Crain's Chicago Business

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For this CEO, a big gamble is paying off

Nick Lombardo

Motorola Solutions’ Brown is poised to cash out more stock options on top of the $296M he’s pulled in so far

TOUGH TIMES FOR STEAKHOUSES

JOHN R. BOEHM

BY JOHN PLETZ

A pillar of downtown dining and expense account lunches, they have closed at twice the rate of other sit-down restaurants BY ALLY MAROTTI

S

teakhouses, that quintessentially Chicago institution, have been hit much harder than other sit-down restaurants by COVID-19.

Nearly one-third of the city’s steakhouses closed in the past two years, as the pandemic reshaped the local dining scene.

Chicago’s steakhouse count has dropped to 37 from 52 since early 2020, according to market research firm Datassential. That’s about twice the failure rate for full-service restaurants specializing in other cuisines.

Gone are such names as Ruth’s Chris Steakhouse in River North, the original Morton’s The Steakhouse location on State Street and Lawry’s The Prime Rib, which shut its doors in Chicago after 46 years. Though some shuttered steakhouses say they decided not to renew leases or closed for some other reason, most directly blame the pandemic and See STEAKHOUSES on Page 22

“RESTAURANTS THAT HAVE STEAKS AS AN OPTION RATHER THAN A FULL STEAKHOUSE MENU ARE GOING TO BE MORE SUCCESSFUL.” Nick Lombardo, chief operating officer, Rosebud Restaurant Group

Greg Brown is cashing in big on the gamble he made in becoming CEO of Motorola 14 years ago, when he bet that he could save a sprawling, once-dominant technology giant that already was staggering just as the economy headed into a massive recession.

The 61-year-old is closing in on a half-billion dollars in pretax gains from stock sales since 2008.

He sold 200,000 shares last week for a pretax gain of $33.5 million.

According to securities filings, he plans to sell 869,229 more shares, which would bring him an additional $134.5 million after costs to exercise options to acquire the stock.

Before last week, he already had

made roughly $296 million from previous stock sales since taking the top job. The company, now known as Motorola Solutions, says Brown’s after-tax take so far is closer to $175 million.

Brown has profited more from stock sales than a handful of peers who have been running Greg Brown other big Chicago public companies for at least a decade, security filings show. The closest is Debra Cafaro, who has been CEO of real estate firm Ventas since 1999. Her pretax stock See BROWN on Page 8

A new wrinkle in the ComEd bribery scheme Prosecutors allege former Illinois House Speaker Mike Madigan killed a power supplier reform bill in 2018

BY STEVE DANIELS It wasn’t just enacting highly lucrative state legislation, like the 2011 smart-grid law and the 2016 nuclear bailout.

As Illinois House speaker, Michael Madigan killed things Commonwealth Edison opposed—or didn’t want passed without get-

ting something in return, according to the conspiracy indictment against Madigan handed down March 2 by a federal grand jury.

New allegations provide a case in point: Consumer advocates were pressing Springfield in 2018 to clamp down on the notorious See MADIGAN on Page 8

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TECH TAKEAWAY

ECONOMY

Get to know a Fermilab physicist once honored by Obama. PAGE 6

Growth makes Amazon the area’s biggest private employer. PAGE 4

3/4/22 2:54 PM

2 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

The cost of growth post-COVID: State Farm loses $3.4B on autos The nation’s largest car insurer didn’t seem to mind, though. Policies hit a record in 2021.

JOE PASSE/FLICKR

St. Regis tower, formerly known as Vista.

Here’s the priciest condo sale so far at the St. Regis tower The 80th-floor unit went for nearly $8.85 million, and more like it may be on the way. The developers of the building have six units at higher prices under contract.

BY DENNIS RODKIN A condominium on the 80th floor of the new St. Regis tower, formerly known as Vista, sold for nearly $8.85 million.

The condo, about 6,400 square feet on the 80th floor of the 101-story tower, sold Feb. 24. It’s the highest-priced sale on record in the glassy, undulating tower designed by prominent architect Jeanne Gang and her firm, Studio Gang. In September, a 75th-floor unit sold for $8.42 million.

THE LATEST SALE IS THE SECOND-HIGHEST-PRICED HOME SALE OF 2022 IN THE CHICAGO AREA. More big-dollar sales may be coming soon in the building. Six units with prices higher than this one are marked “pending” in real estate listings.

