply to your business. Credit products are offered by U.S. Bank National Association. Deposit products offered by U.S. Bank National Association. Member FDIC. ©2017 U.S. Bank. 171125c 8/17 “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC.
NEW ERA. NEW AGAIN. CLEVELAND-CLIFFS While we are proud of what we have accomplished in the last three years, Cliffs Natural Resources going forward will be called by its traditional name: Cleveland-Cliffs. For 170 years, we have been the foundation of the North American steel industry, providing the highest quality iron ore to integrated mills. Reinventing the company once again, our expansion into hot briquetted iron (HBI) to serve the electric arc furnace (EAF) steel industry is key to our growth. The future’s bright – we are excited about expanding our reach while continuing to serve our long-term core customers. See what’s new at clevelandcliffs.com/NewEra
PA G E 4
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
Rape Crisis Center has expanded reach, staff Be Informed!!!
Live Dashboards, Interactive Reports & MOBILE Apps Industry Solutions that allow you to instantly know when your business needs attention. Solve problems, seize opportunities and spot trends as soon as they arise……… Not just at the end of the month.
Discover Your Data Today (866) 407-5541 www.vizionsolutions.com email@example.com
WE PRIDE OURSELVES ON OFFERING LOCAL CREDIT UNION SERVICES TO LOCAL BUSINESSES Purchase and Refinance • Commercial Real Estate Loans up to $10,000,000
Contact Jonathan A. Mokri 440.526.8700 firstname.lastname@example.org www.cbscuso.com
Your Business Lending Partner SM
Take a Risk. Visit % ArmadaRisk.us/BETTER www.armadarisk.us
By LYDIA COUTRÉ
CRCC direct services on the rise
Thanks to a jump in federal funding, the Cleveland Rape Crisis Center has been able to expand its regional presence and reach more people through direct services to survivors, as well as education and prevention programming.
The Cleveland Rape Crisis Center is on track this year to serve two-anda-half times the number of people it reached just five years ago, thanks to a major increase in grant funding. With the added dollars, the center has nearly quadrupled its staff since 2012 and was able to this year open two freestanding regional offices — one in Westlake over the summer and another in Ashtabula in mid-September. In 2012, the center reached about 17,500 people through direct services to survivors, as well as education and prevention programming. This year, the center is on track to reach 44,000. “When I talk about the growth of Cleveland Rape Crisis Center, the first place many people go is thinking, ‘Oh my goodness, is rape really happening that much in our community?’ ” said Sondra Miller, president and CEO of the center. “And my answer is that it’s not happening any more now than it was last year, or a couple of years ago, but it affects an enormous amount of our population.” One in five women and one in 71 men in Ohio will experience rape in their lifetime, Miller said. “Our goal is to make it OK for people who have had this life-altering experience to say, ‘This has happened to me, and I welcome help,’ ” she said. Through the Ohio Attorney General’s Office, CRCC receives federal funding from the Victims of Crime Act of 1984. In fiscal year 2015, it received $167,000. The following year, that jumped to $2.1 million and then $3.1 million in fiscal year 2017, thanks to Congress raising the cap on what could be distributed to states from the federal fund, Miller said. The money has been “transformative,” she said. “In 2011, the conversation here was just how are we going to answer every single phone call coming in,” she said. “It was work just to be able to provide services to each person who came to us. What we are now in a position to do is take our services to
Source: Cleveland Rape Crisis Center
the community, welcome more people, talk about the benefit of our services to survivors and not be afraid that we aren’t going to be able to answer every single call.” The two new locations build upon the center’s strategy to provide services to more survivors sooner and in more places, Miller said. For years, she said, they’ve heard that some survivors can’t make it to the center’s downtown Cleveland location. So in recent years, the center has started opening limited counseling services in co-located offices throughout the region: in Chardon in 2012, Mentor in 2013 and Ashtabula in 2014. The offices in Westlake and Ashtabula are the first freestanding regional locations, offering the center more control over the environment to ensure a warm, nurturing and healing space for survivors. CRCC is looking to stretch into areas without rape crisis services. In the 1990s and 2000s, many rape crisis programs in the state closed their doors due to lack of funding, Miller said. Homesafe was one such case. The domestic violence shelter in Ashtabula — where CRCC initially located its offices before opening its freestanding location — once had its own rape crisis program but lost
funding in 2006. In the years following, as staff received calls from victims of sexual assault, they would have to send them to Cleveland or Erie. There were “most definitely” survivors and people in need of services who didn’t access them because they couldn’t reach them, said Sherri Price, executive director of Homesafe. Having CRCC in their offices was “wonderful” for the community, she said. Price would like to see the center grow even bigger and serve more counties without services. “Already in the three years they went from a tiny office here at the shelter to a nice office where they’re separate from us,” she said. “I could see them actually growing even larger.” The Victims of Crime Act, in conjunction with some increases in private philanthropy support, has helped to more than triple the center’s revenues since 2012 to a projected $5.4 million this year. Today, Miller and her staff believe that CRCC is the largest independent rape crisis center in the country, though no official list exists. “We know that the agencies that we used to look up to are now coming to us and asking us how we’re operating,” she said.
that keep people and businesses
in knots. Litigation is like that—easy to get caught up in, hard to get out of. By the time an issue lands on my desk, very smart people haven’t been able to work it out. It’s my job to unwind it. Make sense of it. In a way that makes sense for everyone involved. Even better? My clients know to call me before a problem escalates, when connections are starting to fray and risks are high. They know I’ll protect their interests. Offer solutions. Diffuse tensions instead of fueling them. That’s the best part of my role as a litigator. Helping people recognize and avoid pitfalls. Keeping them out of intractable litigation, so they can keep doing what they do best. Run their businesses. Live their lives. I’m YELENA BOXER. I’m on your team.
MY BENESCH MY TEAM
> Vice Chair, Litigation Practice Group > Concentrates on complex commercial litigation. > Represents publicly traded companies and private businesses in state and federal jurisdictions nationally. > Experienced in resolving disputes involving intellectual property, breach of contract and fiduciary duties, general tort, real estate, insurance, construction, and employment. > (216) 363-4175 | email@example.com
PA G E 6
CRAINâ€™S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017 |
PREMIER REAL ESTATE
AUCTION OCTOBER 7, 2017
ICONIC 2-STORY PENTHOUSE MOST INCREDIBLE LAKEFRONT VIEWS IN CLEVELAND TRUST BENEFICIARY ORDERS IMMEDIATE SALE
WINTON PLACE â€˘ 12700 LAKE AVENUE, #3005; LAKEWOOD, OH 44107
BIDDING TO COMMENCE AT ONLY $225,000! Unique bi-level 5,404 SF penthouse at the top of Winton. With unrivaled views of Lake Erie, the Cleveland skyline, western sunsets and eastern sunrises, these panoramic vistas are magnificent. The home features 3 bedrooms (2 master suites with amazing baths), 3 full baths and 2 half baths. Great room with large bar and fireplace, gourmet kitchen, and 4 parking spaces. Building amenities include large indoor pool with sauna, tennis court, exercise room, hair salon, party room, guest suites, Pier W restaurant, and more.
FOR INFORMATION, CALL MARK ABOOD, OH RE SALESPERSON
216.861.7200 CHARTWELL REAL ESTATE AUCTIONS â€˘ HANNA COMMERCIAL BROKERAGE MICHAEL BERLAND, AARE, OH AUCTIONEER / MARK S. ABOOD, OH RE SALESPERSON
/ĹśÄ?ĆŒÄžÄ‚Ć?ÄžÄšĹŠĹ˝Ä?Ĺ˝Ć‰Ć‰Ĺ˝ĆŒĆšĆľĹśĹ?Ć&#x;ÄžĆ? /ĹśÄ?ĆŒÄžÄ‚Ć?ÄžÄšĆ?Ĺ˝Ä?Ĺ?Ä‚ĹŻĹ˝Ć‰Ć‰Ĺ˝ĆŒĆšĆľĹśĹ?Ć&#x;ÄžĆ? z&ÄžÇ ÄžĆŒÄ?Ĺ˝ĹľĹľĆľĹśĹ?Ä?Ä‚Ć&#x;Ĺ˝ĹśÄžĆŒĆŒĹ˝ĆŒĆ? z/ĹľĆ‰ĆŒĹ˝Ç€ÄžÄšĆ?ÄžĹŻÄ¨Í˛Ä?Ĺ˝ĹśÄŽÄšÄžĹśÄ?Äž z/ĹśÄ?ĆŒÄžÄ‚Ć?ÄžÄšĆ‰ĆŒĹ˝ÄšĆľÄ?Ć&#x;Ç€Ĺ?ĆšÇ‡ zÄžĆŠÄžĆŒÄ?Ĺ˝ĹľĹľĆľĹśĹ?Ä?Ä‚Ć&#x;Ĺ˝ĹśÇ Ĺ?ĆšĹš colleagues, clients, customers z z
Accent DĹ˝ÄšĹ?ÄŽÄ?Ä‚Ć&#x;Ĺ˝Ĺś Classes
&Ĺ˝ĆŒĹľĹ˝ĆŒÄžĹ?ĹśÄ¨Ĺ˝ĆŒĹľÄ‚Ć&#x;Ĺ˝ĹśÄ?Ä‚ĹŻĹŻĆšĹ˝ÄšÄ‚Ç‡Í—ĎŽĎĎ˛Í˛ĎŽĎŻĎÍ˛Ď´ĎłĎ´Ďł Ĺ˝ĆŒÇ€Ĺ?Ć?Ĺ?ĆšÇ Ç Ç Í˜Ä?ĹšĆ?Ä?Í˜Ĺ˝ĆŒĹ?ÍŹÄ‚Ä?Ä?ÄžĹśĆš
11635 Euclid Ave. z Cleveland, Ohio 44106 z www.chsc.org z 216-231-8787
THE BEST HOLIDAY PARTIES
ST O P W O R RY I N G S O O N E R .
CALL. PLAN. PARTY! C217$&7 ONE OF OUR EVENT PLANNERS TODAY FOR A PARTY AT YOUR HOME, OFFICE ORONE OF OUR FABULOUS VENUES
440.449.0700 â€˘ HYHQWV#H[HFXWLYHFDWHUHUVFRP â€˘H[HFXWLYHFDWHUHUV.com
Former DOJ standouts opt to open small firm By JEREMY NOBILE firstname.lastname@example.org @JeremyNobile
Attorneys shifting from work in the U.S. Department of Justice to private practice usually land lucrative jobs at large law firms, joining practices where their federal litigation experience is highly sought after. Paul Flannery and Christos Georgalis, former assistant U.S. attorneys in the Northern District of Ohio, who worked on the officeâ€™s largest securities fraud case ever, are acutely aware of this â€” but they have different plans for their talents. Bucking a trend of federal prosecutors settling into BigLaw offices, these two 38-year-old Northeast Ohio natives have left their posts in the DOJâ€™s Cleveland office to launch Flannery | Georgalis LLC, a boutique firm specializing in complex white-collar criminal defense and corporate investigations. Prior to landing their DOJ jobs, Georgalis, a native of Independence, worked at Jones Day, largely focusing on corporate internal investigations, while Flannery, who grew up in the Copley/Fairlawn area, cut his teeth at a midsize Maryland law firm, mostly representing individuals in white-collar criminal cases. With rĂŠsumĂŠs like that, punctuated by several years of combined experience as federal prosecutors, each couldâ€™ve pursued jobs at big firms. But the entrepreneurial duo of Cleveland-Marshall College of Law grads was motivated by an opportunity to do criminal defense work in a small-firm setting, where they believe they can fill an unmet need in the legal market. â€œI recognized that potential need very quickly when I came here,â€? said Flannery, referencing his return to Cleveland from Maryland in 2014 to take the job with the DOJ. â€œThereâ€™s an opportunity for a sophisticated boutique litigation firm to provide high-level, complex criminal and civil litigation services outside the largefirm setting. And once Chris and I bonded, it was a natural progression for us to say, â€˜We think we can do this.â€™ â€? Despite no law enforcement backgrounds in his family, Flannery recalls getting the â€œbugâ€? to be an FBI agent as a kid. Georgalis became enamored with lawyering thanks to his attorney cousin, but dialed in his passion for trial work while with Cleveland-Marshallâ€™s moot court team. Each began to dream of becoming federal prosecutors, where the countryâ€™s most complicated trial cases are handled. After law school, each spent a few years at their respective firms. It took a couple tries â€” thousands of people are known to apply for federal prosecutor jobs when they open up â€” but Georgalis landed at the U.S. attorneyâ€™s office in 2010. Flannery joined shortly after a DOJ hiring freeze ended in 2014. They met when Georgalis was assigned as Flanneryâ€™s mentor in whatâ€™s now simply known as the white-collar unit. They became friends and then bonded over a case each thought may have been the pinnacle of their lawyering careers: a $55 million securities fraud case involving a notorious penny-stock scheme orchestrated by Izak Sirk De Maison (aka Izak Zirk Engelbrecht, aka Zirk Engel-
â€œBecause we worked on such big cases, thereâ€™s a sense that, I donâ€™t want to say we reached a pinnacle or a zenith, but I almost felt like we were ready, right now, for something new.â€?
â€œBut the fact we are small has no bearing on the size or complexity of the matter we can take. I think clients will be shocked at what weâ€™re able to do.â€?
â€” Christos Georgalis, Flannery | Georgalis LLC
â€” Paul Flannery, Flannery | Georgalis LLC
brecht) and Stephen J. Wilshinsky. Federal agents and prosecutors worked closely on that case over many months, spending lots of time in close quarters in hotels during the trial that eventually ensued. In that case, resolved in 2016, De Maison and Wilshinsky had stock brokers invest money in penny stocks for bogus shell companies for which prices were manipulated. The architects of the scheme and their co-conspirators all were found (or pleaded) guilty and were sentenced to serve jail time and to pay millions in restitution. Such a case typically would be brought in areas where the Securities and Exchange Commission has large offices, like Southern California or Chicago, making it unique to have been handled in Northeast Ohio. â€œBecause we worked on such big cases, thereâ€™s a sense that, I donâ€™t want to say we reached a pinnacle or a zenith, but I almost felt like we were ready, right now, for something new,â€? Georgalis said. â€œWith what weâ€™ve done, with what he have under our belts, it just felt like the time was right to let someone else take our reins to let us go and do something else.â€? â€œThe big thing is the opportunity thatâ€™s there. Thatâ€™s why weâ€™re doing this now,â€? Flannery said. â€œYou see a lot of folks nearing retirement, and a lot of folks you regularly see in high-stakes, complex work the U.S. attorneyâ€™s office is bringing are nearing the end of their
careers. So this is an opportunity we donâ€™t want to miss out on.â€? Besides being able to charge less for services in a boutique setting versus a large law firm, being unaffiliated with an old, massive firm frees them up to work white-collar cases where other firms might have conflicts of interest. That unencumbered approach is already leading to some referrals. â€œIt seems like firms are struggling to find enough lawyers to refer this kind of work to,â€? Georgalis said. â€œIf someone walks through the door or gives us a call, we donâ€™t have a 50- or 100-year history where we have to search your file to see if thereâ€™s a conflict.â€? â€œTo our knowledge,â€? he added, â€œthis service doesnâ€™t exist.â€? Flannery and Georgalis expect their approach to their market to resonate quickly, which could lead to an expanded office in a few years. But the vision for staying small and nimble for the benefits that provides is not something they intend to lose sight of. â€œIn five years, I see us being the goto litigation firm in Cleveland,â€? Flannery said. â€œWeâ€™ll have a number of associates, paralegals, and staff working as part of our team.â€? However, the firm will be small for the foreseeable future. â€œBut the fact we are small has no bearing on the size or complexity of the matter we can take,â€? Flannery added. â€œI think clients will be shocked at what weâ€™re able to do.â€?
CRAIN’S CLEVELAND BUSINESS
Constantino’s Cafe will open near CSU By SCOTT SUTTELL email@example.com @ssuttell
Management and staff at Constantino’s will have more work on their plates starting next week. The local grocer on Monday, Oct. 9, will open its second Constantino’s Cafe, at The Edge on Euclid, near Cleveland State University at 1750 Euclid Ave. Since 2014, Constantino’s has operated a cafe in the Ernst & Young Tower in the Flats. The cafes are a complement to the company’s two Constantino’s Market stores, at 1278 W. Ninth St. in the Warehouse District and at 11473 Euclid Ave. in the Uptown development in University Circle. Andrew Revy, Constantino’s CEO, said the company “learned a lot” from operating the cafe in the E&Y building and was ready to expand the concept with a second location. The cafe will offer Erie Island Coffee and other coffee and espresso drinks, as well as food — sandwiches, salads, grab-and-go items and more — prepared in Constantino’s kitchen at the flagship Warehouse District market. The new location is slightly larger, with 1,380 square feet and a 550-square-foot mezzanine, compared with the 1,200 square feet at the cafe in the E&Y building, Revy said. The new cafe also will be in operation seven days a week, rather than five at the initial site. Hours for
O C T O B E R 2 - 8 , 2 017
PA G E 7
ideas ideals impact
the cafe at The Edge are 6:30 a.m. to 8 p.m. Monday through Friday, and 8 a.m. to 3 p.m. Saturday and Sunday. “It’s a great opportunity, a great location,” Revy said of the cafe at The Edge, a ground-up, 582-bed student housing development that’s, well, on the edge of the CSU campus. It was developed by the Koman Group of St. Louis. The new cafe also offers free Wi-Fi — a critical amenity these days for everyone, and especially for college students — and a dining area on the second floor. (The first cafe has only five tables.) Revy said Constantino’s has a seven-year lease on the new space. He declined to disclose terms of the lease or the size of the company’s investment in the new cafe. “It’s a decent investment for the size of the property,” he said. Constantino’s is adding about 16 employees as it opens the new cafe, Revy said. It has 74 employees at present. More expansion is on the way at Constantino’s. Revy said the company is “getting very close to closing” a deal, announced in May, to buy the former Nature’s Bin property on Sloane Avenue in Lakewood to operate as a Constantino’s Market. Cornucopia Inc., a nonprofit serving people with disabilities that operated Nature’s Bin for more than 40 years, closed the store in November 2016.
For results that resonate, change the equation. Partner with Glenmede, an independent, privately-owned trust company offering investment and wealth management services. Founded in 1956 by the Pew family to manage their charitable assets, we provide customized solutions for families, endowments and foundations. To learn how our culture of innovation and experienced thinking can help you make your unique imprint on the future, contact Linda Olejko at 216-514-7876 or firstname.lastname@example.org.
Glenmede’s services are best suited to those with $5 million or more to invest. glenmede.com @glenmede /company/glenmede
It’s simple. Trust matters. When shopping for insurance, do you ever consider the financial strength of an insurance company? “An insurance policy is essentially a safety net,” explains Chief Financial Officer Dawn Jaffray of United Fire Group (UFG), a multibillion-dollar insurance company with over $4 billion in assets. “Life is unpredictable and you trust your insurance company to be there at a future point when you might need them.”
DAWN JAFFRAY UFG CHIEF FINANCIAL OFFICER
With 27 years of industry experience, Jaffray understands how important a balance sheet is in determining a company’s financial strength. “If a company doesn’t have a strong balance sheet—one that can withstand major catastrophes, difficult insurance cycles and financial markets crashing—it might not be able to hold up its end of the contract,” she says.
When evaluating an insurance company, Jaffray offers several financial measures to consider: Q
Third-party rating agencies, such as A.M. Best Company: provide an independent opinion on the financial strength of an insurance company
Risk-based capital: shows the minimum amount of capital that an insurance company is required to have to support its overall business operations
Policyholder surplus: shows the difference between a company’s assets and liabilities
Claims reserves: shows the funds set aside for the future payment of claims that have been incurred but not settled
Whether you are shopping for insurance for your business, home or car, Jaffray encourages you to take the time to do a little research. Visit the company’s website to read its press releases and review its financial facts. You’ll be glad you did when the unexpected happens.
A publicly traded multibillion-dollar company, UFG holds a financial strength rating of “A” (Excellent) from A.M. Best Company. It has a strong consolidated balance sheet and income statement, with over $4 billion in assets, $857 million in statutory surplus and $942 million in revenue.
© UFG 2017. All rights reserved.