Five of them are on floors higher than this one, which could mean they will be delivered later, when complete. The sixth is on the 71st and 72nd floors, a

10,600-square-foot home priced at $18.5 million. It went under contract to a buyer in 2018 and remains the highest contracted price the tower’s sellers have announced.

The latest sale is the second-highest-priced home sale of 2022 in the Chicago area, coming in a little below the January sale of a condo at No. 9 Walton for $8.96 million.

The condo tower’s developer, Magellan, and the 80th-floor buyer were both represented by Leila Zammatta of Magellan Realty. Zammatta did not respond to a request for comment. The buyer is not yet identified in public records.

The buyers paid 93% of the roughly $9.56 million that Magellan was asking for the unit.

Information Magellan posted about the sale appears to indicate that the buyer put the unit under contract in July. If that’s true, this would be another purchase decision made after the developer got disentangled from its Chinese former development partner, Wanda, whose sagging fortunes had helped slow down sales at the tower.

GREG HINZ IS ON VACATION

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State Farm lost money insuring vehicles last year, but the reward was what the company described as record growth in policies.

The Bloomington-based giant, the largest insurer of cars and homes in the U.S., reported an underwriting loss of $3.4 billion in its auto segment, which made up 61% of its total premiums, the company disclosed Feb. 25. That compared with an underwriting gain of $3.5 billion in 2020, when the pandemic’s effect on driving habits resulted in larger-than-normal profits for auto insurers.

In addition, the mutual insurer paid $1.9 billion in dividends back to its auto insurance customers in 2020 and $401 million last year.

Hefty investment gains, fueled by a red-hot stock market, kept State Farm overall in the black. It posted $1.3 billion in net income versus $3.7 billion in 2020.

State Farm’s policies increased by about 2 million to more than 87 million in 2021. The company doesn’t provide data for individual types of insurance, so those include auto, home and life insurance.

But state-by-state figures have shown that State Farm’s aggressive rate-cutting in 2020, as the pandemic was providing an earnings windfall for auto insur-

NEWSCOM

BY STEVE DANIELS

ers, resulted in significant policy growth.

How much the pandemic has upended the auto insurance industry is illustrated by the fact that State Farm’s policy growth in 2021 outstripped Geico, the second-largest auto insurer in the U.S. and for decades a growth leader in the industry.

GEICO SLOWS

For the first time in at least 20 years, Geico had little appreciable increase in auto policies in 2021. Policies were “slightly higher” than 2020, according to the annual report released recently

by Geico parent Berkshire Hathaway.

The irony is that Geico has gained so much over the years by offering lower rates than agentsold insurers like State Farm and Northbrook-based Allstate, which until the 2000s dominated

the business. Now, State Farm is the rate-cutter, and Geico is hiking prices aggressively to cope with higher costs tied to used-car and auto-parts inflation.

As a result, State Farm’s auto premiums in 2021 actually dropped despite the higher policy counts, while Geico’s rose modestly after taking into account refunds in 2020 tied to the pandemic.

State Farm’s auto insurance loss last year was hardly its worst. In 2016, the company lost a record $7 billion insuring vehicles after collisions rose far more rapidly than the industry anticipated.

As a mutual insurer—technically owned by its policyholders—State Farm isn’t subject to investor pressures to maintain profitability and can afford to absorb even multibillion-dollar losses in order to gain market share.

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 3

Kirkland confronts workplace reputation

Bellwood Mayor Andre Harvey

Image as ‘a tough place to work’ hinders recruiting, law firm’s chairman says

How one town created its own building boom A do-it-yourself development strategy works for suburban Bellwood

M

ayor Andre Harvey has only recently been able to smile when he passes the corner of 49th Street and St. Charles Road in Bellwood, where he’s lived for 52 years and has been the mayor for five.

The corner lot where an old gas station was demolished had stood empty for at least 30 years, but now two new homes are nearing completion on the site. The red-brick three-bedroom houses are priced at just under $370,000, and one is under contract to a buyer. That’s in a town where the median price of houses sold in 2021 was $264,000, according to Midwest Real Estate Data.

BY DENNIS RODKIN

“Oh my goodness, am I happy to see that,” says Harvey. It’s gratifying, he says, not only to see a sore spot revitalized, but to know that “we’re building bigger, better homes in Bellwood.”

By “we,” Harvey means his administration at Bellwood Village Hall, which is the developer of the two houses under an unusual program he inherited from the previous mayor, Frank Pasquale.