PA G E 8
O C T O B E R 2 - 8 , 2 017 |
CRAINâ€™S CLEVELAND BUSINESS
,1685,1*%281'$5,(6 (;3$1',1*7(55,725,(6 1$7,21:,'(
Labor shortage easily is buildersâ€™ chief concern By STAN BULLARD email@example.com @CrainRltywriter
4E4A4BC ;0=3C8C;4 866.945.4200 | EVERESTLAND.COM
COMMERCIAL AND RESIDENTIAL TITLE INSURANCE
Â¸>VYRPUN^P[O5LZJVPZLHZ`;OLPYZ[H understands our job requirements and are always willing to help in any matter that arises.â€? â€” George Campoamor Supervisor, Derby Industries LLC
The national concern about a shortage of labor is growing among Northeast Ohio executives and owners in the building business, according to the just-completed 2017 survey of real estate and construction industries by the Skoda Minotti accounting, business and financial advisory firm. Asked to rank the biggest threat to their business over the next year in the annual survey, 52% of respondents cited a labor crunch, which vastly surpassed other concerns. Just 15% cited lack of work, 14% worried over tightening credit and 7% see material costs as the biggest risks to their firms. Availability, not cost, of labor is clearly the issue. Just 3% said labor costs were their biggest threat. Roger Gingerich, partner-in-charge of Skoda Minottiâ€™s Mayfield Village-based real estate and construction practice, said itâ€™s the first time finding workers ranked so high. In 2016, it was the top threat for 46% of the respondents and in 2012 just 11%. â€œContractors are saying the work is there. They feel they can make pretty good margins. But the ability to get workers to do the work is impeding our ability to grow,â€? Gingerich said. Solving that issue, he said, will take a broad effort involving educators, counselors and society to change how even well-paying jobs as carpenters and plumbers are perceived. About 60% of respondents listed curing the labor shortage as their top priority. The industryâ€™s problem stems not just from the graying of the baby boomers, but the numbers of people who left
the industry when work dried up after the 2008 financial crisis. The top political issue with impact on construction businesses continues to be material price volatility, for the third straight year, followed by, in order, health care and workersâ€™ compensation costs. Gingerich said he believes workersâ€™ comp worries came in third because companies are worried about the impact of an Ohio Bureau of Workersâ€™ Compensation decision to include coverage for workers injured through no fault of their own when accidents occur while driving a vehicle on behalf of a business. He said the bureau now will cover the entire claim of the worker in such a case if the accident is caused by a third party. However, the improvement in the overall financial health of the industry is what most impresses Gingerich in this surveyâ€™s results. The number of bidders competing for the same job dropped to its lowest level since the survey began in 2009. The report shows 65% of the respondents are competing against just one to four bidders. And 30% report competing with five to nine bidders for the same job â€” 12 percentage points fewer seeing that number than last year. Moreover, 47% reported the size of construction assignments they bid on increased in the last year, 49% said the size stayed the same and just 4% reported smaller projects. Lack of work was cited as the biggest threat over the next year by 15% of the respondents. While the volume of construction work in the region â€” driven by apartments, industrial and health care work â€” is healthy, Gingerich believes contractors worry about the sustainability of the activity level. Less than half of the respondents, or 41%, expect more op-
portunities within Northeast Ohio this year than last. Likewise, 60% of the owners and executives expect to find more opportunities outside Northeast Ohio, 32% see the same amount of opportunities outside the region, and just 8% see fewer opportunities outside the region. â€œWhen there is a lot more construction work out there, people can be selective,â€? Gingerich said. â€œContractors are seeing their (profit margins) expand. I see healthier financial statements. But many contractors say they are working harder to make the same amount of money as they did before 2008. Thereâ€™s optimism, but itâ€™s tempered.â€? The same tempered optimism is apparent in Skoda Minotti's survey of real estate owners and developers. The biggest change is that respondents ranked property valuations first as a barrier to development, a big switch from last year, when it ranked eighth. The lending environment remains the second-ranked barrier to development, the same as last year, after being the top issue from 2013 to 2015. Fewer respondents expect apartment and residential rents to continue to increase as much as in the past. Skoda Minotti found 60% of respondents in the category expect an increase in rents in the next year, compared with 82% last year. And 15% of the respondents noted a slight decrease in rents over the last year, while none reported that in 2016. In terms of growth opportunities, less than half, or 48%, of responding real estate owners and executives see more opportunities over the next three years in Northeast Ohio; 42% are seeing the same volume of opportunities and 10% are seeing less opportunities for growth.
With some of the highest customer satisfaction ratings in our industry Nesco Resource isnâ€™t just another choice in VWDĎ„QJitâ€™s the smart choice.
Nesco Resource: Smart recruiting. nescoresource.com
Nesco Resource is a wholly owned subsidiary of Nesco Inc., a privately held diversified holding company focused on sectors including manufacturing, human resource services, and real estate.
ERNST & YOUNG OFFICE TOWER
Winter Trimacco Law Firm
For Leasing Contact: Douglas Leary & Steve Ross at +1 216 687 1800 www.cbre.com/eytower
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 9
Werner G. Smith able to ‘switch’ with times By JAY MILLER firstname.lastname@example.org @JayMiller
It wasn’t long after D.L Meckes and her husband, Bill Grulich, took over her family’s business, the Werner G. Smith Co. (WGS), in January that the pair learned the city of Cleveland planned to rezone the area near the company that included the Scranton Peninsula, a long-undeveloped area considered ripe for change. The plan, as developed by the city's planning commission, was going before Cleveland City Council for approval in April. It would have stalled expansion of WGS, a company that has operated on Train Avenue in the Walworth Run industrial area in the Flats since 1950, though existing facilities would be grandfathered in. Walworth Run, where the original Standard Oil Co. refinery once operated, is near a growing recreational area where several under-construction bicycle and pedestrian trails — the Lake Link Trail, the 101-mile Towpath Trail and the proposed Red Line Greenway — converge along the Cuyahoga River. Also close by are two large parcels — one 20 acres, the other 25 — where developers are poised to create a new residential neighborhood. “There are parts of the rezoned area that are meant to be green space, and you’ve got the residential potential,” argued Kerry McCormack, the Cleveland councilman who represents much of the near West Side, including the Scranton Peninsula.
“But, also, you’ve got the people at Werner G. Smith.” So council tabled that plan and came back in August with a revised plan. “To (the planning commission’s) credit, they came back with a plan that would allow (WGS) to grow,” McCormack said. “I think it turned out well.” Grulich and Meckes were relieved. “The rezoning will allow us to replace our tanks,” Grulich said. The pair took over the reins of WGS on the retirement of Peter Meckes, D.L.’s brother. She became president, with Grulich becoming CEO. They said the company's sales are between $5 million and $10 million a year. The business had been founded in 1914 by Werner G. Smith to sell sand for foundry molds, and it quickly became a processor of the vegetable oils used to harden sand molds. It expanded into processing other fats and oils, including fish oils, most especially sperm whale oil. Werner Smith sold the company to Archer Daniels Midland Co. in 1924 and ran the business for ADM until 1950, when he bought it back. Smith was succeeded by Waldemar Meckes, his son-in-law and the father of D.L. and Peter Meckes. Now, it’s the last vestige of the string of refineries that once ran up and down Walworth Run. “It seemed like a really good business,” said D.L. Meckes at a desk in the office once occupied by her father and brother, which she now shares with her husband on the sec-
ond floor of the site’s aging brick main building. “We’re very excited about the whole thing.” “The whole thing” is a 10-acre site dominated by 80 oil storage tanks, ranging in size from 250 gallons to 110,000 gallons. Nearby are five reactors, or kettles, that process the oils by heating them to upwards of 500 degrees and injecting various gases — oxygen and nitrogen among them — to produce oils and waxes that go into Vicks VapoRub ointment, lip balms, cosmetics including lipstick, and other products and processes. This is all new to Meckes and Grulich. Neither had been working in the business until Peter Meckes’ retirement. Instead, they had been involved in marketing and media. The pair were executive producers of “Ain’t Done Yet,” a 2013 documentary on the homeless shot in Cleveland that appeared on a number of PBS television stations, including WVIZ. But they saw an opportunity to grow this family business. “We’re really working in a big way to increase our capacity and grow our business.” Meckes said. “We’ve got technology that everyone else has forgotten about.” Grulich said that one thing about this old technology is that most of their products use earth-friendly raw materials that are “bio-sustainable, bio-renewable and biodegradable.” Added Meckes: “In everything we do, we’re looking to become a greener company. We’re very serious about that.” To shape up the business, they are
spending $2 million to upgrade the site. They’ve taken down some of the oldest storage tanks and upgraded the rail spur that is allowing the Flats Industrial Rail Road to bring tank cars of oil onto the site once again. They have also purchased several new reactors. “I love Werner Smith,” McCormack said. “It’s a prime example of the kind of manufacturing we need to promote and to allow to grow.” Grulich and Meckes have already grown the staff from 13 to 18, plus a number of part-timers, and they expect to add even more. They also have begun, after years away, taking a booth at the annual trade show sponsored by the Society of Tribologists and Lubrication Engineers. Tribologists study friction and lubrication. Tribology is the science of interacting surfaces in motion. WGS has been able to meet the demands of customers over the years by being able to adapt its century-old processes to 21st-century products. However, they are uncomfortable talking more specifically about their expansion plans and the products they sell and are developing. Many of the company’s processes are proprietary and its products are often ingredients in the proprietary or patented products of others. So most of their customers require the company to abide by non-disclosure agreements. But a look at patent records give some clue to the company’s customers and to the kinds of up-to-theminute end products their oils and
waxes go into. For example, a 2014 Lubrizol Corp. patent for a “corrosion-inhibiting composition comprising a (diluting agent) and a mixture of organic salts of half ester-half acid” mentions a tallow oil obtained from WGS. Similarly, an explanation in a recent patent filed by Allergan Inc., an Irish pharmaceutical company, for an ophthalmic product for dry eye (which fits the description of the company’s Restasis prescription eye drops) includes “Nonionic Emulsifier T-9.RTM, which is available from Werner G. Smith Co.” “This business has had as its focus a number of products over the years, and we’ve been lucky,” Meckes said, as Grulich finished, “to switch with the times.” The most critical rebound the company has had to make came in the 1970s, when the federal government banned the importation of sperm whale products. The company turned sperm oil into a product called Spermaceti, a high-volume product that WGS sold as a lubricant and as an additive to auto transmission fluid. A story in The Plain Dealer at the time, warning that the plant might have to close, said the company supplied 36% of the nation’s supply of sperm oil and that it accounted for 70% of Werner Smith’s business. The story said the company was working off a three-year supply when importation ended. Fortunately, before its supply ran out the company developed a synthetic replacement.
REGISTRATION IS NOW LIVE 2017 class announcement coming soon!
FORTY UNDER 40
Nov. 20, 2017
TENK WEST BANK
2111 Center St., Cleveland
FOR MORE EVENT DETAILS VISIT:
EVENT/REGISTRATION QUESTIONS: Megan Lemke at 216-771-5182 or email@example.com SPONSORSHIP OPPORTUNITIES: Nicole Mastrangelo at 216-771-5158 or firstname.lastname@example.org
PHOTO BOOTH SPONSOR
PA G E 10
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
Opinion From the Sections Editor
King James has spoken, and we should listen
Believe again Sports aren’t bringing us a lot of joy these days. Pro football is caught in a vortex of culture wars, concussion science, declining attendance and unwatchable games. College basketball is facing a massive FBI investigation of its corruption. The Cavaliers are about to take another shot at an NBA title, which is exciting, but the season will come after a contentious debate about the financing plan for a now-underway renovation of Quicken Loans Arena. The timing is perfect, then, for the Indians to sweep us off our feet as the playoffs begin this week. Baseball’s hottest team has colorful personalities — stars Francisco Lindor and Jose Ramirez are among the brightest — and the game’s best starting pitching, led by ace Corey Kluber. (He leaves the colorful personality to others.) Throw in a shutdown bullpen, stellar defense and one of the best managers of the last generation, and this is a team with serious assets. At our deadline last Friday, Sept. 29, the Indians were 100-59, having reached the century mark in victories for just the third time in team history. It’s hard to remember that as recently as July 19, the Indians were 48-45 and weren’t a lock to make it to the postseason. Shrewd moves by the front office — how about that Jay Bruce trade? — and expert button-pushing by skipper Terry Francona have made the last couple months a pure pleasure for baseball fans. Recent attendance figures and soaring TV ratings reinforce how hard Northeast Ohio has fallen for the team. Baseball’s a funny and unpredictable game. The best teams don’t always win in a short series. This edition of the Indians, though, inspires confidence. Cleveland has been waiting since 1948 for a World Series title. No one has forgotten last season’s near-miss, but we’re believers that 2017 is going to be the year. It’s about time for another big parade.
A very different game is playing out nationwide, as cities compete for the affection of Amazon, which is hunting for a
second North American headquarters. The interest is understandable. Amazon says it plans to invest $5 billion and create 50,000 jobs with its HQ2, even if the e-commerce giant has been less than clear about why it needs another home. Virtually every sizable city, including Cleveland, has assembled a team to make a pitch to woo Amazon by the company’s Oct. 19 deadline. Competitor Midwest cities like Chicago and Detroit are going big to get Amazon CEO Jeff Bezos’ attention. Chicago’s team is led by corporate stars like United Airlines CEO Oscar Munoz and former U.S. Commerce Secretary Penny Pritzker. In Detroit, Dan Gilbert, the founder of Quicken Loans and owner of the Cavaliers, heads the effort. The New York Times reported that Gilbert has “built an Amazon war room, where more than 40 people are trying to analyze what the online retailer likes and doesn’t like.” They’re also looking for insight into Bezos’ psyche, with Gilbert noting, “He’s got hundreds of hours of videos on YouTube you can watch.” Cleveland’s effort, by contrast, seems muted. It wasn’t unveiled formally until Sept. 15, and the city and county won’t say much about it. Virtually all contenders have sites that would make sense for the company. Other criteria, such as access to workforce, walkability and transit, will weigh heavily for the retail giant, and we’d be surprised — though pleasantly so — if Cleveland was in the top ranks of contenders. Even if things don’t go our way, we already have consolation prizes. Amazon is building a fulfillment center at the former Randall Park Mall site in North Randall, and last week it announced it will build one at the former Euclid Square Mall. In the last 30 days, as Joe Roman, president and CEO of the Greater Cleveland Partnership, noted, “Amazon has committed to creating 3,000 new jobs, investing more than $350 million of capital and repurposing over 125 acres of ‘dead-mall’ property.” To a large extent, we’ve already won.
Publisher and Editor: Elizabeth McIntyre (email@example.com)
Scott Suttell (firstname.lastname@example.org)
Timothy Magaw (email@example.com)
Sept. 25, 2017, was the most impressive day of LeBron James’ career. Never mind ending the championship drought. Never mind the pride his basketball prowess has restored in our city. The kid from Akron is much more than a basketball player. James’ willingness to stand up to the powers that be — namely, the president — and express his solidarity with the peaceful protests taking place on the NFL’s sidelines was refreshing. And important. Professional athletes are not our jesters. The size of the balance in one’s bank account is not inversely related to that individual’s right to free speech. It’s a basic Timothy civics lesson that seems to be fading for Magaw many. In a region whose corporate and civic leadership is, at times, blinded by boosterism, James’ words — measured, honest, forceful — should have reminded us of that. The response, of course, was predictable. Stick to basketball, they say. “He needs to shut his pie hole,” wrote one commenter on Cleveland.com’s Facebook page. “Money doesn’t make you smart. Just play with your ball, hopefully in some other city,” Other comments — on that page and elsewhere — were similar. Many comments were laced with racist overtones and absent of any mentions of the work James has done for this community off the court. For starters, his foundation plans to open a school in 2018 for at-risk students in Akron. The foundation also paved the way to eventually send more than a thousand kids to the University of Akron free of charge. Stick to basketball, they say. And certainly, it’s the right of James’ detractors to choose not to support the Cavaliers or any other professional sports franchise for what they perceive as slights to their heritage, or more accurately stated, comforts afforded by their white privilege. It’s true, as a society, we often find solace in sports. They can be a welcome distraction from the doldrums and challenges of daily life. But during these last eight months or so, the divide in this country — by class, race, political party — has continued to deepen. Expecting that divide to stay out of sporting events, which by their very nature are laden with emotion, is a pipe dream. And frankly, it’s not a new phenomenon. The images of Tommie Smith and John Carlos with raised fists at the 1968 Summer Olympics haven’t faded from society’s memory — at least I hope that’s the case. So, instead of demanding an African-American athlete shut up and play ball, perhaps those threatened by James’ voice should use that passion to do as little as one-tenth of a percent of the good he does in our communities. That would be a more productive use of one’s energy than giving his or her keyboard a violent workout with racist diatribes. We live in troubling times. If anything, these professional athletes are reminding us that we can’t afford to settle into our privilege. There are too many people in our communities who are trying to live in a system that has set them up to fail. Still, stick to basketball, they say. No, LeBron. Continue to speak up.
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to firstname.lastname@example.org. Please include a telephone number for verification purposes.
CRAIN’S CLEVELAND BUSINESS
Web Talk Re: A couple pages weren’t there Crain’s Sept. 25 story, “Northeast Ohio bookstores write a new chapter,” missed Market Square in Kinsman. It is the largest used bookstore between Columbus and Buffalo, and it has one of the oldest continuously operating soda fountains in the state of Ohio. — Don Sutton I wondered why there was no mention of Mac’s Backs Books on Coventry in Cleveland Heights, which has been selling new and used books for 38 years. Mac’s Backs has been an enormous support to local writers, poets, publishers, universities, libraries and artists, as well as helping fellow small businesses regionally. It is the first store that comes to mind, having spent most of my life in Cleveland — Bree Zlee Bodnar
structure daily activities. The facilities plan is still a black hole of chaos. Empty South High on Broadway is a disgrace. That said, I do see improvement. I am grateful that the district has scrapped plans to demolish Benjamin Franklin School; it is a gem. The historic schools that once had school garden programs, like Michael R. White (formerly Miles Standish School), need to be maintained and improved with buy-in from residents and employers in the neighborhoods. — Laura McShane
Re: Cavs lost $18.3 million in 2016-17 It's more than counter-balanced by the advertising for Quicken Loans that Dan Gilbert gets, and by increased traffic through his casino. — FlourideProof
Re: State of Cleveland Municipal Schools
Re: Making room for Amazon’s HQ2
There are too many administrators at CMSD. Teachers need more flexibility in their ability to
Give them the D Concourse at Cleveland Hopkins International Airport! — Bob gt
AN EMPLOYER’S DILEMMA: ÏõèèÜóèèæëÌòñĥìæ÷ìñêËèïìèéöäñçäÜäéèàòõîóïäæè Óòìñøöéòõ÷ëìöøóæòðìñêúèåìñäõäñçïèäõñúëä÷òåïìêä÷ìòñöäñèðóïòüèõëäö÷òäææòððòçä÷è çìģèõèñ÷ òóìñìòñö åèïìèéö äñç ùìèúö ìñ ÷ëè úòõîóïäæè Ïìñç òø÷ ëòú ä÷¡úìïï èðóïòüðèñ÷ çìöæõìðìñä÷ìòñ ïäúö éõèè öóèèæë äñç æòñæèõ÷èç óõò÷èæ÷èç äæ÷ìùì÷ü ìñ÷èõöèæ÷ ìñ ÷ëè úòõîóïäæè àèđïï äïöò çìöæøöö èðóïòüèõöđ òåïìêä÷ìòñö äõòøñç úòõîóïäæè ùìòïèñæè óõèùèñ÷ìòñ ìñùèö÷ìêä÷ìòñ äñçõèóòõ÷ìñêäöúèïïäöØÜÑÊõèêøïä÷ìòñöõèïä÷ìñê÷òúòõîóïäæèùìòïèñæè ÏÎÊÝÞÛÎÍÜÙÎÊÔÎÛÜ
SUSAN C. RODGERS
ÎÖÙÕØâÖÎ×ÝÕÊËØÛ ÙÛÊÌÝÒÌÎÐÛØÞÙÕÎÊÍÎÛ ÙÊÛÝ×ÎÛÊÔÛØ×
FREE WEBINAR October 11 Noon - 1 PM
O C T O B E R 2 - 8 , 2 017
PA G E 11
PA G E 12
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
At the Table
Roots conference gives chefs food for thought It may have been one of the hottest days of the year, but that didn’t stop nearly 250 food professionals from across the nation. They gathered under tents and mingled on the verdant acreage of the Chef’s Garden to discuss culinary innovation at the fifth annual Roots conference. Hosted by the Culinary Vegetable Institute, Roots Innovate 2017 was an illuminating exploration of the changes ahead for chefs, restaurateurs, food scientists, educators and industry leaders. For those unaware, the Chef’s Garden is the nation’s foremost producer of specialty vegetables. Hidden away in an anonymous corner of Ohio’s farmland southeast of Sandusky, the 300-acre farm grows a spectrum of greens, herbs,
beans, tomatoes and an unexpected cornucopia of obscure products almost impossible to find elsewhere. You’ll find impossibly tiny clusters of thyme Joe no more than a Crea few centimeters long, custom-grown lettuces, and sweet corn raised under black plastic in darkened rooms in order to yield pure yellow mini-shoots exploding with sugary flavor. Such curiosities are purchased by top-tier chefs to adorn plates on tables of premier restaurants in every corner of North America.