Bellwood, a near western suburb of about 19,000 people, is the rare municipality that on its own develops new homes in town. It has built 24 and, so See BELLWOOD on Page 27

TEN YEARS IN, BELLWOOD’S PROGRAM HAS TURNED AN IMPORTANT CORNER, ATTRACTING A COMMERCIAL HOMEBUILDER TO WORK IN THE TOWN.

PAUL GOYETTE

BY ROY STROM Kirkland & Ellis Chairman Jon Ballis holds a trump card in the legal industry’s desperate battle for talent: He can pay more than just about anybody else. Some partners at the world’s largest law firm earn more than $20 million a year, according to a former shareholder.

Name a rival—Wachtell, Lipton Rosen & Katz; Cravath, Swaine & Moore; Simpson Thacher & Bartlett—and Kirkland has poached from them. But now, Ballis finds that dangling eight-figure paychecks and the allure of doing billions of dollars’ worth of deals for private-equity heavyweights like Bain Capital doesn’t always cut it.

So for the first time, he wants to address head-on the thing he thinks is limiting Kirkland from reaching even greater heights: Too many recruits think his firm is a den of wolves, where “sharp-elbowed” lawyers work grueling hours while looking out for their own good.

“I know this sounds insecure, but I hear often that you are a tough place to work, and it’s not worth it,” Ballis said in a series of interviews in recent months. “That conversation happens often. And that’s how I know that this reputational thing is a problem.”

Big Law firms rarely admit problems. Clients pay them as much as $2,000 an hour to never be wrong.

Kirkland in particular has never cared to explain itself as it offered pro athlete-size pay packages to lure lawyers from partnerships that used to last a lifetime. Rivals bemoan the “Kirklandization” of See KIRKLAND on Page 26

With ‘Frida Kahlo,’ immersive exhibits are here to stay

BY STEVE JOHNSON The biggest Van Gogh show in Chicago over the past year was not at the Art Institute of Chicago, the place people first think of as the local home for the work of the celebrated Dutch painter.

It was in a former German social club on the Near North Side that displays precisely zero original works of Vincent Van Gogh.

There, a contemporary Italian

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digital artist’s riffs on Van Gogh’s tragic life and vibrant imagery, accompanied by a soundtrack featuring Edith Piaf and Radiohead’s Thom Yorke, splash across the walls and floors. The exhibit has sold more than 500,000 tickets since February 2021.

Playing or about to play in 20 cities all told, “Immersive Van Gogh” and competing Van Gogh immersion presentations have officials at traditional museums

wondering how seriously to take this emerging genre of art presentation and whether it is a competitor to what they do or a complement.

One indicator: No less an institution than the Louvre will help premiere next month, in Marseille, an immersive Mona Lisa exhibit, an enveloping exploration of its most famous painting.

Another may arrive in the coming months in Chicago, at the former Germania Club, redubbed the Lighthouse ArtSpace See ART on Page 27

KYLE FLUBACKER

What do such new experiences—like the popular Van Gogh exhibit—mean for traditional museums?

The “Immersive Frida Kahlo” exhibit opened last month in rotation with “Immersive Van Gogh.”

3/4/22 3:12 PM

4 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

Chicago’s new biggest private employer?

It’s Amazon, Crain’s exclusive research shows, as the e-commerce giant’s massive warehouse expansion changes the economy, from wages to traffic patterns Drive along any interstate, from Waukegan to Matteson, and you’ll see that familiar Amazon logo on the side of an enormous warehouse. Drive through any neighborhood, from the city to the suburbs, and you’ll no doubt encounter a few vans or trucks wearing that badge, too.

Amazon is now the largest private employer in the Chicago area, surpassing Advocate Aurora Health, according to Crain’s estimates based on research from MWPVL International. The e-commerce and cloud-computing giant employs 27,000 in the metro area, up from an estimated 16,610 in 2020.

Amazon’s Chicago headcount has soared in the past several years, turbocharged by the massive increase in online commerce ushered in by pandemic-related lockdowns that introduced more people to ordering everything from toilet paper to toys for delivery.

“E-commerce is a tidal wave running through our economy,” says Joe Schwieterman, a profes-

sor at DePaul University who has studied Amazon’s air-cargo operations. “Chicago is a sweet spot for Amazon. We help solve their enormously complex logistics puzzle.

Chicago is centrally located and we have a huge population.”