Given their success, why did farmer Lee Jones; his parents, Bob and Barb Jones; and others in the brood host such an event on their farm? “You know, a few years ago I was invited to speak at the MAD food symposium, hosted by chef Rene Redzepi of Noma Restaurant in Copenhagen,” Lee Jones said. “I was very inspired by the real relevance of the presentations and conversations during that event — the real truth, and guts, of what was being discussed. “It felt like a real ‘chefs’ conference. Looking back, I felt like there was a gap here in the U.S. There are many great conferences here in the States, but few that dealt with the real issues
that chefs face. So we wanted to take a different path than the usual.” Five years later, the conference in Huron and nearby Milan has grown. “This year, we had to cut it off at 250 attendees, and we had another 100 on the waiting list,” Jones said. “But we didn’t want to impact the overall experience and hamper the chefs in preparing the food, all the rest.” Over the course of two days, Roots hosted a series of panels focused on topics built around the theme of creativity. Expert panelists tackled issues such as the changing face of “fine casual” dining, food as medicine, the art of the meal, happy workers and a thriving company.
Neurogastronomy, the science of taste perception, sounded like a mind-numbing topic when I was first asked to moderate a panel of scientists, but it proved fascinating. George Sideras (corporate executive chef, Nestle Professional, in Solon and Dayton), Andreas Pias (senior research chef, McCormick & Co., Baltimore) and Jonathan Brill (researcher, Hewlett Packard, Palo Alto, Calif.) batted around a litany of questions. We talked about “umami,” now considered the fifth component of taste (along with sweet, sour, bitter and salty), and the role texture plays in taste (foods with “crunch” tend to slow chewing, yielding more time for the palate to take in and savor the endless components of flavor). Perhaps most amusing was how the herb cilantro evokes such wildly different reactions among samplers. (But, no, the scientists asserted: There are no genetic factors that account for the dramatic love or hate so many consumers assert.) The “fine casual” discussion offered plenty of fodder for consideration. Panelists Brad Nelson (global executive chef for Marriott International), Brad Kilgore (chef-owner for Alter, Miami) and John Miles (Steelite USA) mused on a range of issues, such as appropriating unexpected venues for hotel restaurants — rooftops, mezzanines and unused corners —“rather than taking up prime lobby space,” Nelson said. They cited changing expectations for children’s menus: more and more kids are ordering right off the main menu rather than traditional “kiddie” fare. (“Times are changing and children’s tastes are, too,” Nelson said.) And in a never-ending quest to integrate unpredictable ingredients into menu options, the chefs talked about the challenges of gleaning from the international marketplace and how growing reliance on the “overnight” convenience Amazon extends as much to chefs as other consumers. “She Will Rise,” about women in leadership roles, was one of the most engaging program hours. In addition to Susan Ungaro, the James Beard Foundation’s outgoing president, two Ohio powerhouses joined in: Jodi Berg, fourth generation president and CEO of Olmsted Falls-based Vitamix Corp., and Jeni Britton Bauer, founder of Jeni’s Splendid Ice Creams in Columbus. Women helping other women was a cornerstone of the discussion, but the panelists delved into what motivates them (“Just make it MATTER,” Berg said) and the work-life balance (“Work hard and play hard. Focus on the work, but when you’re trying to have fun, play hard,” Ungaro said). Anyone who attends such a conference knows that the many spontaneous conversations that occur are often as illuminating as the formal presentations. Attendees such as Cleveland chefs Bridget McGinty of Tastebuds, Britt-Marie Culey of Coquette Patisserie and Matt Del Regno of Levy Restaurants at Cleveland Convention Center joined in some of the event’s most spirited discussions. Through it all, fresh food — especially just-from-the-field produce — played a central role in the event. The Chef’s Garden executive chef Jamie Simpson, accompanied by a procession of guest chefs, masterfully orchestrated a series of culinary surprises. Guests took seats at a sea of candlelit tables, laced with ripe tomatoes, greens and wildflowers, stretching under the open sky. In every aspect, Roots V was a feast for the senses — and especially the intellect.
CRAIN’S CLEVELAND BUSINESS
‘Win or get eaten’ The battle for accounting talent has reached a fever pitch, and firms are reacting accordingly
By JEREMY NOBILE email@example.com @JeremyNobile
Skoda Minotti’s Heidi Hoyt is facing a rare challenge in filling a lucrative post at a Cleveland manufacturer for a comptroller that would transition to CFO. To this recruiter of more than a decade, the most telling sign of the fight for talent in the accounting field is no better illustrated than by an otherwise coveted CFO opportunity for which suitable candidates today are seemingly few and far between. She’s assembled a group of just three people for that job, and each was directly solicited to apply. There have been no applicants — another rarity. “Five years ago, I would’ve had to narrow this down to five or seven people,” said Hoyt, the director of staffing for Skoda itself and also head of the Cleveland-based firm’s boutique recruiting practice for clients. “Today, we’re thankful to just have three.” While the post is outside a traditional accounting firm, Hoyt said the pool of people is so shallow because companies are holding on to their top accountants tighter than ever, which is translating to a host of challenges for accounting firms battling to fill their own ranks in an industry already coping with a talent shortage. SEE RECRUITING, PAGE 22
Illustration by Liana Monica Bordei via iStock
O C T O B E R 2 - 8 , 2 017
PA G E 13
PA G E 14
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
YOU DESERVE LESS LESS HASSLE
YOUR BUSINESS DESERVES MORE It’s time to upgrade your expectations. At Cox Business, you get scalable, reliable services backed by 24/7 business-class support from a trusted provider. That means less headache, less hassle and more time to focus on what matters most, your business. S W I T C H T O COX B U S I N E S S .
50 Mbps INTERNET AND VOICE WITH UNLIMITED NATIONWIDE LONG DISTANCE
for 6 months with a 2 or 3-year agreement
SWITCH TODAY. CALL (877) 903-7884 OR VISIT coxbusiness.com *Offer valid until 12/31/17. Minimum service term, equipment, installation fees, taxes, and other restrictions may apply. See coxbusiness.com. © 2017 Cox Communications, Inc. All rights reserved.
New normal sets in for private equity Competition for deals is at a record high due to growing arsenals of dry powder By JEREMY NOBILE firstname.lastname@example.org @JeremyNobile
Competition for deals, fueled by a record level of built-up dry powder, is forcing private equity firms to adapt to a shifting landscape. And while there’s a lot of buzz surrounding the tough environment, it’s not all doom and gloom, emphasized Stewart Kohl, co-CEO of The Riverside Co., a global private equity firm and the largest with a home base in Cleveland. Competition is leading to higher company valuations, contributing to a seller’s market. It’s something firms enjoy when selling off assets, but are forced to cope with on the buy-side. So when it comes to finding deals, there’s more pressure in finding the best companies in an already crowded landscape and realizing value. This all means funds are still buying and selling companies as they always have — after all, they can’t just sit on the record levels of money investors are pumping into them as private equity continues its shift to a mainstream investment class.
They’re just going about it all a little differently. “What’s happening is, once upon a time in PE, there was more of a cushion. You could get pretty good returns even if you didn’t have a great idea of what to do, or didn’t execute on the plan very well,” Kohl said. “In today’s world, you have to have a really smart idea, and you have to execute it well,” he added. “The market is enforcing that. We have to up our game and get better. Deeper industry specializations, more use of a strong operating partner, deployment of outside experts to serve on boards and guide businesses, all these things are required today just to generate the same returns.” At the heart of this movement in private equity is that buildup of dry powder — an industry term for the money held by private equity funds that’s ready to be deployed. According to research firm Preqin, private equity dry powder globally increased by more than $80 billion between December 2016 and May 2017, leading to about $906 billion available for investments, an industry record. Buyout dry powder composes about 62% of all that.
“Everstream connected us to their fiber ring to provide the high-speed, low-latency connectivity that our business requires.” Tim Sakmar Global Network Manager, MTD Customer since 2011
Faster Fiber. Better Business. Enterprise to Wholesale. Networking to high-speed internet. Everstream is your Business Fiber Network.
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 15
FINANCE The fact more money is chasing fewer deals means companies have some leverage to charge those higher multiples. Kohl said it’s common to see highly sought after, revenue-growing companies — like those in software, for instance — with price multiples between eight- to 12-times EBITDA. Some sectors will see companies valued as high as 15-times EBITDA. Five-times EBITDA was a more common expectation several years ago. Companies looking at that multiple today are probably not even selling. This places even more pressure on vetting potential investments beforehand, said Bert Smyers, founder of Cleveland’s New Heights Research, which does buy-side diligence for private equity funds. This environment has kept him busy as firms fret whether they’re overpaying for deals. “The fact of the matter is, once that letter of intent (to invest) is signed, people are spending real money on diligence. I’m seeing more of an imperative to get the bid right because they know they will be in tremendous competition among peers if they want the deal,” Smyers said. “The leverage has shifted back to the seller, and the sellers know that. They’re dictating the deal timelines. They couldn’t do that in the past.” In this climate, acquisitions of add-on companies for platform investments are key in achieving value over a hold period, Kohl said, and they often come at lower pricetags. It’s a core strategy for Riverside. Doing so can drop the valuation of a
“Deeper industry specializations, more use of a strong operating partner, deployment of outside experts to serve on boards and guide businesses, all these things are required today just to generate the same returns.” — Stewart Kohl, co-CEO of The Riverside Co.
Illustration by erhui1979 via iStock
NATIONALLY FOR CAREER READINESS
– Bloomberg BusinessWeek
company from 10-times EBITDA to eight-times. “If we bought a company for 10 (times), drive it down to eight (times) and sell it for 12 (times), then that’s a really happy day,” Kohl said. The firm has also reinvested in companies its already taken and exited positions in. An example of all this is this comes with The Dwyer Group Inc., a Waco, Texas-based holding company for about a dozen service-based franchise companies. Window, painting and drain businesses are all in under the Dwyer umbrella. Riverside first bought Dwyer in 2003, then sold it 2010. It reinvested in the company in 2014, and has made at least add-on acquisitions for Dwyer since then. While large private equity firms reevaluate their approach to the market, another trend is emerging with funds increasingly looking for value in smaller companies than they might’ve traditionally looked at. The lower-middle market is an attractive end of the spectrum right now. In Northeast Ohio, several new firms have started up recently to focus specifically on companies there, particularly those in niche manufacturing — which there are plenty of in this market, and many funds see them as underserved. Those include Align Capital Partners, which was formed in spring 2016 by a trio of former Riverside principals, and Watervale Equity Partners, which formed this summer from a group that left Linsalata Capital Partners. SEE EQUITY, PAGE 16
IN THE MIDWEST
– U.S. News & World Report
Educating the world’s next “greatest generation” of leaders Internships
John Carroll is located just ten miles from downtown Cleveland, which allows its students to access internships year round.
JCU and Cleveland are defined by their strong sense of civic purpose. JCU’s partnerships with numerous organizations allow students to give back to the community while helping them become civically-engaged change makers
JCU students have done research in a range of areas both on campus and with community partners such as Cleveland Clinic.
“During my junior year, I interned at one of the largest professional services firms in the world. Upon completion of the internship, I was offered a full time job after graduation—a great way to start my summer heading into senior year.”
“It’s exciting to be a part of this community where students and faculty alike are committed to being men and women for and with others.” – Will, Class of 2018
– Laura, Class of 2017
Backed by a 450-year-old Jesuit tradition, John Carroll challenges students to go beyond mastering the latest knowledge and skills. John Carroll provides the experiences that prepare graduates for a constantly changing world and helps students become their best selves so that they can be a force for good. More than 500 businesses in Northeast Ohio are owned or led by John Carroll alums. With its focus on programs that meet the needs of its students as well as the demands of the job market, John Carroll is educating the next generation of world-class leaders.
“I conduct research on pediatric obesity alongside the staff of Cleveland Clinic. I have continued to work on publications and have worked with JCU alumni who have been supportive and helpful along my journey.” – Leanne, Class of 2019
To learn more visit go.jcu.edu
PA G E 16
O C T O B E R 2 - 8 , 2 017 |
CRAINâ€™S CLEVELAND BUSINESS
Sherwin-Williams tweaks its expectations The paintmakerâ€™s earnings are expected to be impacted by the recent string of hurricanes By SCOTT SUTTELL email@example.com @ssuttell
A string of hurricanes and earthquakes is taking a toll on sales at Cleveland-based paintmaker Sherwin-Williams Co. (NYSE: SHW). The company announced on Thursday morning, Sept. 28, that it expects third-quarter revenue to be reduced by $50 million to $70 million as the result of disruptions to operations in Texas, Florida, the Caribbean
and neighboring areas from hurricanes Harvey, Irma and Maria, and from two earthquakes in Mexico. Sherwin-Williams also lowered its per-share earnings guidance for the quarter to $3.40 to $3.70, down from previous guidance of $3.70 to $4.10. The guidance includes a $1.10 per share charge from costs related to the companyâ€™s $11.3 billion acquisition of Valspar, completed in June, and includes an earnings-per-share increase of 40 cents to 60 cents per share from Valspar operations, the company said in a news release.
Sherwin-Williams operates 706 paint stores in Texas, Florida and the Caribbean, and it has 145 company-operated stores and 387 dedicated dealers in Mexico. In the days surrounding the three hurricanes, Sherwin-Williams said its company-operated paint stores, manufacturing facilities and distribution centers in the affected regions â€œsuspended daily operations to ensure the safety of employees and comply with instructions of the local authorities.â€? The company said it expects
third-quarter sales and profit â€œto be negatively impacted by the lost sales days, costs related to clean up and recovery efforts and tightened supply of propylene and ethylene based raw materials.â€? John G. Morikis, Sherwin-Williamsâ€™ chairman, president and CEO, said in a statement, â€œOur thoughts and prayers are with the thousands of Sherwin-Williams employees and all those affected by these catastrophic natural disasters who have experienced loss. Efforts are well underway to provide relief and support
THEREâ€™ S ONLY ONE THING TO DO WITH A CROOK E D S TOCK BROK E R .
to the affected communities. The majority of company-operated stores and facilities in these regions have reopened, and we have made tremendous efforts to quickly resume operations while supporting those in need during this difficult time.â€? Considering the full impact of the storms and earthquakes, Sherwin-Williams said it expects that core net sales in the third quarter â€œwill increase a low single-digit percentage compared to the third quarter last year,â€? below previous expectations of a low to mid single-digit percentage increase. â€œWhile we are still assessing the longer term impact of these tragic events on our business, the sales momentum we are seeing across most geographies â€” particularly in our company-operated stores in the unaffected regions of the U.S. and Canada â€” should enable us to recover some of the third quarter earnings shortfall over the balance of the year,â€? Morikis said. Sherwin-Williams plans to provide a full-year 2017 outlook on Oct. 24.
CONTINUED FROM PAGE 14
Watervale co-founder James Guddy has noted that his firm is looking for companies with about $6 million in EBITDA, which are small enough that their greatest competition for those businesses is with other firms looking in that niche. To Guddy, thatâ€™s where the opportunity is. Steven Rosen, co-founder of Beachwoodâ€™s Resilience Capital Partners, has long focused on smaller, niche manufacturing companies, which, despite being smaller, can often undergo more lucrative, transfor-
â€œIn an environment like this, good assets always fetch a premium price, and most firms have lowered their expectations.â€? â€” Steven Rosen, co-founder of Resilience Capital Partners
S T R A IGH T E N HIM OU T. At Meyer Wilson, weâ€™ve been successfully representing individual investors against their brokerage Â€UPVIRUPRUHWKDQ\HDUV:HČ‡YHGRQHLWORFDOO\:HČ‡YHGRQHLWQDWLRQDOO\$QGZHČ‡YHEXLOWRXU UHSXWDWLRQRQRXUVXFFHVV6RLI\RXNQRZRIDVWRFNEURNHUZKRLVFURRNHGQHJOLJHQWRUMXVWSODLQ QRWVPDUWHQRXJKWRGRWKHULJKWWKLQJFDOOXV:HFDQKHOS
Meyer Wilson Co., LPA
mative impacts through the injection of new technology. In a tough deal environment, sticking to their business plan is key, Rosen said, adding â€œwe thrive in environments like this.â€? The firm has made nine investments since summer 2016. Manufacturers and services of medical devices, a label maker and printing company and an LED light manufacturer compose some of those deals. â€œBut in an environment like this, good assets always fetch a premium price,â€? he said, â€œand most firms have lowered their expectations.â€? Working in the smaller end of the market takes â€œdiligence and patience,â€? Rosen said. But itâ€™s a strategy many funds are focusing on today. â€œIt takes time to see results in the investment youâ€™ve made,â€? he said, â€œbut youâ€™re going to do OK.â€?
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 17
Shearer’s Foods searching for new CEO The Massillon-based company did not disclose the reason for C.J. Fraleigh’s departure By DAN SHINGLER firstname.lastname@example.org @DanShingler
There may be a dream job in Massillon for the person with the right business acumen, executive experience and a taste for crunchy, salty snacks. Shearer’s Foods said it’s currently engaged in a nationwide search for a new CEO, with company veteran and former president Scott Smith currently serving as interim CEO — and is in the running to take the role permanently. “There is a new interim CEO. It is Scott Smith. He had been with Shearer’s for a number of years prior. He left for about five years and came back in February as the chief commercial officer and is now the interim CEO,” said Shearer’s spokeswoman Kelly McGolrick. She declined to say why former CEO C.J. Fraleigh recently left the company, but did say that Farleigh, who is in his 50s, did not retire. Fraleigh was part of a buyout group, led by Chicago-based Wind
Cleveland Metroparks appoints new CFO CRAIN’S CLEVELAND BUSINESS
Cleveland Metroparks has named Bill Chorba as its new chief financial officer, Chorba, who most recently served as CFO at Beachwood-based NineSigma, will take over for Karen Fegan, who will return to her role as the parks’ controller. Fegan has served as the CFO since June 2016, following the departure of Dave Kuntz for a Chorba similar role at Cuyahoga Community College. Chorba will earn an annual salary of $189,000, according to a parks’ spokesperson. “Bill brings a strong and diverse financial background to the Cleveland Metroparks and will provide responsible oversight and stewardship of public dollars as we continue to remain debt-free,” said Brian M. Zimmerman, Cleveland Metroparks CEO, in a prepared statement. In addition to the CFO role at NineSigma, Chorba also served as managing director for NineSigma Europe and on the board of directors of NineSigma Japan. He has served as chairman of the Ohio Society of CPAs since 2015, and as an advisory board member for UpSearch LLC, a technology firm of Microsoft Data Platform specialists. He earned his bachelor’s degree in business administration Baldwin Wallace University in Berea.
Point Partners, that acquired Shearer’s in 2012. Prior to that, he had been CEO of Illinois-based Sarah Lee before departing stemming from a disagreement with the company’s board of directors in 2011, The Wall Street Journal reported at the time. Regardless of the circumstances, McGolrick said, the change will have little to no effect on Shearer’s direction, its operations or its more than 3,000 employees in nine states and Canada. “Our strategy is sound and on
“There is a new interim CEO. It is Scott Smith. He had been with Shearer’s for a number of years prior. He left for about five years and came back in February as the chief commercial officer and is now the interim CEO.” Smith
— Shearer’s spokeswoman Kelly McGolrick
track. We continue to obviously fine-tune the strategy, but this does not change it,” McGolrick said. The company is looking broadly
as it determines who will be its next permanent CEO, McGolrick said, but Smith is interested in the position and certainly in the mix.
“He absolutely is in consideration and he would love to have it – and I would love for him to get it,” she said, noting that she worked with Smith during his previous time with the company. The chips may fall Smith’s way — Shearer’s may have a tough time finding someone who knows more about the snack business, or Shearer’s specifically. Not only was Smith president of the company from 2005 to 2013, but he has also served as chief operating officer and chief financial officer.
PA G E 18
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
Lawyers who are skilled skilled / skild/ adj. 1. Our ability to think outside the box and understand complex issues quickly, offering effective, practical solutions. 2. walterhav.com
Huntington eyes growth following FirstMerit deal Focus shifts from cuts to boosting revenue By JEREMY NOBILE email@example.com @JeremyNobile
If this is your definition of the type of attorney you want working for you, give us a call.
The Real Estate Attorneys of
Cleveland | 216.781.1212 | walterhav.com
LEARN ARN MORE TODAY ABOUT HOW CRAIN’S CAN HELP YOU AND YOUR CONTENT MARKETING PROGRAM. Contact Amy Stoessel at 216.771.5155 or firstname.lastname@example.org.
est . 1896
Where passions are discovered. See how we inspire each girl to fulfill her promise and to better the world every day. Our Open House offers the opportunity to learn about our nationally-recognized Center for Research on Girls, as well as our rigorous academic programming grounded in the themes of civic engagement, global studies, entrepreneurship and STEAM (science, technology, engineering, arts, mathematics). Her discovery starts here.
LYMAN CAMPUS One Lyman Circle, Shaker Heights, Ohio
Dream. Dare. Do. Girls Kindergarten through Grade 12 and Coed Pre-Primary
BUTLER CAMPUS 7420 Fairmount Road, Russell Township, Ohio
All-School Open House Sunday, October 15, 1:00 -3:00 pm RSVP today! LaurelSchool.org/OpenHouse
When Columbus’ Huntington Bancshares announced it was acquiring Akron’s FirstMerit Bank in January 2016, executives touted a slew of synergies in the combination creating an ideal mix of potential cost savings and revenue growth. Now, the time has come to execute on the latter half of those plans in that $3.4 billion deal. This past August marks a year since that acquisition closed. With the merger now more than a year in the books, the bank is turning a critical corner from cutting costs to making money. In mid-year earnings, Huntington CEO Stephen Steinour emphasized the bank — now at $101 billion in assets — remains on track with all its cost-cutting moves, which are to amount to annual cost savings of $225 million. Much of that comes from the elimination of duplicated work, including a tightening of the branch network where Huntington and FirstMerit branches most closely overlapped. “We got a great group of new colleagues in the company from FirstMerit, and we couldn’t be more thrilled with the quality of the team moving forward together,” Steinour said. “But we are quickly shifting gears.” That next gear is one intended to put Huntington on the runway for its next phase of growth. And that means executing on everything the legacy FirstMerit operations offer. Analysts say the bank has been particularly open with investors about its plans, which include achieving $100 million in revenues in year two of their merger as a direct result of the deal. Huntington is spending money to make money by investing in its efforts for small-business lending — the SBA program is an area the bank dominates in, being the largest lender of SBA loans in Northeast Ohio and the second largest in the entire U.S. despite just eight states in its core footprint — home lending and RV, boat and marine lending. Wisconsin and Chicago are areas newly added to Huntington’s reach with FirstMerit. SBA loans are being heavily pushed there and while the bank is effectively starting that program from scratch in those markets, it’s already the third or fourth largest SBA lender in them, Steinour said. The mortgage business is another that should benefit from a generally expanded footprint. Meanwhile, the RV, boat and marine lending channel is new for Huntington. That was a niche arena in which FirstMerit did well, and it’s a business being introduced to the legacy Huntington markets. Expanding the reach of its rather little-known services — in comparison to peers — in capital markets, treasury management and private banking is also a priority. Yet, across its geographies, new
bankers and expanded teams are looking for fresh opportunities in those major lending arenas. It’s a logical plan, and one that’s showing early signs of benefit. In mid-year earnings, loan growth from FirstMerit helped grow the bank’s total earning assets by $23.9 billion, or 35%, from the like period in 2016. Total loans grew 30%. That performance helped log a record second quarter for the bank in net in- Steinour come and earnings-per-share increases. While those figures look promising, organic loan growth for the bank has been rather stagnant. In the second quarter, overall loans grew less than 1%. Commercial loans, meanwhile, actually decreased by about 1% over the same period due to FirstMerit-related loan runoff. Bankers across the country have reported rather tepid loan demand this far through 2017 compared with their expectations coming into the year. There’s growth, it’s just been slow. But Huntington still has some work to do. “Loan growth remains generally fine, but not as robust as was hoped at eight to nine months ago,” said Scott Siefers, a bank analyst at New York's Sandler O'Neill and Partners. “Average loans were a bit weaker than we expected, and for Huntington in particular.” Many analysts are now waiting to see what Huntington shows in the coming quarters and if the bank can turn around some “sluggish” growth, said Fred Cummings, president of Pepper Pike hedge fund Elizabeth Park Capital Management. That’s why their stock price has stayed relatively flat through the year following a spike in price mostly all large-cap banks saw at the end of 2016 in what’s been characterized as the “Trump Bump” a surge in bank stocks that came from a wave of investor optimism pushed by expectations for things like reform of bank regulations and tax codes, along with what many expected to be a generally more favorable climate for businesses. “I think they’re probably ahead of schedule on cost savings, but the market is concerned about revenue growth,” Cummings said. “If Huntington can deliver (on cost cuts), and maybe beat expectations on the revenue side, that would position them for an upside surprise, and their stock will respond accordingly.” Just because Huntington has some work to do in lending doesn’t mean it’s not performing well, though, or that investors expect the bank to miss its promised watermarks for cost cuts and revenue growth. If anything, analysts say, the bank has a good reputation for management and hitting its goals — the fact executives were so open with specific figures for revenue growth is a move to show the market transparency. SEE HUNTINGTON, PAGE 22
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 19
FINANCE Adviser: Kate Hubben
Total Rewards packages must go beyond the obvious Many small to midsize companies look at Total Rewards as the tail wagging the dog. And as a result, companies neglect to articulate a Total Rewards philosophy, a statement that identifies what a company wants to achieve with its Total Rewards program, which refers to the full combination of monetary and non-monetary investments companies make in their workforce to attract, retain and engage the people they need to operate their business successfully. And if a company does not have a Total Rewards philosophy, it is nearly impossible to create any type of a human capital strategy, much less a modernized, robust and profit-yielding one. First off, in order to create a Total Rewards philosophy, it’s important to obtain a baseline assessment of your current program. Some companies use retention to measure Total Rewards satisfaction. According to Willis Towers Watson’s 2016 Talent Management and Rewards Study and the 2016 Global Workforce Study, turnover can be an expensive opportunity cost if employees are not happy. For example, at the senior manager/executive level, the cost of turnover equals 74% of annual compensation. Given that 31% of senior level managers are at risk of turnover, the total value at risk due to senior managers’ turnover is 23% of the total annual compensation. This varies by job level and by organization, but it still represents a significant level of productivity and financial value at risk. Other companies like to rely purely on benchmarking data to determine if their Total Rewards stack up. Companies want to know if the plan design matches that of their competitors or how much money their competitors contribute to premiums and is it more or less than they do. While this is an important exercise, there are always outliers and this method does not lend itself to creativity or innovation. And lastly, there are some companies that measure the success of their Total Rewards by the level of employee engagement. Sustainable engagement matters and makes a difference to your organization’s performance. Companies with more highly engaged employees improve profitability at a faster rate than their sector peers, and those with more disengaged employees lag sector performance substantially. The study found that there is considerable room for improvement as only slightly more than a third (37%) of employees globally are highly engaged and a quarter of employees globally are disengaged. These various assessments will provide organizations with a sense of how well their programs are performing, which, in turn, will help inform their Total Rewards philosophy. In order to craft a Total Rewards philosophy, your company must answer the following questions: J Is your company optimizing its Total Rewards investments to achieve the right cost, behavior and performance outcomes? J Does your company’s Total Rewards programs attract, retain and engage the talent you need across your business, at all levels? J What are the key cost/value trade-
Kate Hubben is a client advocate at Willis Towers Watson in Cleveland.
offs for your company in balancing cost management and workforce management objectives? J Is your company optimizing its cost/value for key reward programs
“If a company does not have a Total Rewards philosophy, it is nearly impossible to create any type of a human capital strategy.” and the Total Rewards portfolio overall? J Does your company’s Total Rewards programs reinforce the desired “deal” with employees (i.e., aligning
employee behaviors with key business needs and direction of the company)? J Does your company’s employees understand and recognize the value of their Total Rewards portfolio? The 2017 workforce is changing fast, which can make the development of any human capital strategy more difficult. According to the Willis Towers Watson studies, employees place a higher value on leadership, transparency and job security more than ever before. Employees don’t want or expect a “forever job” but
rather the skills to remain relevant and employable throughout their career. The thread through all of these findings is that Total Rewards, jobs, performance and individuals vary — one-size-fits-all approaches to programs may not fit everyone. However, a Total Rewards philosophy can have the breadth and latitude to appeal to all your employees from millennials to Medicare eligibles and can push forward a human capital strategy that will have a meaningful impact on your company.
Front Row: Allen Weaver, Tim Flenner, Ben Palazzo Back Row: Justin Singer, Andy Meinhold, Eryn Medved
Your business lending team. COMPANY OVERVIEW Assets: $2.6 billion Deposits: $1.9 billion
It makes a difference. Business owners like you deserve the highest level of personalized
Capital: $230 million
service. At ERIEBANK, your local commercial banker has the authority
Employees: Over 500
to make quick decisions. Access to capital is readily available by
Customers: Over 80,600
cutting through the red tape to get a loan processed quickly. Commercial Banking Division 7402 Center Street • Mentor, OH
And that means, you can concentrate on what’s most important to you—growing your business and bottom line.
Phone: (440) 205-8100
Big or small, ERIEBANK offers customized solutions to fit your unique situation. Call us today to schedule your personal meeting.
Commercial and Industrial Loans • Lines of Credit Commercial Real Estate Acquisitions & Refinancing • Corporate Credit Cards Treasury Management Services • Business Online & Mobile Banking
PA G E 2 0
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
Q&A: Brian Williams
Executive director, PNC Fairfax Connection PNC logo? Check. ATM? Check. A row of bankers looking to peddle their products? Not quite. In a nutshell, that would describe the PNC Fairfax Connection at East 83rd Street and Carnegie Avenue on the eastern rim of downtown Cleveland. The $5 million facility, which is celebrating its fifth anniversary this fall, might look like a bank from the outside, but what’s inside couldn’t be further from the truth. Just ask Tiffany Scruggs, who told Crain’s the resume help and staff at PNC Fairfax Connection “allowed her to get the confidence she needed” to transition to the next phase of her career at the Greater Cleveland Foodbank. Since its opening, the bank-funded community resource center has served thousands of residents in Cleveland’s Fairfax neighborhood at no cost to them. In addition to the impressive array of technology at members’ disposal, programs there include resume building, financial wellness and even yoga. Crain’s recently chatted with PNC Fairfax Connection’s Brian Williams — who until recently had run a PNC branch in an economically challenged area in Akron — about what makes the facility unique in Northeast Ohio’s finance industry and his passion for helping others achieve their goals. —Timothy Magaw
So, you’re the new guy around here. How have you gotten to know the community? Just by making myself available to every member who walks in. In my first week, I just sat in the lobby and introduced myself as they came in. I try to leave my door open all the time. I want them to feel that they can poke their head in and have a conversation. As the executive director, I need to be as available to our members as possible so I can hear their needs and help them accomplish their goals. During those conversations, what have you learned about this community? Fairfax is a very proud and resilient community. People are very proud to be from the Fairfax area. Many of the members that come in are here because their parents are here, or their grandparents staked a claim in this community. Many remember the good old days here and want to see those days return.
THE 2017 LITTLER OHIO EMPLOYER CONFERENCE
The Winds of Change: Strategies to Help Employers Bend, Not Break
SAVE $50 reference promo code
Thursday, October 19, 2017 Corporate College East 9:00 a.m. – 4:30 p.m.
So, despite the PNC logo on the facility, this is not a bank. What do you offer? All kinds of programs from pre-K all the way to seniors. They could be physical education services — we have a yoga class on Saturdays. We do a Kids in the Kitchen class where we teach young people how to cook. Parents expressed interest in that class, so now we have one for whole families. We also have financial empowerment classes. We have a little bit of everything. Maybe this is a cynical question, but because the facility isn’t necessarily designed to drum up banking business, what’s the value for PNC? I think we all ask that. Why does PNC spend all these dollars in this community? PNC, of course, has roots in the city because of National City, so there is a sense of pride because of that history. So, if this community is taken care of, PNC will see the benefits of it as well. So, there’s no sales pitch for PNC’s services. Is it a challenge
to get people to realize that? I don’t think it’s a lot of work to get them to use the resources once they discover what we have here. The hardest thing is getting awareness out into the community that we are here to help them. Our
Join Littler, the nation’s largest employment and labor law firm, for a program designed to provide legal and human resources professionals with strategies to navigate the continually shifting employment and labor law terrain.
Providing a private travel experience that exceeds expectations
To register please email Veronica Rodriguez at VRodriguez@littler.com. CLE, SHRM and SPHR/PHR credit pending.
Oswald Centre | 1100 Superior Avenue East | 20th Floor | Cleveland, OH 44114 | 216.696.7600
» 13 Private Jets » Free In-Flight WI-FI » Jet Card & New Club Programs
FlySkyQuest.com 216-362-9904 Charter@FlySkyQuest.com
CRAINâ€™S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 21
Susan Blasko makes pizzas with children from St. Adalbert Catholic School during the Kids in the Kitchen program at Fairfax Connection.
Above: Members participate in Black History 365, a class that promotes discussion about current events. (Photos by Bob Perkoski)
anything about my career, but this is where I need to be at this point in my life. I want to be able to take the time to be with people and learn what they need. Iâ€™m lucky to have PNC who is willing to provide those resources for the community. Itâ€™s also nice being able to do philanthropic work without having to worry where the money is coming from or what the budget is like. Thatâ€™s really huge for this community.
What are some of the biggest concerns or questions with which this place can help? Itâ€™s usually around budgeting â€” people just want an understanding of what it takes to budget so they can make ends meet. Theyâ€™re also looking for employment resources. We can help with resume building, or sit down with them and help them navigate job websites and show the best way to put in a resume so itâ€™s not weeded out by some electronic system.
I imagine people come in here looking for help with some pretty difficult financial situations â€” losing a home or unemployment, for example. Whatâ€™s the first thing you say to those people? The first thing I let them know is that they are not the only one going through that struggle. They are not alone. Then I get them as much information as I can, and share experiences of how Iâ€™ve helped people recover before. Then we build a plan. Where does your passion for helping others come from? I wish I could tell you. I think itâ€™s God-given, but I think itâ€™s from experiences too. Iâ€™ve been down on my luck, too. Iâ€™ve had high highs and low lows. When you suffer financially or otherwise, if youâ€™re a good person, I think you can gain a little more compassion for folks. Once I got back on my feet again, I had a burning desire to help others realize their goals and be the best they can be.
Left: PNC Fairfax Connection is a free community resource center at East 83rd and Carnegie Avenue. this door. They just put three signatures on a disclosure form, get a card like youâ€™d use at Giant Eagle or Heinenâ€™s, and then any of the resources we have here are available to them.
membership has grown to 6,000plus in five years largely because of word of mouth. I havenâ€™t taken someone on a tour yet and they say, â€˜This isnâ€™t for me.â€™ Once people walk in, theyâ€™re amazed and as surprised as I was when I first walked through
Whatâ€™s your favorite part of this role? Just being able to take my time with the members and be able to help them with their lives. I was blessed to do the same in my previous role as a branch manager, but sales goals were always involved and all that goes along with managing a financial institution.
Serving up your business a
GREAT EAT RATE CD
Do you miss that hardcore banking component? I donâ€™t. I would never change
12-MONTH NYCB BUSINESS LIQUID CD FOR SALE
ASSISTED LIVING SITE
SHOVEL-READY SITE LOCATED JUST OFF OF I-77 ON MULL AVE
â€¢ FlexibleLQEUDQFKSHQDOW\IUHH withdrawals2 1
â€¢ $2,500 minimum to open and earn interest
OVER 2.4 MILLION PEOPLE WITHIN A 45 MINUTE DRIVE TIME OVER 82,000 CARS PASSING DAILY (I-77) 1
SVN SUMMIT COMMERCIAL REAL ESTA ESTATE GROUP, LLC CONTACT: Ben Christopher
Associate Advisor Ben.Christopher@SVN.com 330-631-7285
3045 Smith Road, Suite 200 Akron, OH 44333 (234) 231-0200
Annual Percentage Yield (APY) above is accurate as of date of publication and is subject to change without notice. The minimum balance to earn the stated APY for the 12-Month Business Liquid CD is $2,500. The interest rate remains Ã€[HGXQWLOPDWXULW\)HHVFRXOGUHGXFHHDUQLQJV7KHSURPRWLRQDO&'PXVWEHRSHQHGZLWKQHZPRQH\QRWFXUUHQWO\ RQGHSRVLWZLWKWKH%DQN$YDLODEOHDOVRIRUQHZEXVLQHVVDQGQRQSURÃ€WDFFRXQWV3OHDVHDVNDEDQNUHSUHVHQWDWLYH for the full terms and conditions of the Business Liquid CD. 2 $SHQDOW\PD\EHLPSRVHGIRUZLWKGUDZDOVEHIRUHPDWXULW\7KHSHQDOW\ZLOOEHZDLYHGLIWKHZLWKGUDZDOLVPDGHDIWHU WKHÃ€UVWVL[GD\VRIWKHDFFRXQWWHUPRUDIWHUWKHÃ€UVWVL[GD\VIROORZLQJDQ\SDUWLDOZLWKGUDZDO 2IIHUPD\EHZLWKGUDZQDWWKHGLVFUHWLRQRIWKHEDQNDWDQ\WLPH7KHEDQNLVQRWUHVSRQVLEOHIRUW\SRJUDSKLFDOHUURUV 1HZ<RUN&RPPXQLW\%DQN
PA G E 2 2
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
HUNTINGTON RECRUITING CONTINUED FROM PAGE 18
CONTINUED FROM PAGE 13
And despite any softness in the lending market overall, Steinour said the bank is still targeting growing its total loan portfolio at an annual rate of 4%-6%. Sometimes the bank even surprises itself, though. In consumer deposit retention — a key metric for banks trying to grow loan books — the bank reported deposits from legacy FirstMerit customers growing 2% at mid-year. They were expecting runoff of about 10%. Total core deposits were up 39% year-over-year. “That’s a huge differential,” Steinour said. Notably, Huntington has more than 150 branches in Cleveland and 56 in Akron, where the bank ranks second and first in deposit market share. And after shedding about 100 branches in the merger as required by regulators to break up market share — predominantly around Akron — Steinour said there are no plans to shrink that consumer network. If anything, the bank plans to expand it further. Whether locally or across its footprint, Steinour said the bank is investing in the business to achieve the growth goals it’s been discussing since early 2016. “We have a lot of capacity and a lot of customers,” Steinour said. “We’re investing in growing, and we are in this unique position because of the combination with FirstMerit.” As far as what role the local market here — where the bank has its second densest group of executives stationed outside of Columbus — plays in all that, Steinour's expectations for bulking up staff here speak for themselves. “We’ll be adding people to the team in Northeast Ohio for years to come,” he said.
“And if they do entertain an offer, they’ll go back to their employer and probably get a counter offer, and we might have to start the search all over again,” Hoyt said, adding counter offers are becoming better and more common. “That’s a worst-case scenario. But we are seeing more of this.” Acutely aware of that climate for talent, Skoda itself is adapting to better recruit and retain people for its own staff, whether they’re public accountants or more technically, digitally focused roles in areas like IT. “There’s simply a talent shortage right now,” Hoyt said. “But I also think (the industry has) created this buzz around there being a talent shortage in the last couple years, so firms are taking better care of their employees, and there are fewer people interested in making a move.” Those factors have created some headaches for the accounting industry today as firms prioritize around finding and keeping the people they need like never before. “The war on talent has gone ballistic,” said Allan Koltin, a consultant to the accounting industry and CEO of Koltin Consulting Group Inc. in Chicago. “Firms are moving from using outside firms for recruiting to doing it internally. They have war rooms set up just for that because it’s win or get eaten.”
An industrywide concern Skoda is one of many players fighting the battle for talent in the accounting field. According to the 2017 PCPS CPA Firm Top Issues Survey — a biennial report released in June by the Association of International Certified Profes-
The five-year outlook According to the 2017 PCPS CPA Firm Top Issues Survey — a biennial report released in June by the Association of International Certified Professional Accountants — firms of all sizes (except for solo operations) overwhelmingly pegged staffing as their greatest concern for their business through the next five years. Of firms with six people to 21-plus, for example, between 80%-88% of respondents said managing staff will be extremely impactful to their business. Issue Staffing
2–5 professionals 70%
6–10 professionals 80%
11–20 professionals 88%
21+ professionals 88%
Changing client needs
“The war on talent has gone ballistic. Firms are moving from using outside firms for recruiting to doing it internally. They have war rooms set up just for that because it’s win or get eaten.” — Allan Koltin, CEO of Koltin Consulting Group Inc.
sional Accountants — firms of all sizes (except for solo operations) overwhelmingly pegged staffing as their greatest concern for their businesses through the next five years. Of firms with six people to 21-plus, for example, between 80%-88% of respondents said managing staff will be extremely impactful to their business. Firms almost universally acknowledge a more challenging environment to recruit and retain talent across the industry, and a sampling of large and midsize players in the
Northeast Ohio markets shows that challenge is indeed being faced here. Among 28 of the more prominent firms in the region, nearly 60% said recruiting has become more difficult, according to research compiled by Crain’s. Midsize firms seem to being feeling the most pressures there. They're poised for growth, but they’re competing for people against each of the Big Four — Deloitte, PwC, EY and KPMG — which all have a strong presence in the market and report little concern with recruiting. But that echelon of firms is in a unique position. PricewaterhouseCoopers has a ratio of 20 people apply to every job it fills, said Mark Ross, managing partner of PwC’s Cleveland office. The company hired 14,000 in the United States last year, and two-thirds of those new recruits out of college are still accounting majors. The difference is composed of grads in finance, information systems and technology, engineering and so on. Like others in its class, PwC enjoys the benefits of the Big Four brand tag.