Amazon has 49 facilities in the Chicago area, including 36 built between 2015 and 2020, fueled by commitments for hundreds of millions in state and local tax incentives. So far, the state has paid out $7.8 million in economic-development tax credits to Amazon for four projects that created 11,787 jobs since 2016, according the Illinois Department of Commerce & Economic Opportunity. Amazon said last year it employed about 43,000 people statewide. A spokesman did not respond to a request for comment.

The growth shows no signs of slowing. The company opened facilities in Markham and Matteson last fall that will employ 6,000 workers.

The company also employs more than 1,000 workers at its tech hub downtown, where it plans to add 450 jobs, including data engineers, business devel-

opment managers, user-experience researchers and financial analysts. Amazon’s headcount also includes Whole Foods Market grocery stores.

“They’ve added jobs in all parts of the area,” says Jack Lavin, CEO of the Chicagoland Chamber of Commerce. “They use a lot of small businesses as vendors.

There’s an impact beyond their distribution centers.”

ADDED SCRUTINY

Amazon’s outsize growth has brought more scrutiny. The company has become a target for organized labor, such as Amazonians United, a national movement for Amazon workers advocating for better working conditions. During the holidays, dozens of workers walked off the job at Chicago warehouses at 3507 W. 51st St. in the Gage Park neighborhood and in Cicero at 1500 S. Laramie Ave. Amazon’s workplace conditions, which have been in the spotlight for several years, were again in the spotlight after six workers were killed when a tornado struck a warehouse near St. Louis in December.

GETTY IMAGES

BY JOHN PLETZ

Amazon’s sheer size has an outsize effect on the Chicago economy, helping push up wage rates and alter transportation patterns among workers. The company boosted starting pay for drivers and warehouse workers last year to $18 an hour. “As Amazon becomes a bigger part of our economy, the shape of urban areas could change,” says Therese McGuire, a professor of strategy at Northwestern University’s Kellogg School of Management.

Amazon is now the largest employer in Channahon, says Village Administrator Tom Durkin. The company operates two facilities along Interstate 55 southwest of Joliet, where it employs about 2,000.

P.S. Sriraj, director of the ur-

ban transportation center at the University of Illinois Chicago, is working on a study for the Illinois Department of Transportation about the feasibility of new transit connections in the south suburbs to make it easier to get workers new jobs.

While the explosion in e-commerce is bringing more jobs, it’s also increasing congestion, he says.

“The congestion impact of delivery trucks has become a real one,” Sriraj says. “Ten years ago, it wasn’t really an issue. There’s congestion at the neighborhood level and the highway system. Freight has been single biggest contributor to congestion at the highway level in various cities.”

This cannabis company lease would be a breakthrough Overcoming a legal hurdle facing most landlords, Verano Holdings is poised to become the first major weed firm to rent office space in a top-tier Chicago building One of Chicago’s publicly traded marijuana companies is close to leasing space for a new headquarters in River North, a potential breakthrough for cannabis firms that have struggled to find landlords willing or able to sign them to office deals.

Verano Holdings is in advanced talks to sublease roughly 24,000 square feet at 515 N. State St., according to multiple people familiar with the negotiations. The deal would mark an expansion and relocation from its current headquarters in the vintage loft office building at 415 N. Dearborn St. Sources familiar with the company’s search said Verano is considering two different sublease offerings in the building: One in the lower portion of the property leased to restaurant software company Toast and another higher in the building leased to marketing communications firm Dentsu Aegis Network.

Both spaces have been listed as available for sublease throughout much of the COVID-19 pandemic.

If Verano completes a deal with either, it would become the first major cannabis company to lease office space in a top-tier building in Chicago. Such deals have been difficult to consummate because marijuana remains illegal at the federal level, even though it is

P004_CCB_20220307.indd 4

now legal under Illinois law. That has prevented many building owners from getting approval for cannabis company leases from their lenders, particularly large, institutional banks wary of running afoul of federal rules.

But Verano is spotlighting a solution through the sublease market, since its agreement would be exclusively with another tenant in the building and not the building owner itself. Landlords typically must consent to sublease agreements in their buildings, and sources familiar with the negotiations said 515 N. State owner Beacon Capital Partners would not block a Verano sublease agreement.

A spokeswoman for Beacon declined to comment, and spokesmen for Verano, Dentsu and Toast did not provide comments.