Corporate Training and Performance Solutions
And with global revenues of $35.9 billion in its 2016 fiscal year, it’s also got the resources to finance the development and implementation of the best programs and strategies to recruit and retain people. The company has focused lots of investments on doing just that. It must be doing something right. According to Ross, turnover across PwC was a record low 12% last year. Beyond creating a more relaxed and flexible culture that centers on work-life balance (and a freshly renovated office in Cleveland), the firm is more conscious socially and of its employees’ desires. A relatively new program at PwC helps students directly pay down student debt. There are numerous other examples of employee-minded programs. All those elements combined will eventually draw people, Ross said, adding, “I believe we are ahead of the curve with this.” “The things we’re doing are working and meaningful to our people,” Ross said, “and I think that’s why we might be in a different position than some.” But most companies aren’t PwC.
BUSINESS LIKE YOUR BUSINESS.
Corporate College® provides professional training and development customized for your organization.
Vorys, Sater, Seymour and Pease is a full-service corporate law ﬁrm that works with all kinds of businesses to help them grow. We recognize that your business is unlike any other. And what a coincidence — because our law ﬁrm is unlike any other, too.
QUALITY AND BUSINESS PROCESS MANAGEMENT TRAINING SOLUTIONS • Business Process Improvement • ISO Standards and Quality Management
• Lean and Lean Six Sigma • Professional Services and Consulting
• Safety and Environmental Compliance (OSHA/EPA)
For more information, visit vorys.com. Vorys, Sater, Seymour and Pease LLP 200 Public Square, Suite 1400, Cleveland, Ohio 44114 106 South Main Street, Suite 1100, Akron, Ohio 44308
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 2 3
FINANCE Competition intensifies
Recruiting challenges survey
Koltin said recent discussions with Big Four accounting firms center on how the recruitment of college grads could drop as much as 30%-50% by 2020 as technology increasingly replaces much of the work entry-level accountants have done. He calls it the “fourth great industrial revolution.” The battle for young talent now largely is motivated by firms looking to strengthen their ranks with these people today to train them for the work they’ll be doing in the future. That doesn’t mean there’ll be less need for accountants. It just means their work will be different. And if anything, Koltin said, they’ll have more time to spend with clients and on other projects instead of repetitive tasks as automation becomes more ingrained. That movement will only benefit the industry. Yet, as midsize firms grow, and other accounting-based jobs remain in high demand today, companies are hiring them faster than schools can graduate them. That’s fueling intensified efforts on college campuses among names trying to stand out in the crowd. Last year, for instance, Akron-based Bober Markey Fedorovich started a program giving college sophomores and juniors job offers — years before they get their diploma. Other strategies in the recruiting battle are becoming more commonplace, largely by necessity.
What specific recruiting challenges has your firm faced? Results are from 26 firms responding — many companies picked more than one answer. Poaching was mainly a problem for smaller firms. Shortage of qualified people Finding people who want to work/live in Northeast Ohio Poaching of employees by other firms Rapid growth has created many positions to fill Finding people who could potentially take over the business Recruiting has not been a significant challenge 0
Finding talent Over the past two years, has it become easier or harder to find and recruit talent, whether those jobs are entry-level, mid-level or senior positions? 28 responses. Significantly Moderately Slightly easier: easier: easier:
Little to no change:
Retaining talent Over the past two years, have recruiting challenges pushed your firm to increase salaries and/or benefits more than it otherwise would have? 28 responses. No:
Maloney Novotny has begun using executive search recruiters. Meaden & Moore holds an intern mixer to draw a larger pool of prospects at one time. Cohen & Co. has hired a dedicated campus recruiter and increased perks in their CPA bonus program. Skoda has doubled its HR team in the past three years and developed an in-house university for career and leadership development. It also offers more flexible work schedules during the busy season. When the firm does bring in a candidate for an interview, Hoyt said an offer is often made before they walk out the door from their first visit. It’s quite a lot of changes for a business that historically had to compete for people on little else but salary. But today’s employees, millennials in particular, want more than a paycheck, recruiters say. And when companies do find candidates they like, they’re working harder than ever to draw them. “You have to always take the next step up and say, what can I give them they don’t already have? We’re doing all these things to be a more attractive firm to a broader scope of candidates,” Hoyt said. Market factors tend to be cyclical, but this is a trend unlikely to change in the near future. “You have to do these things today,” said Dave Brockman, Sikich LLP’s Akron partner-in-charge. “The competition is only going to become an even greater challenge down the road.”
TECH + COMMUNITY SERVICE + FLEXIBILITY + + FREE SMARTPHONE = WINNER WINNER Any way you slice it, a career at OEC adds up to awesome. As one of the top five tech companies in Northeast Ohio, we offer innovative work, genuine balance and a lively culture. Not to mention free birthday lunches (you could actually get a chicken dinner!) Visit oeconnection.com/careers to learn more.
DINNER JOIN OUR TECH+ TEAM #OECTechPlus
THE EXPERTS JOE COMPTON
ROUNDTABLE DISCUSSION CYBERSECURITY SPONSORED CONTENT
Principal Skoda Minotti Risk Advisory Services
Joe Compton is a principal in Skoda Minotti’s Risk Advisory Services practice. With more than 30 years of IT and business management experience, he has spent the past 20 years focused on compliance and technology security management for regulated industries, including banking, health care and technology companies. As a certified information systems auditor (CISSP), qualified security assessor (QSA), core impact certified professional (CICP) and certified information security professional (CISA), Joe’s consulting practice is focused in four main areas: IT security audit and penetration testing; IT security program development; risk assessment facilitation; and business continuity planning. He is a 1989 graduate of John Carroll University with a bachelor of arts degree in English and history, and he earned in 2012 a certificate in executive management from the University of Notre Dame Mendoza College of Business. A lifelong learner, he is a graduate of Leadership Cleveland (2014) and the Mandel Leadership Program (2014) at the Cleveland Jewish Federation. Joe served on the board of Lake Catholic High School and chaired the technology committee for the Jewish Federation of Cleveland. Joe is also a board member on various Cleveland technology startups. He lives in Lakewood.
STEPHANIE J. DINGMAN Senior Vice President and Cyber Team Leader Aon Risk Solutions
Stephanie Dingman is a team leader for Aon, a global professional services firm. Stephanie manages a team of brokers and helps clients across the country address Cyber and Errors & Omissions exposures. Her areas of expertise include network security and privacy liability; technology errors and omissions; professional liability; and media liability. Stephanie advises clients on all aspects of cyber resilience, utilizing market leading solutions and proprietary data and analytics. She holds the following designations: chartered property casualty underwriter, associate in risk management and certified insurance counselor. Stephanie earned a bachelor’s degree in business administration with an emphasis on actuarial science and risk management and insurance from University of Wisconsin, and an MBA in finance from University of Minnesota.
Chief Information Security Officer MCPc
How to keep your organization or company safe from increasingly sophisticated security breaches
yberattacks are omnipresent in the digital world as data flows through systems and networks at breakneck speed. One accidental click on a hyperlink from what appears to be a legitimate email address can lead to a serious data breach and costly consequences for a company or organization. Attacks are becoming more advanced and intentional, leaving business leaders struggling to figure out how to stay ahead of and anticipate new threats. Crain Content Studio — Cleveland turns to four cybersecurity experts who discuss some of the most common concerns, and what leaders can do to be sure their data, operations and people are protected.
Bob Eckman is chief information security officer at MCPc Inc. in Cleveland. He also is an adjunct professor at Kent State University and at Cleveland State University’s Cleveland-Marshall College of Law, specializing in cybersecurity and digital systems security. He also serves as leading contributor and interim executive director of the Cleveland State University’s Center for Cybersecurity and Privacy Protection. Bob’s career background includes serving as cybersecurity program manager, during which he implemented the NEI 08-09 Cyber Security Program for Nuclear Power Generating facilities in response to 10.CFR 73-54. As part of these responsibilities, Bob served as chairman of the Nuclear Information Technology Strategic Leadership and a member of the Nuclear Energy Institute’s Cyber Security Task Force in Washington, D.C. In addition to cybersecurity, Bob is an experienced technologist and project specialist, having earned both his project management professional (PMP) and certified information systems security professional (CISSP) certificates along with his master’s degree.
Partner and Chair of the Innovations, Information Technology & Intellectual Property Practice Group Benesch
Mike Stovsky is a partner and chair of one of Benesch’s core practice groups, Innovations, Information Technology & Intellectual Property (3iP). Mike has led the growth of the 3iP group from nine to 27 professionals nationally. He also has spearheaded the transformation of the group to include comprehensive technology transactions and global data security and privacy. Mike helps companies handle deals and matters in the following areas: intellectual property, information technology, technology transactions, technology procurement, intellectual property transactions, licensing, systems implementations, technology transfer, intellectual property counseling, intellectual property commercialization and monetization, due diligence, life sciences, privacy, data security, advanced manufacturing, Internet, ecommerce, corporate, securities, venture capital and private equity. Mike is CIPP/US certified. He earned his undergraduate degree from Northwestern University and his law degree from the University of Pennsylvania. He is listed in The Best Lawyers in America, Information Technology Law (Woodward/White, 2007- present).
Q&A What are the biggest concerns in terms of day-to-day business operations from a cybersecurity perspective? MIKE STOVSKY: The biggest concerns today center around the potential impact of a cybersecurity incident on the business operations of a company, as well as the potential liability risks to the company from a cybersecurity incident. These risks include financial loss, reputational harm, having company data or systems held for ransom, governmental fines and penalties, private lawsuits and class action litigation. BOB ECKMAN: The greatest challenge in our industry is knowing the unknowns. We should strive to go where the adversary is going to go next, and that’s where we aren’t looking. Verizon’s Data Breach Investigations Report has identified the “Detection Deficit” is ever growing, that is: The time it takes from the point of compromise vs. the time it takes for us to detect (and even respond) to these breaches is not trending in our favor. I’d like to say that new tools are the panacea to solve this issue, and although a great asset that’s getting better, tools are simply not enough. Companies must get serious about how they are approaching cybersecurity from the top down. A chief information security officer, or CISO, in the boardroom who can effectively translate cyber risk into the language of business is a good start. Tactical cyber leadership on the ground who can drive out comprehensive cyber programs that seek to integrate the operational (monitoring, threat hunting, detecting breaches, physical processes); the management (policies and procedures, training, awareness); and the technical (cybersecurity tools) is equally as important. Steps to prevent attacks should be linked directly to closing the attack surface to the organization and a portfolio management process that allows the cyber team to shift and focus on new, unknown, areas quickly.
What are the latest events impacting a company’s cybersecurity risk profile? MIKE STOVSKY: These include whether the company has established a chief
cybersecurity officer with authority for technical and legal compliance; whether the company does business across international boundaries (and is subject to multiple, often conflicting, laws, rules and regulations); and whether cybersecurity risk has been elevated to the C-level and the board level in the company in terms of its importance and prominence as a business imperative. JOE COMPTON: If you read the marketing, one would believe it is ransomware, but the biggest thing affecting a company’s cybersecurity risk profile is the data they collect and how and where they choose to process that information. Most regulated businesses have a requirement to develop a vendor management program to understand vendor security profiles and financial health, and map what sensitive data they process or touch. All businesses should get serious about making this process more than a check-the-box exercise. To reduce the risk, businesses need to have a better understanding regarding the controls they are supposed to have implemented when using a third party, and test those internal controls on a regular basis. There are also some that take unnecessary risks by processing data themselves because they don’t “trust the cloud.” In many cases, if implemented properly, cloud services provided by Microsoft, Amazon and Google can be significantly more secure than hosting in a private data center where the business’ IT group is responsible for all the security. It is tough for any company to match the security firepower found at these organizations. It is not perfect, but it is better than most organizations can hope to provide with a small IT staff.
What are basic things a company can do to reduce the likelihood of an IT security incident? STEPHANIE DINGMAN: Riskresilient companies have shifted their approach to cybersecurity and the way they act — from reactive to interventionist to proactive and preventive. Among these actions: n Create effective cybersecurity board governance and accountability. Although there are still limited resources, such as a standard methodology or guidelines to help them navigate the
Cyber projects should always help to improve the process or quality of an organization. . . As part of any good risk assessment, the question that needs to be asked: what is the impact if we don’t fund the initiative?" — JOE COMPTON, Principal, Skoda Minotti Risk Advisory Services
issue, boards are increasingly adding cybersecurity to their agendas. n Prioritize assets for cyber protection. Companies must systematically evaluate assets and prioritize them for varying levels of cyber protection based on risk. n Assess third-party relationships. It's important to understand the security posture of every third party, vendor and customer. n Formulate rigorous incident response plans. Organizations must design, implement and test plans to minimize and mitigate the damage when a breach inevitably occurs. n Invest in employee awareness and education. Because even when a company arms itself to the teeth with cybersecurity measures, it can take one person opening a corrupt attachment to put the whole company in jeopardy. n Incorporate cyber governance into
the M&A due diligence process early, particularly in higher risk or heavily regulated industries. Acquiring companies should get the CISOs around the table and conduct cyber due diligence earlier in the process, alongside financial and FCPA due diligence. JOE COMPTON: If your organization is new to IT security, the easiest place to start is to go to www. pcisecuritystandards.org/document_ library and download the prioritized approach tool for implementing a Payment Card Industry Data Security Standard (PCI DSS) and implement it. Look, this isn’t going to guarantee your organization's immunity from all attacks, but the standard is easy to follow, and prescriptive (it tells you what you have to do to meet the control objectives). It is a great place to start.
October 2, 2017 S2
MIKE STOVSKY: Establish a comprehensive set of policies and procedures for cybersecurity protection that are implemented on an enterprise-wide basis. Ensure that all subcontractors with which the company does business comply in full with the company’s policies and procedures. Have adequate safeguards in place for their own systems. A company should appoint a qualified chief privacy officer and ensure that the company’s board of directors includes qualified members who understand cybersecurity risk and elevate the prominence of cybersecurity to the C-suite. They should involve outside counsel and outside cybersecurity consultants in the company’s planning, procurement, outsourcing and compliance efforts. Additionally, an organization should enlist the services of a qualified managed services provider to provide comprehensive network monitoring, vulnerability assessment and threat mitigation services.
Does cybersecurity compliance equal security? MIKE STOVSKY: No, there is a difference CONTINUED ON NEXT PAGE
Aon Risk Solutions
Cyber attacks are almost inevitable Do you know how to minimize your risk? To learn how you can boost your cyber resilience, contact Jeff Nicholson at 216.623.4152, or email@example.com
Firms value cyber policies because they provide support and expertise as insurers work with their clients to assess and mitigate cyber risk." — STEPHANIE J. DINGMAN, Senior Vice President and Cyber Team Leader, Aon Risk Solutions
04031 Aon Cleveland Crains Cyber Advert v3.indd 2
9/19/17 6:00 PM
S3 October 2, 2017
technology with a business
It’s a language you don’t learn overnight. Or master once and done. Systems change quickly. Capabilities evolve. Breakthroughs create disruption, for better or worse. Through it all, your business has to make sense of it. And it has to make sense for your business. Whether you’re a tech company with products and services to sell, A manufacturer with processes to run, Or anyone with IP to protect and leverage. I’m your translator. And your guide. Offering sound judgment and practical advice. For licenses and contracts. Data security and privacy matters. Compliance, commercialization, transactions, IP due diligence, outsourcing. Domestically and globally. I don’t make the technology work. I make sure it works to your benefit. > Chair, Innovations, Information Technology & Intellectual Property (3iP) Practice Group > Focuses on representing companies as outside counsel in IP and technology transactions, licenses, technology transfer and all forms of business process outsourcing (SaaS, IaaS and PaaS). > Represents clients in the acquisition, divestiture and licensing of IP assets and rights, and the purchase and sale of intellectual property portfolios at private sale and auction. > 216.363.4626 | firstname.lastname@example.org
I’m MIKE STOVSKY. I’m on your team.
CONTINUED FROM PREVIOUS PAGE
between legal compliance and technical compliance. Both work hand in hand, but neither is exclusive. Both are necessary to overall compliance efforts. JOE COMPTON: Look, Target was PCI compliant, and there was a data breach. A compliance audit just verifies controls are implemented and functioning. Controls are developed to prevent known security issues with systems from being exploited. The uphill battle we face as security professionals is, “How do you protect a system or network from the vulnerability that you don’t see yet?” Security is a process: risk assessment, control implementation, control testing, remediation and risk assessment. It should be a Möbius strip — a continuous loop that never ends.
What should any company focus on in the near-, midand long-term in terms of cybersecurity compliance? MIKE STOVSKY: The latest advances in cybersecurity threat assessment, monitoring and mitigation.
MY BENESCH MY TEAM
AMY BRADY KeyBank MODERATOR
SUE WORKMAN CWRU
SANDRA RAPP Timken
SHERRY NEUBERT Goodyear
LORI JOHNSTON ProMedica
PEGGY FISHER The Diversity Center
JOE COMPTON: Near-term: Make sure your organization’s network diagram is up to date, and your data classifications are up to date. An updated data flow diagram is helpful. Remember that data has three states: in use, in storage and in motion. Also, is your data encrypted, and how good are your originations backups? Conduct an IT risk assessment, and conduct IT security awareness training for your personnel. Mid-term: Implement missing controls from risk assessment; conduct vulnerability assessments and patching; enhance log server capabilities and review items logged; and implement and test an IPS system. Long-term: Develop an incident response plan and test it.
Who is responsible for managing cyber risk at an organization, and how often should they be communicating ongoing concerns, projects, etc. with leadership and employees? MIKE STOVSKY: The chief privacy officer, the general counsel (or chief
legal officer), the chief human resources officer and the board of directors. STEPHANIE DINGMAN: There is a need to start shifting the approach and manage cyber as an enterprisewide risk. It is important to work collaboratively across various stakeholders to implement good governance and frameworks, execute a resilience strategy and create a culture of risk, compliance and cybersecurity. Here’s why: n CEOs want to satisfy their fiduciary duty, understand any legal, regulatory and financial implications of the risk and ensure a return on investment. n CISOs think about security improvements, transformation and remediation. n Risk managers, CFOs and treasury focus on the risk, align strategy and buy-in from stakeholders on necessary investments including the transfer of cyber risk exposure through cyber insurance. n HR stresses protecting HR sensitive data, counterproductive behavior, training to mitigate cyber threats and creating a culture of awareness. n Legal and compliance focuses on privacy data and managing the various regulatory position. n CROs want to mitigate increased cyber risk that mass connectivity means for operations and supply chains.
How can we get cyber projects approved when companies are focused on return on investment? JOE COMPTON: Cyber projects should always help to improve the process or quality of an organization. There should be an operational reason to implement those security controls — improve availability of systems, improve the processing integrity of a system and improve the security of a system. Management should also take time to re-engineer inefficient processes when implementing security controls. As part of any good risk assessment, the question that needs to be asked: what is the impact if we don’t fund the initiative? STEPHANIE DINGMAN: While it’s difficult to quantify the ROI on a particular cyber project, we do know that there is a cost to not focusing on it. In the months since Petya, five public companies have had to adjust their financial statement disclosures.
A company should appoint a qualified chief privacy officer and ensure that the company’s board of directors includes qualified members who understand cybersecurity risk and elevate the prominence of cybersecurity to the C-suite." — MIKE STOVSKY, Partner and Chair of the Innovations, Information Technology & Intellectual Property Practice Group, Benesch
This is just a fraction of the impacted companies (as only public companies are required to publicly disclose) but certainly confirms the need for continued focus on IT security.