The sublease could open the door for other cannabis companies in a market that is home to the emerging titans of the weed industry. Verano, Green Thumb Industries and Cresco Labs are three of the five biggest public companies in the United States that grow and sell marijuana. One of the largest privately held players in the space, PharmaCann, is also based here.

Verano has roughly tripled headcount at its main office to about 120 since it went public a year ago, according to a company source, prompting the need for

more office space. The State Street office would be more than double the size of the company’s current spot on Dearborn.

HIGH VACANCY

Downtown office landlords would love to see more companies from the expanding cannabis sector lease up available office space, even if it’s on the sublease market.

Office vacancy in the central business district hit an all-time high last year, partly driven by a flurry of sublease listings from companies trying to shrink their footprint after adapting to the rise of remote work during the public health crisis.

There was 83% more downtown office space available for sublease last month than there was when the pandemic began, according to data from brokerage CBRE. Cannabis companies could help occupy some of that, taking out some formidable competition landlords are grappling with today. In the meantime, building owners are closely watching the federal SAFE Banking Act, a bill that would carve out the ability for banks to do business with cannabis companies. That measure was originally proposed in 2017 and has won approval from the House of Representatives as recently as last month, but it has not been able to move out of the Senate.

Boston-based Toast listed half of

COSTAR GROUP

BY DANNY ECKER

Verano Holdings is in talks to sublease roughly 24,000 square feet at 515 N. State St. its State Street office for sublease in July 2020, just six months after it leased nearly 50,000 square feet in the building following its acquisition of another Chicago-based restaurant software company, StratEx. Publicly traded Toast disclosed early in the pandemic that it would cut 50% of its staff through layoffs and furloughs, freeze hiring and pull back job offers due to fallout from the pandemic.

Dentsu became the largest tenant in the 29-story building in 2019 when it more than doubled its footprint to 126,000 square feet, a move that consolidated multiple offices in Chicago under the umbrella of London-based Dentsu.

The company subsequently listed more than 40,000 square feet on the sublease market during the pandemic, though it’s unclear what prompted the offering.

The Dentsu and Toast deals were part of a crucial leasing bounceback at the State Street building for Beacon and co-owner Ivanhoe Cambridge. Their venture saw a nearly 400,000-square-foot anchor tenant deal with embattled tech company Outcome Health crater after Outcome’s investors sued the company, alleging its leadership inflated results. But new deals inked with Dentsu, Toast and co-working provider WeWork helped shore up the building’s rent roll before the pandemic put a clamp on office demand.

The building today is 71% leased, according to real estate information company CoStar Group.

That’s below the 80% average for downtown office buildings at the end of 2021, CBRE data shows.

John Pletz contributed.

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 7

Family feud at Lifeway Foods targets CEO Ludmila Smolyansky, chair of the Morton Grove-based maker of kefir, a fermented dairy drink, and son Edward want to replace CEO Julie Smolyansky, Ludmila’s daughter, and they want the firm to explore ‘strategic alternatives’

BY ALLY MAROTTI A family feud is underway at kefir maker Lifeway Foods, as a mother and her son seek to push her CEO daughter out of her post at the top of the company.

Ludmila Smolyansky and son Edward Smolyansky filed a form late last month with the Securities & Exchange Commission saying Lifeway “should replace” CEO Julie Smolyansky, Ludmila’s daughter, and “commence an exploration of the company’s strategic alternatives.”

Julie Smolyansky has been CEO of the Morton Grove-based company since 2002, when she took over after the death of her father, who founded Lifeway. She was 27 at the time. “There was some trepidation over whether she could do it,” Leon Gurny, a Lifeway shareholder and former owner of a packaging equipment company that had done business with Lifeway, told Crain’s in 2005. “But she has proven herself completely capable of running the company.”

She grew sales 34% to $16.3 million in her first two years at the helm. In 2020, the most recent year

for which annual data is available, sales were $102 million, up 8.9% from 2019, and profit was $3.2 million, a sixfold increase from 2019.

Early on in her tenure, Julie Smolyansky used her media savvy to generate broader interest in the product, a fermented dairy drink, similar to drinkable yogurt, once largely unknown to American consumers. She broadened distribution, introduced new products and acquired other companies. Since the pandemic hit, demand for Lifeway products increased, along with other packaged foods, as consumers stayed home for more snacks and meals.

Julie Smolyansky, who has the support of the independent directors of the company’s board, said in a statement she appreciates the board’s support during these “challenging times.”

“My loyalty lies with our company, our brand, our customers, our employees, our shareholders and my father’s legacy,” she said.

Some experts say Ludmila and Edward Smolyansky could be gunning to sell the publicly traded company. Its growth and focus on

health-conscious products, which consumers have gravitated toward during the pandemic, could raise its market value. Paris-based food company Danone owned 22% of the company’s stock as of Dec. 31, 2020, and could be a viable buyer.

Together, Ludmila and Edward Smolyansky own more than 38% of the company. Edward Smolyansky had been chief operating officer of the company since 2004, but a Jan. 4 filing noted Lifeway no longer employs him. Edward is about five years younger than Julie.

CLASHING INTERESTS

Lifeway has been criticized for higher-than-average executive compensation. Julie and Edward Smolyansky were both paid $1 million in base salary in 2020. With stock awards and incentives, Julie Smolyansky’s total compensation that year was more than $2.3 million. Edward Smolyansky’s was almost $1.5 million.

Ludmila Smolyansky helped her husband, Michael, launch Lifeway in 1986. The duo set to popularize kefir—still Lifeway’s staple product—after they immigrated

Lifeway Foods CEO Julie Smolyansky from Ukraine. Ludmila, who is in her early 70s, is chairperson of Lifeway’s board. She also had a consulting agreement with the company, which was terminated in January.

Though Ludmila Smolyansky has offloaded some of her stock in recent months, the company’s most recent annual filing contained a disclosure noting the family owned the majority of Lifeway’s stock. That gave them the ability to control the outcome of shareholder votes.

“No person interested in acquiring Lifeway will be able to do so without obtaining the consent of the Smolyansky family,” the filing states. “We desire to remain independent and family-owned, and we believe the Smolyansky family

shares these interests. However, the Smolyansky family’s interests may not always be aligned with other stockholders’ interests.”

The independent directors of Lifeway’s board issued a statement supporting Julie Smolyansky as CEO, saying she has “consistently delivered growth.”

“We believe the company is reaching an important inflection point supported by ongoing research around probiotics and their influence on gut health, mental health and immunity, all of which are especially important with the impact of Covid-19,” the statement said. “Further, we believe new product innovation with the recent introduction of Lifeway Oat, a probiotic cultured oat drinkable, and the recent expansion into drinkable yogurt through the acquisition of GlenOaks Farms, will drive future success and we look forward to continued growth under her leadership.”

Lifeway representatives could not otherwise be reached for comment, nor could Edward and Ludmila Smolyansky.

Lifeway operates manufacturing facilities in Morton Grove, Waukesha, Wis., and Philadelphia, as well as a storage and distribution facility in Niles, according to its most recent annual filing. As of Dec. 31, 2020, it employed 316 people.

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Brown set for big payout after betting he could save the once-dominant Motorola BROWN from Page 1 gains total $208 million. Tom Wilson, CEO of Allstate since 2007, has gains of $175 million. Scott Santi of Illinois Tool Works has racked up $127 million after costs to acquire shares since 2012. Miles White, who was CEO of medical-device maker Abbott Laboratories for 21 years, had a pretax gain of $124 million by the time left the chairman’s role in December. Terrence Duffy, who has been CEO or chairman of CME Group since 2002, tallied a gain of $63 million before taxes.

Brown’s haul reflects both the long journey for him and for Motorola, and the life-changing financial rewards that make the job of public-company CEO so enticing.

His windfall is an extreme example of how the compensation strategies that public companies have long touted as equal parts risk versus reward can play out. Companies give CEOs huge piles of equity in the theory that they’ll get rich if shareholders do, too.

Motorola’s stock price has climbed 237% to $221.57 since Brown became CEO on Jan. 1, 2008, according to Bloomberg data.

The S&P 500 is up 197% during that time.

“The criticism of options is an executive could do extremely well simply because the market went up during this time and the economy was strong. It could be just pay for luck,” says David Denis, a professor at the University of Pittsburgh.

Brown’s results over his full tenure put him in the middle of his peers. CME Group shares are up 3,340% during Duffy’s 20 years at the top, far outpacing the S&P’s 381% gain, according to Bloomberg data. Abbott Labs increased 513%

under White, compared with 283% for the S&P. Ventas rose 1,294% during Cafaro’s tenure, compared with a 224% rise in the broader market. ITW shares have climbed 262% since Santi became CEO, compared with 215% for the S&P. Brown declined to comment. But the company says a better measure of his performance is Motorola’s ascent since 2011, when Brown spun off its money-losing mobile-phone business, now known as Motorola Mobility. Shares are up 497% since then, compared with 243% for the S&P 500, according to Bloomberg data. Including dividends, Motorola’s total shareholder return is 625%, compared with 328% for the S&P. (The total return doesn’t include the value of Motorola Mobility, which was acquired by Google in 2012 for $12.5 billion.)