What are cyber insurance policies designed to cover? BOB ECKMAN: It has been our experience that cybersecurity insurance policies are meant to cover damages relative to the actual breach. These may include physical asset impacts, such as having to replace equipment, and/ or relative data impacts. For instance, should sensitive information be made available to unauthorized individuals, it could result in damages, some form of credit or identity protection, and/or brand defense, legal defenses, etc. What is yet to be understood in total is how insurers are handling resulting investigations and fines from organizations like the Office of Civil Rights (HIPAA), which has levied an impressive number of fines over the past two years with both the frequency and penalty growing as of late. The question of whether cyber insurers are willing to take on the added risk of paying these fines is yet to be seen. Some have paid, while others have excluded these fines from their coverage. STEPHANIE DINGMAN: A typical cyber insurance policy will address costs incurred following a cyber attack, including forensics costs, the cost of notifying those whose data has been breached, the cost to hire a PR agency to address reputational damage and credit monitoring for those affected. Insurance can also provide coverage for extortion events, including ransomware attacks. It can also provide business interruption, extra expense reimbursement and cover potential third-party liability, including some regulatory action. Firms also value cyber policies because they provide support and expertise as insurers work with their clients to assess and mitigate cyber risk.
Where do coverage gaps on current cyber policies exist, and what can organizations do to mitigate those gaps? STEPHANIE DINGMAN: Typical insurance market cyber policies do not cover bodily injury and property damage, theft
Many colleges are racing toward cybersecurity to better meet the realized risks of staffing the next generation of cyber warriors. Consult CISOs, information security directors, analysts and ethical hackers in curriculum development." — BOB ECKMAN, Chief Information Security Officer, MCPc
of first-party intellectual property, loss of sales due to reputational harm, real monies lost or loss of future investments. The marketplace continues to evolve but it’s important to have a thorough gap analysis completed. This provides guidance on where there may be overlap with other policies such a property, crime, general liability and others.
How will artificial intelligence drive the need for more secured Internet connected devices? BOB ECKMAN: Technologists are still in the honeymoon phases of artificial intelligence. Currently, we are in a phase of understanding the data and cherry-picking the data that our AI solutions will consume. We are also tightly controlling the algorithms being used to evaluate and analyze this data. The “decisions,” for the most part, are still man’s to make. What is yet to be seen is what will happen when AI is given the autonomy to determine its own data bed, and use cognitive learning to revise, and in some cases re-code, its algorithms to arrive at different conclusions. These systems will become like addicts, wanting to absorb any and all available data to arrive at a “better answer.” As this shift occurs, the Internet of Things will become a natural pipeline for this data. By feeding IoT data (both residential and corporate) into AI solutions, the industry will have the data fuel it needs to allow AI solutions to take control. This control will begin with everyday tasks and evolve overtime to include higher functioning activities like health care, air traffic control, law enforcement, etc. As we move from analysis to control, the impact of cyber compromise will elevate significantly. JOE COMPTON: Endpoints that feed into AI processing systems
Advertising director: Nicole Mastrangelo, email@example.com Managing editor, custom and special projects: Amy Ann Stoessel, firstname.lastname@example.org Project editor: Kathy Ames Carr Graphic designer: Staci Buck For more information about custom publishing opportunities, please contact Nicole Mastrangelo.
are vulnerable and pose a risk of compromise. Amazon’s Alexa was in the news because police want Alexa recordings it may have made at a murder scene. If you have an Alexa device, what could an attacker learn about you? If your water meter or electric meter were hacked, would an attacker know when you weren’t home? What else could they learn?
How can educational and training programs address the increasingly sophisticated nature of cyber attacks? STEPHANIE DINGMAN: Employees are perhaps an organization’s greatest evolving security threat. To combat this, a consistent, frequent cyber-related campaign targeted at increasing employee awareness of cyber attacks is key. A successful training program starts
CYBERSECURITY with support from senior leadership – companies must get understanding and buy-in by clarifying the business risks and consequences at the board level for potential data breach or cyber scenarios. Then, increasing employees’ awareness of current cyber trends or threats and testing their ability to withstand “clicking on the link,” including re-training for those who do click, is essential. JOE COMPTON: First, the world needs more cybersecurity professionals. My company can’t hire enough cybersecurity professionals to meet the market demand. We are currently having success with our internship program, and training folks right out of college, but it would be nice to find high quality experienced professionals who could step in and run projects. If you are in college, study MIS or computer engineering, you will always have a job waiting for you. Second, general workers need regular IT security awareness training on a regular basis because the way cyber criminals attack is changing. Employees need to learn to spot social engineering attacks, and be trained to think twice before clicking on a hyperlink in an email or Word document. I think for the most part, the training is catching up because there is a market for it. The challenge is giving people the tools they need to think critically and solve problems.
October 2, 2017 S4
BOB ECKMAN: Many colleges are racing toward cybersecurity to better meet the realized risks of staffing the next generation of cyber warriors. All well intended. When I’m not a CISO for a major tech firm, I also teach cybersecurity to undergrad, post grad and law students. This experience as an adjunct has served to give me a very specific view of this issue. Educators and administrators alike should resist the urge to develop these cyber programs in the vacuum of the purely theoretical. Instead, and as someone who is on both ends of the workforce development pipeline, incorporate real-life security people in the curriculum development. Consult CISOs, information security directors, analysts and ethical hackers in curriculum development. Incorporate cyber labs and security operations centers that give students the ability to work side by side with cyber professionals testing, probing and developing cyber solutions. Allow these professionals to invite students to take part in the cyber community and learn the cyber methodology. By incorporating practical, real-life experience, we not only show students that security can translate into a career, but we begin to graduate students who have real cyber experience and who can better appreciate the level of commitment required to be a cyber professional.
PA G E 2 8
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
Highest Paid CFOs-Public Cos. Ranked by 2016 Compensation
TOTAL COMPENSATION 2016 2015
THIS YEAR CFO H. Fearon/Eaton THERichard LIST 1 vice chairman, chief financial and planning officer
NONEQUITY INCENTIVE PLAN
CHANGE TO PENSION VALUE
$8,673,939 (1) $5,334,633
Highest Paid CFOs-Public Cos.
F. Pearson/FirstEnergy Corp. 2 James CFO, executive vice president RankedK. by 2016 Compensation Thompson/Goodyear Tire & Rubber Co. 3 Laura CFO, executive vice president
ALL OTHER COMPENSATION
NONEQUITY $321,327 INCENTIVE PLAN
CHANGE TO NA PENSION VALUE
$670,453 $4,482,911 (1)
$3,349,554 $4,452,251 $5,122,462 (2) $1,465,276
(34.6) 203.9 (2)
Vincent K. Petrella/Lincoln Electric Holdings Inc. Jon Marten/Parker Hannifintreasurer Corp. CFO,P. executive vice president, former CFO, executive vice president, finance and administration (3)
$3,230,903 (5) $4,394,354 $2,124,292 $4,507,489
52.1 (5) (2.5)
$848,537 (5) $1,565,581
Donald R. Kimble/KeyCorp Mark R. Belgya/The vice chairman, CFO J.M. Smucker Co. vice chair, CFO
$3,125,076 $3,801,050 $2,735,681 $3,964,776
Russell L. Gordon/RPM International Inc. Sean P. Hennessy/Sherwin-Williams Co. CFO, vice president senior VP of corporate planning, development & administration, former CFO (4)
$3,066,097 (6) $3,486,882 $2,004,069 $3,564,600
53.0 (6) (2.2)
$1,609,089 $1,042,956 (6)
Gregory A. Thaxton/Nordson Corp. John P. Sauerland/Progressive Corp. CFO, senior vice president CFO, vice president
$2,419,339 $3,349,554 $2,083,512 $5,122,462
P. Kelly Tompkins/Cleveland-Cliffs Inc. Vincent K. Petrella/Lincoln Electric COO, executive vice president; formerHoldings CFO (4) Inc. CFO, executive vice president, treasurer
$2,174,187 $3,230,903 $2,533,436 (5) $2,124,292
(14.2) 52.1 (5)
$172,838 $848,537 (5)
Robert G. O'Brien/Forest City Realty Trust Inc. Donald R. Kimble/KeyCorp CFO, executive vice president vice chairman, CFO
$2,079,242 $3,125,076 $4,060,330 $2,735,681
Philip D. Fracassa/The Timken Co. Russell L. Gordon/RPM International Inc. CFO, executive vice president CFO, vice president
$2,035,672 $3,066,097 $1,958,451 (6) $2,004,069
3.9 53.0 (6)
$615,356 $1,609,089 (6)
Brian C. Witherow/Cedar Fair LP Gregory A. Thaxton/Nordson CFO, executive vice president Corp. CFO, senior vice president
$1,942,116 $2,419,339 $2,513,676 $2,083,512
Christopher A. Chapman/Diebold Nixdorf P. Kelly Tompkins/Cleveland-Cliffs Inc. CFO, senior vice president COO, executive vice president; former CFO (4)
Michael F. Biehl/Fairmount Santrol Holdings Inc. Robert G. O'Brien/Forest City(7) Realty Trust Inc. CFO, executive vice president CFO, executive vice president
TOTAL COMPENSATION $4,452,251 (2) 2016 $1,465,276 2015
Michael J. Tokich/Steris plc
Jon P. Marten/Parker Hannifin Corp. Richard H. Fearon/Eaton former CFO, executive vice president, finance and administration (3) vice chairman, chief financial and planning officer
$4,394,354 $8,673,939 $4,507,489 (1) $5,334,633
(2.5) 62.6 (1)
Mark R. Belgya/The J.M. Smucker Co. James F. Pearson/FirstEnergy Corp. vice chair, CFO CFO, executive vice president
$3,801,050 $5,670,945 $3,964,776 $5,552,673
Sean P. Hennessy/Sherwin-Williams Co. Laura & Rubber Co. senior K. VPThompson/Goodyear of corporate planning,Tire development & administration, former CFO (4) CFO, executive vice president
$3,486,882 $5,105,271 $3,564,600 $4,137,463
John P. Sauerland/Progressive Corp. Michael Tokich/Steris plc CFO, viceJ.president CFO, senior vice president, treasurer
THIS CFO, senior vice president, treasurer YEAR CFO
$1,919,629 39.1 $500,000 NA $700,757 $300,000 $331,500 When your family-owned business uses Ahola’s cloud-based technology, $2,174,187 (14.2) $537,000 $0 $428,990 $0 $1,000,618 $1,380,114
there’s nowhere to go but up. $2,533,436
ALL OTHER COMPENSATION
$12,000 $2,941,961 (2) $30,664 $121,909 $36,625 $33,559 $40,835 $233,329
$1,850,446 $2,079,242 NA $4,060,330
Jeffrey L. Rutherford/Ferro Corp. Philip Fracassa/The Timken formerD. CFO, vice president (8) Co. CFO, executive vice president
$1,769,456 $2,035,672 $1,675,128 $1,958,451
Andrew J. Rebholz/TravelCenters of America LLC Brian C. Witherow/Cedar Fair treasurer LP CFO, executive vice president, CFO, executive vice president
$1,655,000 $1,942,116 $1,721,750 $2,513,676
Bradley C. Richardson/PolyOne Corp. Christopher A.vice Chapman/Diebold Nixdorf CFO, executive president CFO, senior vice president
$1,577,332 $1,919,629 $1,326,721 $1,380,114
Robert Kenneth Gudbranson/Invacare Corp. Michael F. Biehl/Fairmount CFO, senior vice president Santrol Holdings Inc. CFO, executive vice president (7)
$1,488,883 $1,850,446 $2,217,952 NA
Greggory W. Branning/Myers Industries Inc. Jeffrey L. Rutherford/Ferro Corp.secretary (9) former CFO, senior vice president, former CFO, vice president (8)
$1,360,147 $1,769,456 $1,086,402 $1,675,128
David S. Huffman/TFS Financial Corp. Andrew J. Rebholz/TravelCenters of America LLC CFO, secretary CFO, executive vice president, treasurer
$1,321,915 $1,655,000 $1,737,741 $1,721,750
Ware H. Grove/CBIZ Inc. Bradley C. Richardson/PolyOne Corp. CFO, senior vice president CFO, executive vice president
$1,309,963 $1,577,332 $1,192,352 $1,326,721
Kenneth J. Webster/Chart Industries Inc. Robert Kenneth Gudbranson/Invacare Corp. former CFO, vice president (10) CFO, senior vice president
$1,161,838 (10) $1,488,883 $448,158 $2,217,952
159.2 (32.9) (10)
Mark O. Eisele/Applied Industrial Technologies Inc. Greggory Branning/Myers Industries former CFO,W.vice president, treasurer (11)Inc. former CFO, senior vice president, secretary (9)
$1,161,767 $1,360,147 $1,615,862 $1,086,402
Christa A. Vesy/DDR Corp. David S. Huffman/TFS Corp. chief accounting officer,Financial executive vice president, former interim CFO (12) CFO, secretary
$1,103,423 (12) $1,321,915 $595,188 $1,737,741
85.4 (23.9) (12)
Benjamin J. Schlater/Ferro Corp. Ware H. Grove/CBIZ Inc. CFO, vice president (13) CFO, senior vice president
$1,091,181 $1,309,963 NA $1,192,352
Patrick W. Fogarty/Park-Ohio Holdings Corp. Kenneth J. Webster/Chart Industries Inc. CFO, vice president former CFO, vice president (10)
$1,089,281 $1,161,838 $1,107,214 (10) $448,158
(1.6) 159.2 (10)
Mark O. Eisele/Applied Industrial Technologies Inc. former CFO, vice president, treasurer (11)
PAY R O L L • H R • B E N E F I T S • T I M E & AT T E N DA N C E • O N B OA R D I N G • W W W . A H O L A . C O M • 4 4 0 . 7 1 7 . 7 6 2 0
$188,988 $30,014 $20,404 $60,035
RESEARCHED BY CHUCK SODER $79,915 $46,582
WantChrista theA.full version of this list Ñ and every other Crain's list? Data Member: CrainsCleveland.com/data $1,103,423 85.4 Become $310,175 a $100,000 $449,815 $23,610 $204,000 NA $15,823 Vesy/DDR Corp. (12) 28
Data provided by S&P Global Market Intelligence (Marketintelligence.spglobal.com). The full digital list includes 59 CFOs. $595,188 chief accounting officer, executive vice president, former interim CFO (12) (12)Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Have questions, corrections or suggestions? Contact Chuck Soder: email@example.com
$1,091,181 NA $351,354 $230,062 $221,800 $0 $188,988 Benjamin J. Schlater/Ferro Corp. (1) FearonÕs 2016 total compensation figure is higher than normal because it includes payouts from a discontinued incentive plan and stock $0 awards from a new plan. The$98,978 number of shares he eventually receives will be adjusted NA viceperformance president (13)over a three-year period. (2) Certain Steris executives received based on CFO, Eaton's large one-time stock awards in fiscal 2016 as compensation for work related to the Synergy Health acquisition. (3) Left company in April 2017 (4) Left CFO position in January 2017 (5) Most of this increase is attributed to a significant increase in the value of Lincoln Electric's defined benefit plans. (6) RPM granted performance-based stock awards to several $1,089,281 $345,000 $300,000 $417,360 $6,517 $20,404 PatrickinW. Fogarty/Park-Ohio top executives 2016, but they won'tHoldings receiveCorp. the full award if they don't hit performance goals for the three-year (1.6) period ending May 31, 2018. (7) Became CFO in April $0 2016 (8) Left$0 CFO position in September 2016 (9) Left $1,107,214 CFO, vice president company in March 2016 (10) Promoted to CFO in April 2016; left position in March 2017 (11) Left company in August 2017 (12) Served as interim CFO from July 2016 to March 2017; pay increase is mostly attributed to one-time bonuses and stock grants (13) Became CFO in September 2016
RESEARCHED BY CHUCK SODER
Want the full version of this list Ñ and every other Crain's list? Become a Data Member: CrainsCleveland.com/data
Data provided by S&P Global Market Intelligence (Marketintelligence.spglobal.com). The full digital list includes 59 CFOs. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Have questions, corrections or suggestions? Contact Chuck Soder: firstname.lastname@example.org
(1) FearonÕs 2016 total compensation figure is higher than normal because it includes payouts from a discontinued incentive plan and stock awards from a new plan. The number of shares he eventually receives will be adjusted based on Eaton's performance over a three-year period. (2) Certain Steris executives received large one-time stock awards in fiscal 2016 as compensation for work related to the Synergy Health acquisition. (3) Left company in April 2017 (4) Left CFO position in January 2017 (5) Most of this increase is attributed to a significant increase in the value of Lincoln Electric's defined benefit plans. (6) RPM granted performance-based stock awards to several top executives in 2016, but they won't receive the full award if they don't hit performance goals for the three-year period ending May 31, 2018. (7) Became CFO in April 2016 (8) Left CFO position in September 2016 (9) Left company in March 2016 (10) Promoted to CFO in April 2016; left position in March 2017 (11) Left company in August 2017 (12) Served as interim CFO from July 2016 to March 2017; pay increase is mostly attributed to one-time bonuses and stock grants (13) Became CFO in September 2016
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 2 9
List: CFOs get good, but not great, raises
California investor buys Richmond Heights spots
By CHUCK SODER
By STAN BULLARD
Chief financial officers at local public companies are, for the most part, doing pretty well for themselves. But last year, many of the executives on our Highest-Paid CFOs list didn’t get huge raises. At least not compared to other local C-suite executives. Consider the top 20 CFOs who held the role throughout fiscal years 2015 and 2016. The median CFO in that group received a 6.9% increase in total compensation in 2016, according to the list, which is based on public company data from S&P Global Market Intelligence. That’s way better than the 2%-3% raises most people get each year. But other local public company executives got even bigger bumps in 2016. For instance, the median total compensation increase was 13.5% if you look at the top 20 CEOs on our Highest-Paid CEOs list, which was published earlier this year. Likewise, the median increase was 9.5% for the top 20 executives on our Highest-Paid Non-CEOs list (which excludes CEOs and CFOs). When calculating those numbers, we only counted executives who held their positions through 2015 and 2016.
On all three lists, executives who worked for bigger companies tended to be paid more and receive bigger raises (that may have pushed up the median for the non-CEOs list, since that list includes more executives from large companies). For example, the median pay increase was just 4.7% when you include all 40 CFOs who held that title through 2015 and 2016. The full digital version of the list includes 59 local CFOs. This year, the highest-paid CFO on the list is Richard Fearon of Eaton Corp. What happened to the guy who was first on last year’s list? Terrance Paradie of TransDigm Group fell to No. 36. But there’s a reason why his compensation dropped by 91%: The Cleveland-based aerospace parts supplier awards stock options to most top executives every two years, so don’t be surprised if he ranks higher next year. That’s the annoying part about putting together these highest-paid lists: At public companies, executive pay often varies widely from year to year, based on company performance or one-time awards and bonuses. We’ve included footnotes to explain some of those variations. And if you see a footnote by someone’s title, that means that person either became a CFO or left the position since Jan. 1, 2016.
An Encino, Calif.-based investor is the new owner of three multitenant office buildings at Airport Office Park in Richmond Heights. The properties at 26361-26391 Curtis Wright Parkway on the north side of Cuyahoga County Airport were transferred Sept. 11 to Spero Partners LLC by 26361 Curtis Wright Parkway Holdings LLC, according to Cuyahoga County land records. The seller was an affiliate of special asset servicer CW Capital Asset Manager of Bethesda, Md., which took title to the buildings on behalf of Wells Fargo Bank, the trustee on a securitized loan, at a sheriff’s sale Jan. 20, 2016. Wells Fargo had foreclosed in Cuyahoga County Common Pleas Court on a $4 million loan on the properties that had come due. The prior owner, Euclid-based Royal American Group, had not been able to secure replacement financing. How much Spero paid for the buildings was not disclosed in public records because Royal American developed the structures under a longterm lease with Cuyahoga County. The county had made the excess land at the airport available for real estate development as part of a jobs-creation effort in the 1980s.
Come celebrate 30 years of growth and success in Northeast Ohio. Come celebrate the Weatherhead 100.
Three of the high-image multitenant office buildings on Curtis Wright Parkway near Cuyahoga County Airport have a new owner based in California. (COSTAR)
Although no sale price was given, the county has previously assigned the buildings a market value of $5 million for property tax purposes. Spero snagged the structures, which were developed separately over several years in the 1980s, at a May 16 online auction conducted by the Newmark Knight Frank real estate brokerage’s capital markets unit. Terry Coyne, a vice chairman at Newmark’s Cleveland office who handled the offering locally, said the buyer submitted the best of four bids for the property. “The land lease with the county probably limited the number of potential buyers,” Coyne said. “It’s more com-
plicated than a typical transaction, so it required a more sophisticated buyer.” Buyers also could have been put off by a 48% vacancy rate in the nearly 68,000 square feet of rentable space in the buildings, according to Newmark’s online listing for the auction. The buildings are called flex buildings because they are design to house either office or light industrial tenants. Office users are their primary occupants. Michael Gatto, the broker at the Willoughby Hills-based Gatto Group real estate services firm, confirmed that Spero had awarded him the assignment to lease the properties. Asking rent on the empty space is not yet set, Gatto said.
Thursday, November 30, 2017 Hilton Cleveland Downtown 100 Lakeside Avenue East Cleveland, OH 44114 5 p.m. 7 p.m. 8 p.m.
Cocktails Dinner Awards
To register, please visit weatherhead100.org. Questions? Interested in sponsorship opportunities? Contact Cassie Pinkerton at 216-368-0927 or email@example.com. Hosted by
PA G E 3 0
O C T O B E R 2 - 8 , 2 017 |
CONTINUED FROM PAGE 1
She was there, along with others from GOJO, to unveil two new components of the Purell brand, products the company says have the potential to be their biggest sellers to date. Specifically, Jaros and her team were launching Purell Healthy Soap, and something the company calls “clean release” technology. The latter is far more than a rinsing aid. GOJO says it gets soap into cracks and crevices it couldn’t reach before, meaning it also removes dirt other soaps can’t while requiring far less water to use and remove. Applying the Purell name to soaps leverages the brand’s strength in the “wash-your-hands” category and is a natural extension of the brand, the company says. But GOJO’s already been applying Purell’s reputation as a germ killer to other products. “We just launched Purell surface spray, the first surface product we’ve ever had … in April 2016,” Jaros said. That product “kills 22 germs in 30 seconds” she added. “It kills Noro virus, it kills Hepatitis A in a second ... it kills MRSA, which is a big deal in health care, and it kills salmonella,” Jaros said. It’s also tasteless, odorless and can be applied directly to food-preparation surfaces.
CRAIN’S CLEVELAND BUSINESS
“You can spray it right on a cutting board,” Jaros said, or a hospital table or counter, a bar, a reception desk. There’s a long list. So far, GOJO’s only been marketing the surface spray in the B2B market, mostly to institutional users. “We’re now in the process of launching that product into the consumer market,” Janos said. “We’re doing focus group tests in the fourth quarter in domestic grocery chains and, you’ll see it on the shelves next year.” Whether these products will have the effect on the company, and on people’s lives, as Purell, will depend on a couple of factors: whether marketing and markets will create a demand for the products and whether GOJO can make them effective and user-friendly. On the last front, the company has a good track record and, as Jaros’ talk of focus groups suggests, is no stranger to honing its products on the stones of good research and development. And as the recognition of the Purell name attests, marketing is also something GOJO’s good at. As for the markets, time will tell, but there are some things that indicate the company could get some tailwinds. For one, there’s continued demand for consumer products that are friendly to the environment in terms of their toxicity and the chemicals they use. GOJO’s going after that with green formulas — enough that its
“This is like the Super Bowl for GOJO. It’s the biggest launch in the company’s history.” — Carey Jaros, GOJO chief strategy officer
surface disinfectants are among only 10 out of more than 3,000 on the market to receive the U.S. Environmental Protection Agency’s “Design for the Environment” designation. “And of those, we’re the only one that kills in 30 seconds,” added Jaros. On the health front, there are all sorts of bugs seemingly working in GOJO’s favor, particularly the MRSA bacterium — a so-called “superbug” that is resistant to many antibiotics and things that kill other germs. According to Global Industry Analysts, a California-based market research organization, concern over superbugs and other forms of disease and related health issues is creating a huge market for products like the ones GOJO is now introducing. Outbreaks of MRSA, along with Ebola, SARS, avian flu and other illnesses are helping to create a market for disinfectants
that will grow to $8 billion by 2024, the organization said in a July report. Increasing regulation, in response to concerns, is driving demand generally, while industries like health care and food service are also taking their own measures that involve the increased use of disinfectants and sanitizing products, according to Global Industry Analysts. The International Supply Services Association does not comment on any one member of its products, but it says it sees new and enlarged drivers in health care that are pushing its entire industry forward. “Hospitals are no longer reimbursed by Medicare/Medicaid for medical expenses related to HAIs (health care acquired infections). Sheer economics have forced them to ramp up their infection prevention programs — and disinfection plays a key role,” said Bill Balek, ISSA’s director of legislative and environmental affairs. At the same time, he said via email correspondence, infectious diseases are spreading geographically faster in today’s highly mobile world, while more drug-resistant viruses have put more emphasis on infection prevention, which also entails using more sanitizers and disinfectants. If it sounds like GOJO is coming to market with products at an opportune time, that’s what those at the company believe as well. The private company does not release its financial data, but when it
moved to its current headquarters in downtown Akron in 2000, the Akron Beacon Journal pegged its sales at more than $100 million, while last year Adweek put sales of Purell at $266 million a year. The company is not neglecting its original business either, and it continues to come up with new and better ways to deliver soap via dispensers in kitchens and bathrooms, Jaros said. Its latest offerings on that front, also unveiled at the recent trade show, include battery-operated dispensers where a new battery is included with each new refill of soap, which makes maintaining the devices easier, Jaros said. As for whether the new products will be as big a hit as Purell hand sanitizer, time will tell, but GOJO executives sound optimistic. It’s once again creating an almost new category with its surface disinfectants, while the market for soap has always been a huge consumer product category, after all. “We are very happy with the market enthusiasm for Purell Surface Spray,” said Steve Schultz, GOJO’s North American and international business president and COO, who added that the new product has done particularly well in the health care and education markets so far. Now the company will go to the broader market and see if it can convince the general public it’s got another killer product — at least as far as germs go.
of the site would contain a total of 200 more multifamily apartments. A stone arch at the hospital’s entrance would be retained and located at a public promenade on the north side of the complex. Carnegie said the open space would be designed so it would also provide visibility for retailers on the building’s first two floors. Dr. Rustom Khouri, Carnegie’s CEO and founder, said in a phone interview, “We’re extremely happy. We think this award represents a unique opportunity to honor and transform a beautiful location in Lakewood. We think we will create a live-work-play project that will provide another step forward for this neighborhood in the city’s downtown.” Carnegie promised to devote substantial amounts of staff time to the project, especially from George Papandreas, its executive vice president, and Rustom Khouri III, the owner’s son and a Carnegie project manager. Khouri said the project excited his team because it allows it to pursue a development slightly different from those it has in the past and is near its corporate headquarters. Much of the company's work during the last few years has been out of state. Carnegie originally developed retail properties, but over the years it has developed the Redtail golf course community in Avon, office buildings in Westlake, and buildings for the General Services Administration housing federal agencies including the Veterans Administration and the FBI. “We’ve developed 150 properties in 35 years,” Khouri said. “We’ve only sold a few.” The tentative schedule for the project, if the parties formalize agreements for it, calls for demolishing existing properties by fall 2018 and for construction to begin in 2019. The mix of rental or for-sale suites remains to be determined, Khouri said. City officials say they favor pursuing Carnegie’s mid-rise proposal. However, Khouri said he would like to pursue the taller project if additional studies show market support for it, especially with more than 2,000 apartments bound for completion in the area before the proposed “One Lakewood Place” project could break ground.
CONTINUED FROM PAGE 1
Congratulate THE 2017 CLASS Crain's Cleveland Business is honored to partner with the Weatherhead School of Management at Case Western Reserve University to celebrate Northeast Ohio's entrepreneurs, innovators and leaders on the 2017 Weatherhead 100 fastest growing companies award. Join Crain's by publicly recognizing the class with an ad in the December 4 publication and a table at the award ceremony on November 30. Crain's Cleveland Business reaches over 100,000 readers in print each week and another 105,000 users online!
ISSUE DATE: December 4
AD CLOSE: October 16
MATERIALS DUE: October 27
ADVERTISING: Nicole Mastrangelo • 216.771.5158 • firstname.lastname@example.org. REGISTRATION INFORMATION: Cassie Pinkerton • 216.368.0927 • email@example.com SILVER SPONSOR
Lakewood City Council president Sam O’Leary added, “Carnegie is the clear choice for Lakewood. Its plan has the highest potential for job growth and has the most modest request for support from public financing. In a lot more ways than one, this project provides the most value for Lakewood. This certainly promises to rejuvenate and revitalize Lakewood’s downtown core.” The other factor that gained Carnegie backing was a commitment to work with the community to shape the final project. Bryce Sylvester, Lakewood planning director, said in a phone interview that “Carnegie said several times that they view this as ‘Lakewood’s project.’ It was certainly a tough decision. The committee felt this was a transformational mixed-use project, and Carnegie is committed to it for the long term.” The six-member committee unanimously selected Carnegie’s concept over the Casto/North Pointe plan, Sylvester said. Both proposals called for demolishing the acute care hospital that dated from 1916 when it was established as the first hospital in the Cleveland suburbs. They also both call for preserving elements of its design and repurposing the city-owned Curtis Block Building, 14501 Detroit Ave., a two-story retail and office building that dates from 1913. “That’s important,” O’Leary said. “It’s the last historically intact commercial building in the city.” Carnegie submitted two plans for the site. One is a mid-rise plan with retail, “office-university” space and about 200 residences designed as flats or townhouses. That concept incorporates a six-story building with two floors of retail and four floors of office space, and two other buildings of four or five stories. In the high-rise plan, an 18-story building would go in with 12 stories of multifamily units over six floors of office and retail space, as well as the two additional multifamily buildings. That plan could incorporate 400 suites in the high-rise. Two of four or five stories each on the southern end
CRAIN’S CLEVELAND BUSINESS
Tribe biz tidbits
13: Number of sellouts for the 2017 Indians — the club’s best total since 2001. 25: Crowds of at least 30,000 at Progressive Field this year. 21: Combined total of 30,000+ crowds for non-home openers from 2012-16. 28%: Indians’ per-game attendance increase in 2017 — the best in baseball. 24%: Per-game increase in 2017 for the Atlanta Braves, who opened a new ballpark that included $400 million in public financing. 1,500: New season-ticket accounts the Indians sold in one week during their 22-game winning streak. 12,513: Full-season equivalents the Tribe already has lined up for 2018. 12,300: The Indians’ season-ticket base in 2017 — their best total in nine years. 8.31: The average rating for Tribe broadcasts on SportsTime Ohio — the club’s best in 16 years. 6.53: The average Tribe rating on STO in 2016, which ranked fifth in MLB.
CONTINUED FROM PAGE 1
Another pivotal moment occurred in late August, when the Indians began a 22-game winning streak that was the talk of the sport (and sparked debates about the legitimacy of the 1916 New York Giants’ 27-game undefeated stretch). From Aug. 25 (Game 2 of the streak) until Sept. 17 (two days after the Tribe finally lost), the Indians’ 13 home games produced five sellouts, nine crowds of at least 30,000 and an attendance norm of 29,676. Not counting the home openers, the 2014-16 Indians played in front of a combined nine crowds of 30,000 or more. The winning streak came on the heels of the Indians moving up their select-a-seat process for season-ticket holders by two months. During that period, the Indians opened their 2018 inventory to new season-ticket customers. The “perfect storm” of timing, according to Indians vice president of sales and service Tim Salcer, resulted in the organization adding 1,500 new season-ticket accounts in one week. The club sold so many new season tickets, in fact, that it eventually had to remove the highly sought incentive that all organizations use to lure buyers — postseason access. But even with new season-ticket holders no longer guaranteed a chance to buy 2017 playoff seats, interest has remained high for 2018, Salcer said. As of Tuesday, Sept. 26, the Indians already had 12,513 full-season equivalents lined up for 2018. Even if the club only added 500 more in the next six months — highly unlikely, considering the 2016 postseason and offseason surges — the 2018 Tribe would have their second-largest season-ticket base in the last 12 seasons, and easily the club’s best since 2008. The winning streak produced “a significant lift” in the Indians’ call volume, Salcer said. The Tribe VP’s colleague, Jeff Stocker, the club’s senior manager of ticket sales, said the streak generated a demand that even exceeded that of the Encarnacion signing.
Cody Allen celebrates win No. 21 of the 22-game streak on Sept. 13. (Jason Miller/Getty Images)
Fortifying the gate The season-ticket base, the Indians have continuously stressed, is their lifeblood. It’s a huge factor in the 2017 Tribe having the biggest attendance gain in MLB. But a white-hot summer, with strong on-field play generating large same-day and group sales, cemented the Indians reaching 2 million tickets sold for the first time in nine years. Beginning with a sellout crowd on July 4 and prior to the final weekend series of the regular season, the Indi-
ans’ last 39 home games had produced 11 sellouts and an average crowd of 27,599. Eighteen games in that span were played before at least 30,000 fans — beating the combined non-home opener total from the previous four seasons by three, and that isn’t counting a weekend that, as of Sept. 28, already had one guaranteed sellout (the Sept. 30 matchup against the Chicago White Sox). In September, when the Indians traditionally struggle to draw even mediocre crowds, the Tribe’s attendance average through Sept. 28 was
26,768. The norm marked a 32% improvement from September 2016. Another intriguing 2016 snapshot: A year ago almost to the day, Salcer told Crain’s the Indians were “approaching” 9,000 FSEs for 2017. The business team, then, is nearly 40% of where it was from a season-ticket standpoint at this time last year.
Ratings juggernaut The attendance spike might be more meaningful to the Tribe’s bottom line, but another metric — the
O C T O B E R 2 - 8 , 2 017
Phone: (216) 771-5276 Contact: Lynn Calcaterra E-mail: CLBClassified@crain.com
AUCTIONS MEDINA, LORAIN, LAKE COUNTIES Fall Bonanza
‘Feed that beast’ As was the case with the in-park and at-home audiences, the 2016 playoffs gave the Indians’ Facebook, Twitter and Instagram accounts a combined follower jolt in the 230,000 range. An improved team in 2017, along with a hilarious, snarky social presence, has produced the No. 1 MLB interaction rates on Instagram and Twitter. The Tribe is seventh in Facebook interaction rates, which measures the percentage of followers who interact with the club. The Indians had “the same voice and approach” during the 2016 postseason, said Joel Hammond, the Tribe’s assistant director of communications. The club, however, ups its already-active game for October. “Our followers are extremely engaged with us during stretches like this, so we increase our post frequency to feed that beast,” Hammond said. Northeast Ohio isn’t often described as hungry for baseball. The 2016 and ’17 Indians have begun to change that perception. And 2018 is already looking like a monster by Tribe standards.
THURSDAY, OCTOBER 26, 2017 AT 1:00 PM 22 SEPARATE OFFERINGS 412+/- TOTAL ACRES OFFERED Auction Site: Holiday Inn - 6001 Rockside Rd, Independence, OH 44131 Thomas Auctions LLC Thomas Seaman, Licensed Auctioneer
COMMERCIAL PROPERTY - FOR SALE OR LEASE - FOOD PRODUCTION FACILITY & WAREHOUSE
Invest Conneaut, Ohio!
1031 Chamberlain Blvd Conneaut, OH 44030
s Modern Steel Building s Concrete Floors s Office Space s Loading Dock s Three Phase Wiring s Fire & Burglar Alarm s High Bay Ceilings and Lighting s #ITY 7ATER 3EWER s 3 High Clearance Floor Level Doors Access To 3 State Routes & Less Than 2 Miles From Interstate 90
Charlie Deck · 440-265-9429
A Going Stamping Business for Sale!
Thinking of Selling? Free Market Analysis
HAVE INTERESTED PARTIES
To purchase short-run stamping business, $1 - $10 million in sales, CNC going business in the medical-aerospace, $5 - $20 million in sales, also existing business in distribution warehouse. Email firstname.lastname@example.org, will contact, everything confidential
For daily on-lineupdates, sign up @ CrainsCleveland.com/Daily
OCTOBER 2, 2017
Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card
BUSINESSES FOR SALE
For purchase, all assets (machinery) of stamping plant (short run) with estb’d accounts. email@example.com We do sell established businesses.
PA G E 31
club’s ratings on SportsTime Ohio — are every bit as telling. Prior to Sept. 28, Tribe broadcasts on the regional sports network that the Indians sold to Fox Sports in late 2012 were generating an average rating of 8.31. The norm was the franchise’s best in 16 years, and was a 27% jump from a 6.53 ratings average that ranked fifth in MLB in 2016. The mania that surrounded the 22game winning streak might be best defined by the 20.44 rating that win No. 22 produced on Sept. 14. That Northeast Ohio audience was the largest ever on STO, and the best rating on an MLB regional network since an Aug. 28, 2007, matchup between the Yankees and Red Sox on NESN. And even during the smartphone and short-attention-span era, the club’s radio numbers have been excellent. The average radio rating in August was 6.2, which was 35% better than the like month in 2016.
CRAIN'S CLEVELAND BUSINESS
No Upfront Fees See our listings at: www.empirebusinesses.com firstname.lastname@example.org 440-461-2202
FLYNN ENVIRONMENTAL UST REMOVALS - REMEDIATION DUE DILIGENCE INVESTIGATIONS
BUSINESS SERVICE OWNERS! Submit your business card to promote your service.
BUSINESS SERVICES C.W. JENNINGS INDUSTRIAL EXCHANGE Global Industrial Consulting Construction • Acquisitions Exporting • Financing (855) 707-1944
Freelance Marketing Needed Must be located in Northeast Ohio Must have proven experience marketing trade shows, exhibitions, conferences, events through print and digital ads, email marketing, partnership agreements. Will need to work with existing marketing plans, while making improvements and suggesting new ideas, strategies and tactics. Estimate 20 hours+ per week. Daytime availability a real plus!
Email Inquiries to: CLBboxreply@crain.com Reference Box #1004 in Subject Line
Send us your ad via e-mail... LCalcaterra@Crain.com
PA G E 3 2
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
UA is finding a new way to make color By DAN SHINGLER email@example.com @DanShingler
Biomimicry researchers at the University of Akron have made a breakthrough working on a bright idea that could change the way we see the world. It’s an idea as bright as a parrot and as colorful as a peacock. Literally. That’s because the researchers have developed a new way to make color, by copying birds to create hues that are not only bright but that will not fade with time. “We can create any color on the visible spectrum,” said Ali Dhinojwala, Morton professor at the university’s Department of Polymer Science. So, what’s the big deal — dye, paint and pigment makers can already make pretty much any color imaginable, from a thousand shades of blue to myriad DayGlo colors, right? Right, except those colors are based on pigments, which are crayons compared to what Dhinojwala and his colleagues at UA, Northwestern University in Chicago and Ghent University in Belgium have come up with. “This is structural color. It’s very different,” Dhinojwala said. Pigments make us see certain colors when all of the other colors in the light spectrum are absorbed. In other words, when white light hits a blue pigment, all the colors in the spectrum other than blue are absorbed, while the blue light is reflected back to our eyes. A black pigment absorbs virtually all the visible light, and a white pigment reflects them all back. That’s not how structural colors work, Dhinojwala said. Instead of ab-
Work at the Goodyear Polymer Center at the University of Akron is resulting in a new way to make color. (Shane Wynn for AkronStock)
sorbing color in the spectrum, they scatter it, kind of the way a prism does. They also are often iridescent, which means they shimmer with a rainbow of colors, especially as the object or its viewer moves. Those cool cars you may have seen with custom paint jobs that change from green to purple as you walk by — those are examples of iridescent colors, as are the feathers of many birds. While it looks very cool, iridescence is not something that industry necessarily wants. “If you’re painting your car, you might think that’s a really cool effect,” said Kent Young, senior director of research and development at the Sherwin-Williams Co. in Cleveland. “But if you’re painting a wall in your house, you might want it to look blue, whether you look at it from 90 degrees or 30 degrees.”
Need a Friend in the
Banking Business The Middlefield Banking Company’s Brad Guess has the experience. From Cash Management Assistance to Commercial Real Estate, Brad has all the tools you need. Ask
Brad and find out how
easy it is to work with a Community Bank.