TURNAROUND PROJECT

Carl Icahn, an activist shareholder who waged a fight with former CEO Ed Zander to break up Motorola and ultimately prevailed, says Brown earned whatever stock riches he’s reaped. “Motorola wouldn’t have been the success it’s been if not for Greg,” says Icahn, who sold much of his stock shortly after the split. “I’m not against CEOs making a lot of money if the stock goes up. The stock went up.

Greg took a risk. He also operated the company really well.”

Corporate governance expert Charles Elson says he doesn’t begrudge Brown accumulating stock wealth. But he doesn’t like the idea of a CEO selling his shares.

“A hundred-fifty million is a lot to take off the table while you’re still CEO,” says the University of Delaware professor. “It’s not the greatest signal if you sell. If you believe the

company has a bright future, why are you selling now? Should others take your lead?”

The company notes that the stock Brown is selling, as with previous sales, involves options that are set to expire. Options to acquire stock are worthless if not exercised by their expiration dates, but executives aren’t required to sell the shares upon acquisition.

Brown still holds options to acquire 2.8 million shares at strike prices ranging from $51.33 to $81.37, which are worth nearly $400 million after acquisition costs.

He occasionally has drawn criticism from shareholders for his pay, particularly before the stock took off in recent years.

But Brown generally has kept his wealth out of the spotlight, until tabloids reported that pop star Bruno Mars played at his son’s wedding last fall on Cape Cod, where the CEO owns a vacation getaway. Mars reportedly gets $3 million for private events.

Motorola was a turnaround project when Brown, then 47, was promoted to replace Zander, a former software executive who rode the Razr’s success until rivals took over the cellphone industry.

The $36.6 billion revenue colossus was sinking with the rapidly declining fortunes of its phone unit. Brown spun off the phone and cable set-top box businesses and sold other divisions to focus on hand-held emergency radios and dispatch equipment. The company shrank to $5.7 billion in revenue and 14,000 employees in 2015, but rebounded to $8.2 billion in sales and nearly 19,000 employees last year as Brown acquired software, services and video-technology companies.

CASHING IN ON THE CORNER OFFICE Which longtime Chicago CEOs have sold the most stock, and how their companies’ shares have performed during their tenures.

SHARES SOLD* Stock Greg Brown (Motorola Solutions)

$329 million

performance**

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Year

237%

197%

2008

1,294%

224%

1999

93%

208%

2007

262%

215%

2012

513%

283%

1999

3,340%

381%

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Debra Cafaro (Ventas) $208 million

Tom Wilson (Allstate) $175 million

Scott Santi (Illinois Tool Works) $127 million

Miles White (Abbott Labs) $124 million

Terrence Duffy (CME Group) $63 million Source: SEC filings, Bloomberg data

Many of the thousands of Motorola alumni in the Chicago area have lamented how the company has dwindled in size and prestige.

James Schrager, who teaches corporate strategy at the University of Chicago’s Booth School of Business, says it was the right decision.

“You can fix some problems. Other times you have to sell or close other ones,” he says. “Greg took a sober assessment of the risk in keeping it together. (Motorola) could have been Kmart. It could have been Sears.”

STOCK PAYOUT

Dave Novosel, a bond analyst who has followed Motorola for years at Gimme Credit, says free cash flow has more than doubled since the breakup to about $1.6 billion a year. The company’s pretax profit margin has risen from 21% to 26%. Since 2015, after the sale of its bar-code scanner business

* Net pretax gain ** through March 3

to Zebra, Motorola’s earnings have nearly doubled to $1.25 billion from $643 million. The company has bought back $13.9 billion of its stock since 2011.

Brown’s stock paydays largely stem from large option grants he received in connection with becoming CEO in 2008, completing the breakup of the company in 2011, and in 2015 when private-equity firm Silver Lake Partners invested $1 billion in Motorola through a convertible-debt deal.

“They gave him an option package. If the share price appreciates, you’re going to make a pile of money,” says Jason Petitte, an analyst at Chicago-based Kovitz Investment Group, a money manager that bailed out of Motorola during the post-Razr meltdown before buying back in a couple of years ago. It now holds about 500,000 shares. “The shareholders have done well along the way.”