Brad Guess, Vice President, Commercial Lending 2351 Edison Boulevard, Twinsburg, Ohio 44087
The Middlefield Banking Company middlefieldbank.bank • 888.801.1666 Northeast Ohio Region Offices in: Beachwood • Chardon • Cortland • Garrettsville Lake County Loan Production Office • Mantua • Middlefield • Newbury • Orwell • Solon • Twinsburg Central Ohio Region Offices in: Dublin • Sunbury • Westerville
Yes, your average 12-year-old might still prefer iridescent walls, but for paint, coating and textile makers, and other industries, having a predictable, manageable color that does not change is usually what’s needed, Young said. Dhinojwala said the researchers have solved that problem by making tiny nanostructures from melanin, a common pigment in nature and the same one that determines the tone of a person’s skin. Better yet, he said, the process for making the structures is easy and inexpensive. It involves making a simple emulsion by mixing the right ratios of melanin, oil and water. It’s basically blending them together, he said. “You get little oil droplets in water, or water droplets in oil. Within them are melanin particles floating around. The water diffuses out and
the bubble shrinks,” Dhinojwala said. What’s left are what he refers to as “beautiful spheres” of melanin — so small that you need an electron microDhinojwala scope to see them. Their structure is determined by the ratio of melanin, oil and water in the mixture, and by varying that ratio, the structures can be made to produce any color that’s needed. Also, Dhinojwala said, melanin is easily made and synthetic melanin works just as well as natural melanin. The next step will be to find real-world uses for the new technology. The first applications might be military, and that’s because the U.S. Department of Defense has funded specific research at UA, the University of California, San Diego and the University of Delaware with $8 million. No, the military isn’t looking for iridescent uniforms. The tiny melanin balls look like they can do other things, too, such as block UV or gamma rays that can harm people and damage equipment. But the ultimate goal is to make something for industry, and Dhinojwala said he’s already received emails from interested companies. “I’ve gotten lots of emails in the past four or five days from all kinds of paint and other companies. I’m still responding,” Dhinojwala said on Monday, Sept. 25, just as the results of his latest work became public. He said it’s too soon to name any of the five or six companies that had already contacted him, but said he
hopes to soon find an industry partner to commercialize the technology. The biggest challenge so far is reducing the cost of producing synthetic melanin, but Dhinojwala said those costs likely will drop sharply if the process is scaled up from what he’s done in the lab. The technology could be a big deal to some companies, like those in the paint and coatings industry, said Sherwin-Williams’ Young, who added he’s not surprised to see such technology come out of the university and its partners. “We are pretty familiar with the work there, and we’ve done some collaborative work with the University of Akron on something similar. It was different research,” Young said. While he’s not fully familiar with the latest research, Young said it piques his company’s interest and he wants to talk further with the Akron researchers. As for the full potential of the technology, it could be huge, but Young said it’s too soon for him to predict. “I can’t answer yet on how this one would perform … That’s a hard one to answer at this point, just because of where that technology is,” he said. The technology is more than just a new way to make color. It’s also another affirmation of the university’s and the region’s devotion to biomimicry, the study of nature to find solutions to human engineering challenges. The University of Akron is a leading participant in Cleveland-based Great Lakes Biomimicry, a consortium that also includes NASA and the Cleveland Institute of Art. The university is the only one in the world, too, to offer a fellowship and doctorate program in biomimicry.
Consolidus finds big-growth niche in product portals By JUDY STRINGER firstname.lastname@example.org
Fidget spinners — those mesmerizing ball-bearing devices that kids rotate between their fingers — skyrocketed in popularity this year, but the craze did not stop with youngsters. They surfaced in office cubicles, at board meetings and on Denise Cline’s desk. Cline is director of business development and operations for Consolidus, an Akron-born distributor that helps multiple-location organizations — such as universities, health systems and large nonprofits — manage promotional products. That includes enduring giveaways like logo-embellished T-shirts, pens and water bottles but also anything new — think fidget spinners — that organizations think will resonate with employees, customers, conference-goers, clients, donors or students. “If you see a new style of insulated mug at Starbucks, you are going to see it in our industry within the next six months,” Cline said. “It is a very fast-paced industry.”
It also is a very crowded one. The Advertising Specialty Institute, the promotional product’s largest trade group, says its membership includes more than 33,000 distributor firms (sellers) and 3,500 supplier firms (manufacturers) — each vying for a piece of the booming $22.9 billion annual business. With revenue growth of 20% to 25% per year for the past five years, Consolidus is staking its claim. “What’s really exiting is that we are starting to build a track record,” Consolidus CEO Jeffrey Jones said. “That track record, to me, began with retaining good strong professionals. They came on board and stayed. “It is also the type of clients we have and their retention. But now we are starting to see the outward signs, too, like the financial performance, which gets attention more widely.” In August, Inc. magazine ranked Consolidus among its list of the nation’s fastest-growing companies. The company ranked No. 3,461 on the 2017 Inc. 5000 list. The 15-person firm had a three-year growth rate of SEE CONSOLIDUS, PAGE 33
CRAINâ€™S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 3 3
CONSOLIDUS CONTINUED FROM PAGE 32
90%, bringing 2016 revenues to $3.8 million. This month, Consolidus will be named to the Inner City 100, Fortune magazineâ€™s ranking of the countryâ€™s fastest-growing urban-core companies. Ranking aside, â€œWe recently calculated that we have delivered over 15 million branded products,â€? Jones said, â€œand we have a 99%-plus customer-satisfaction rating. Those are the measurables we look at to determine how well the vision is coming to life.â€? Jones laid the foundation for the company that would eventually become Consolidus in the early 2000s. The University of Akron graduate was an Akron firefighter at the time, moonlighting in promotional product distribution by taking supplier catalogs to area businesses and managing their purchases. As his side business grew, Jones said, e-commerce evolved as a legitimate internet platform. He knew it would take more than throwing up a digital storefront, however, to compete in the booming promotional products space. Jones formed Consolidus in 2006,
defining the company as a â€œconsolidatorâ€? of branded material purchases for large decentralized organizations via custom online portals. It works like this: Consolidus creates a website for a client, say Big Brothers Big Sisters, where anyone from the organization â€” no matter what department they are in or where they are located â€” can log in and view a variety of promotional merchandise that has been chosen and vetted by the organization. Because of this, a T-shirt, banner or fidget spinner purchased from a Big Brothers Big Sisters post in Cleveland will look exactly the same as
one ordered from a site in San Diego or Orlando, except for the name of the location. Jones said big nonprofits such as Big Brothers Big Sisters â€” not unlike higher education, hospital systems and global franchises â€” can have up to 100 people in the organization responsible for buying promotional goods. â€œAt a university, there may be someone from admissions, another person from alumni or donor relations, someone from marketing and many different people from student groups â€” all buying branded materials for some promotional pur-
pose,â€? he said. â€œThat buying would go in a lot of different directions from a variety of vendors.â€? One of the more obvious benefits to consolidating purchases is cost savings. By leveraging the collective spend of many different departments or groups, organizations can lower their logo merchandise expenses. Jones said equally important to organizations today, however, is the ability to exert more control over whatâ€™s out there with their name on it. â€œThe brand standards in these organizations are very specific,â€? he said. â€œBut a lot of vendors donâ€™t know what those brand standards are, so they canâ€™t help ensure that the imprint that is being requested from a department is in alignment. â€Ś A big part of our service is that brand control.â€? Cline said time savings is another big plus. These â€œbuyersâ€? all have real day jobs, which are not purchasing promo products. On the front end, having popular items at a single site limits the amount of time they spend researching options and comparing prices. On the back end, Consolidusâ€™ order processing and fulfillment system, built in-house, streamlines the approval process, limits order errors
and ensures orders arrive on time and at the right place, she said. According to Cline, 70% to 80% of promotional product orders industrywide are not shippable, often because the customer did not provide all the information needed to process the order. â€œWith our system, that is not even a possibility,â€? she said. More recently, Consolidus has taken workflow ease a step further by integrating customer procurement systems with its process management backbone. Cline said some newer clients tell her they already had a handful of promotional product distributors and were not necessarily looking for a new one, until they saw its procurement capabilities. Jones, meanwhile, credits the homegrown process management system with Consolidusâ€™ ability to scale but stay lean. Five years ago, he said, one order processor could fulfill perhaps $1 million to $1.5 million worth of promotional products each year. â€œNow with the management system in place, we are looking for $6 million to $7 million (per processor). So we can have that same person â€” and that cost associated with that employee â€” manage three to four times the volume,â€? he said.
The time is now to change the course of our childrenâ€™s future
Money DOES Grow On Trees 'RQČ‡WMXVWPDNHGRQDWLRQVČ‚0DNHDGLHUHQFH Give to your own donor-advised fund for immediate WD[EHQHWV3URYLGHJUDQWVWRWKHFDXVHV\RXČ‡UH SDVVLRQDWHDERXW*URZ\RXUFKDULWDEOHLPSDFW WRGD\DQGIRUHYHU7KHH[SHULHQFHGWHDPDW$NURQ &RPPXQLW\)RXQGDWLRQFDQFUHDWHDVWUDWHJLFSODQIRU \RXUFKDULWDEOHJLYLQJ
United Way is partnering with Akron Public Schoolâ€™s College and Career Academies. By connecting students with local businesses, United Way will provide kids with valuable hands-on experiences and skills they need to compete â€“ and succeed â€“ in the workforce of tomorrow.
Start Giving Today Visit akrongiving.org Call us at 330-376-8522
Find out more at uwsummit.org/academies
PA G E 3 4
O C T O B E R 2 - 8 , 2 017 |
CRAIN’S CLEVELAND BUSINESS
WEATHERHEAD SCHOOL OF MANAGEMENT
To place your listing or for more information, please call Lynn Calcaterra at (216) 771-5276 or email email@example.com
Connie S. Carr
Jeffrey S. Moehler
Seeley, Savidge, Ebert & Gourash Co., LPA
Seeley, Savidge, Ebert & Gourash Co., LPA
Connie Carr has joined Seeley Savidge Ebert & Gourash as a Partner. Connie has a diverse transactional practice representing a variety of clients from entrepreneurs and family-owned businesses to publicly-traded corporations. Her services include commercial real estate, finance, M&A, securities and more. Connie is known for her ability to handle complex matters involving stakeholders from the public and private sectors.
Jeffrey Moeller has joined Seeley Savidge Ebert & Gourash as a Partner. Jeff has a diverse transactional and litigation practice. His services include business and family immigration, employment counseling, complex commercial litigation, products liability and construction matters, as well as a general corporate practice. Jeff’s background enables him to grasp technically complex construction, manufacturing and engineering issues and he counts numerous small and mid-sized manufacturing.w
Bridget Burke, JD
Vice President of Taxation
The NRP Group
Bridget Burke joins Harvest CFO’s growing executive recruiting team as a Principal in its Cleveland office. Harvest CFO is a recognized premier executive search firm with a singular focus of delivering the right financial leaders for the roles of CFO and VP of Finance to private equity portfolio companies. Bridget will be leading Harvest CFO engagements. She resides in Chagrin Falls with her family and is a member of the Union Club of Cleveland.
Frank Costanzo has joined The NRP Group as Vice President of Taxation. He comes to the company from DDR Corp, where he served as the Vice President of Tax and was responsible for strategic and structural tax planning, compliance, and tax projections to senior management and the Board of Directors. Previously, Frank worked at Deloitte Tax LLP. He has a BBA from Cleveland State University and a Master of Taxation from the University of Akron. He is a Certified Public Accountant.
David Sowerby, CFA
Vice President, GIPS Compliance Officer
Managing Director, Portfolio Manager
Ancora proudly announces Renie Walters promotion to Vice President, GIPS Compliance Officer. Since joining the firm in 2007, Renie has cultivated the GIPS compliance program while also maintaining Ancora’s communications and marketing programs. Ms. Walters’ promotion will allow her to advance the GIPS compliance program and help promote and maintain the culture of regulatory compliance within the Firm. Ancora wishes Renie nothing but success in her new role in the compliance department.
Ancora is pleased to announce that David Sowerby, CFA has joined the firm as Managing Director, Portfolio Manager in our Detroit office. David will work as a portfolio manager for multiple investment strategies at Ancora while bringing in assets for the firm’s various institutional products. Mr. Sowerby brings extensive industry experience to Ancora and we are happy to have him join our team.
Chief Compliance Officer, Ancora Holdings Inc.
Managing Director, Family Wealth Advisor
Ancora proudly announces Jason Geers promotion to Chief Compliance Officer, Ancora Holdings Inc. Jason oversees all aspects of the firm’s compliance including creation of the firm-wide compliance program, regulatory reporting, and internal compliance controls. Jason joined Ancora in 2014. He first served as Vice President, Compliance Officer, followed by a promotion in 2016 to Chief Compliance Officer, Ancora Advisors, LLC. Ancora congratulates Jason and wishes him continued success.
Ancora is happy to announce that Larry Joseph has been promoted to Managing Director, Family Wealth Advisor. Larry is responsible for the management of individual client and institutional portfolios as well as gathering assets for the firm’s managed strategies, mutual fund, and partnerships. Larry joined Ancora in 2007 as a Wealth Management Advisor before a promotion to Director, Family Wealth Advisor. Ancora is proud of Larry’s continued growth and commitment to the firm.
FINANCIAL SERVICES Nicholas Koenigsknecht Assistant Vice President, Equities Analyst
Ancora Ancora congratulates Nick Koenigsknecht on his promotion to Assistant Vice President, Equities Analyst. Nick assists with research for the Small/Midcap strategies in our Detroit office. Nick joined Ancora in 2014 as an Associate, Equity Analyst. Ancora is proud to announce Nick’s promotion and wishes him continued success.
KNOW SOMEONE ON THE MOVE?
For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (216) 771-5276 or email: firstname.lastname@example.org
SIGN UP FOR ONE OF OUR INDUSTRY NEWSLETTERS www.crainscleveland.com/newsletters
Sports Business -- Real Estate -- Health Care -- Manufacturing -- Small Business -- People on the Move -- Middle Market
CLEVELAND BUSINESS 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 | www.crainscleveland.com | @CrainsCleveland Publisher/editor Group publisher Managing editor Sections editor Creative director Web editor Associate editor/Akron Assistant editor Senior reporter
Elizabeth McIntyre Mary Kramer Scott Suttell Tim Magaw David Kordalski Damon Sims Sue Walton Kevin Kleps Stan Bullard Real estate/ construction
Reporters Jay Miller, Government Dan Shingler Energy/steel/auto Rachel McCafferty Manufacturing/energy Jeremy Nobile, Finance Lydia Coutré, Health care Data editor Chuck Soder Cartoonist Rich Williams
Events manager Events coordinator Integrated marketing manager Managing editor custom/special projects Advertising director Senior account exec. Account executives
Ashley Ramsey Megan Lemke Michelle Sustar
Amy Ann Stoessel Nicole Mastrangelo Dawn Donegan Lindsie Holton John Banks Laura Kulber Mintz Office coordinator Denise Donaldson Digital strategy/ audience development director Nancy Hanus Pre-press and digital production Craig L. Mackey Media services manager Deanna DeShaw Billing Peter Iseppi Credit Rod Warmsby
CRAIN COMMUNICATIONS INC Chairman Keith E. Crain President KC Crain Secretary Lexie Crain Armstrong
Vice chairman Mary Kay Crain Senior executive VP Chris Crain CFO Robert Recchia
*** Mrs. G.D. Crain Jr., Chairman (1911-1996) G.D. Crain Jr., Founder (1885-1973) *** Reprints: 732-723-0569 Laura Picariello, email@example.com Customer service and subscriptions: 877-824-9373
CRAIN’S CLEVELAND BUSINESS
O C T O B E R 2 - 8 , 2 017
PA G E 3 5
Partner-in-charge for the construction and real estate vertical, Sikich LLP Laura Culp had been with Akron’s BCG & Co. for nearly 30 years when it was bought out by Sikich LLP in 2016. But the Illinois-based accounting, technology and investment banking outfit has been a good fit for the Akron company in a time of increasing industry consolidation. “Sikich has adapted some of BCG’s best practices as well, and we have people involved in several Sikich initiatives,” she said. “In Akron, even though our name has changed, it is still the same people managing our office, and really there is not a noticeable change in our environment.” A love of math drew Culp to the field, and she still revels in its ever-changing nature. She also revels in helping other people. Culp will collect the Lieberth Community Vision Award from Leadership Akron in November for her volunteer work, which ranges from serving as current campaign chair for United Way of Summit County to being a big supporter of the Akron Area YMCA. “If we just help one person at a time, that still results in one more person who can contribute to making our community a better place,” she said.— Sue Walton
Five things Guilty pleasure Jelly beans (Jelly Belly) and watching crime shows like “Criminal Minds,” “Law & Order: SVU” and “NCIS”
Favorite movie line “It is not our abilities that show what we truly are. It is our choices.” — Dumbledore, “Harry Potter and the Chamber of Secrets”
Next vacation destination? Cabo San Lucas, Mexico
Biggest regret? “I am an avid reader, so it would be that I haven’t written a fiction novel yet. Not sure that I ever will, but it is fun to think about,” Culp said.
Hidden talent “Baking. My mom taught us to cook and bake. In fact, we had to make our own cookies for our school lunches (No store-bought cookies ever!).”
Lunch spot D’Agnese’s Trattoria and Cafe 566 White Pond Drive, Akron
The meal Both had a salad and small Margherita pizza. One had water, the other a Diet Coke.
The vibe With dark wood accents and white tablecloths, it’s got an upscale look but a relaxed vibe. Casual wraps and Italian classics fill the lunch menu.
The bill $23.43 with tip
What drew you to your career? When I was in junior high school, my math teacher, Mr. Pfeiffer, really helped me to develop a love of math. So, I wanted a career that used math. In high school, my May co-op project was working for a small CPA firm in Columbus, where I learned about bookkeeping, which I really enjoyed. My favorite professor at Lafayette College was Rosie Bukics. She taught accounting and had worked for one of the Big 8 firms. All these experiences led me to accounting.
help us succeed. My parents also set notable examples of being involved in the communities in which we lived and encouraged us to do the same as children and adults. Through Girl Scouts, church youth group and school, I was given opportunities to help others. I will never forget one Christmas when our class gathered gifts and food for a family in Mansfield, and I went with my mother to help deliver the gifts. The mom of the family was overwhelmed and very thankful, and that memory has stayed with me.
What keeps you interested and challenged? Learning something new all the time. The tax law changes constantly, so I need to always keep learning.
What are some of the community projects that are dear to your heart? Programs that contribute to real change in someone’s life are very important to me. I was the chair of the Akron Area YMCA and on that board for 18 years. One of the programs I really love is the Phoenix School at the East Akron YMCA. Youth, who have gotten in trouble with the legal or school system, are given a second chance. There are remarkable success stories of young men and women turning their lives around, graduating from high school, many times graduating from college and, most satisfyingly, becoming sustainability employed.
What was that transition like when Sikich bought BCG, where you had worked for many years? While we were not planning to be acquired by a larger firm, when approached, we decided to explore this opportunity. Culture is very important to us, since we had worked very hard to develop a good one at BCG. The culture at Sikich mirrors the BCG culture with the potential for growth and enhanced training opportunities for our staff, as well as expanded service offerings for our clients, which made this decision a good move. What are the biggest challenges facing your field? Finding and retaining talent. Public accounting can be very challenging due to workload compression. While we work very hard to have the correct work-life balance for our employees, the long hours that are needed at times are not for everyone. Our profession is focused on educating more young people about the career opportunities in public accounting to increase the pool of future employees. You’re this year’s recipient of Leadership Akron’s Lieberth Community Vision Award, given for community leadership and service. Why are you driven to contribute in such a manner? I believe that to whom much is given, much will be required. I was fortunate to have parents that believed education and learning were very important. They gave my siblings and me great educational opportunities to
You’re involved in group called Women Up to No Good Again, which works to elevate women in leadership roles. How far does our business community have to go in bringing women to the forefront? While progress has certainly occurred with the number of women named to leadership positions in both the private and public sectors recently, room for more improvement still exists. We need to maintain focused attention on diversity of leadership in all nonprofit organizations and for-profit businesses in Northeast Ohio. Additionally, there are still male-only places and groups where business is conducted without female participation in the conversation. This exclusion of women needs to end. If you could give one piece of advice to a young woman entering the business world, what would it be? Chose a career aligned with your personal passion, and don’t be afraid to take on challenges. Even if you are unsure that you possess all the skills needed, the experience will stretch you and result in growth.
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113 Phone: 216-522-1383; www.crainscleveland.com Reprints: Laura Picariello ; (732) 723-0569 Customer service and subscriptions: 877-824-9373
Volume 38, Number 40 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 441131230. Copyright © 2017 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.
Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@ crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.
TUES., NOV. 14, 2017 8:30AM – 1PM
Corporate College East | Super Conference Room REGISTER TODAY:
STORIES FROM THE FRONT LINES: THE WORKFORCE CRISIS Hear how manufacturers and educators are collaborating to address the lack of a skilled labor pool and more. PANEL 1 — Making it work: Education’s role in the talent pipeline PANEL 2 — The drug crisis and its toll on the sector PANEL 3 — Finding a solution: Manufacturer case study SPONSORSHIP OPPORTUNITIES: Nicole Mastrangelo at 216-771-5158 or firstname.lastname@example.org EVENT/REGISTRATION QUESTIONS: Megan Lemke at 216-771-5182 or email@example.com
October 2 - 8, 2017 issue