Indictment against Madigan alleges he killed legislation that ComEd opposed MADIGAN from Page 1 power suppliers preying on residential consumers to the collective tune of more than $100 million a year in excess electric bills in ComEd’s territory. Negotiations between industry and consumer advocates in that year proceeded until near the end of the session, when the bill fizzled.

It was a bit puzzling at the time because ComEd was outwardly “neutral” on the bill, and Madigan publicly supported it. His daughter, then-Illinois Attorney General Lisa Madigan, was an ardent supporter. Rarely did measures the elder Madigan supposedly supported fail to clear his chamber.

But consumer advocates were inured to such outcomes for their priorities at the end of legislative sessions.

Little did they know at the time, but the fix was in while they were negotiating with the industry, according to the indictment.

The bill (HB 5626) went nowhere on orders from Madigan, who instructed his old friend Michael McClain—then a ComEd lobbyist and alleged to be the chief gobetween handling dealings be-

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tween the speaker and ComEd—to “work to kill” the bill, according to the new charges. On May 18, 2018, McClain emailed Anne Pramaggiore, then ComEd’s CEO, and others saying “a friend of ours” gave the green light to “go ahead and kill it,” the indictment alleges.

“Our friend” and a “friend of ours” were phrases McClain and Pramaggiore used to refer to Madigan without citing him by name, according to prosecutors.

ADDED OFFENSES

The indictment of Madigan (McClain also is charged with added offenses to ones for which he was indicted last year) is the first reference to the power-supplier reform legislation in the ComEd bribery scandal that first exploded in July 2020, when ComEd admitted to a nine-year bribery scheme to win the speaker’s favor. In ComEd’s extensive admissions back then, the legislation didn’t come up one way or the other.

As it turned out, a bill very much like that—known now as the HEAT Act—passed the following year with the support of ComEd parent Exelon. But the circumstances, like most energy legislation in Spring-

field, were complicated.

ComEd, along with downstate utility Ameren Illinois, tried to tie passage of the supplier reforms to an extension of their formula rate-setting authority, which was (and still is) set to expire at the end of 2022. The new system essentially eliminated the Illinois Commerce Commission’s authority to set electricity delivery rates, instead changing them via an annual formula that the utilities wanted extended for another 10 years.

Illinois Attorney General Kwame Raoul, who took the lead in 2019 on the supplier crackdown, refused to allow his bill to be tied to the formula rate extension. To the surprise of veteran observers of Illinois energy politics, ComEd’s priority stalled while Raoul’s bill passed.

Later, it became clear why. In May 2019, the FBI raided the home of McClain, as well as other close associates of Madigan’s. That news became public in the summer, but no one knew of those actions in May as the spring session wound down. Madigan obviously did.

ComEd itself had very little direct stake in the issues surrounding retail power suppliers. Unlike the retailers, it doesn’t profit on the

sale of energy and makes money on rates to deliver it to homes and businesses whether they buy their electricity from ComEd or another company.

But ComEd parent Exelon owned Constellation at the time, one of the largest retail power suppliers in the country. As it often did, the politically potent ComEd— with the support of the state’s most powerful politician at the time— advocated behind the scenes in Springfield for the unregulated power plants and businesses (like Constellation) owned by Exelon.

In an emailed statement, ComEd said, “We will not comment on charges related to the former speaker or beyond what is in the statement of facts in ComEd’s deferred prosecution agreement, which resolved the U.S. Attorney’s office’s investigation into ComEd and Exelon. ComEd has cooperated fully with the investigation, been transparent with customers, and implemented comprehensive ethics and compliance reforms to ensure that the unacceptable conduct outlined in the agreement never happens again.”

In a separate statement, Madigan’s attorneys Sheldon Zenner

and Gil Soffer said, “Mr. Madigan vehemently rejects the notion that he was involved in criminal activity—before, during or after his long career as a public servant.

The government’s overreach in charging him with these alleged crimes is groundless, and we intend to prevail in court.”

UNDERHANDED PRACTICES

The one-year delay in passing what became the HEAT Act meant more needlessly high electric bills for the roughly 1 in 5 households in ComEd territory that had elected to purchase power from an alternative supplier. Routine underhanded industry practices like dramatically hiking the energy prices charged each month after a three-month “teaser” period in which prices stayed lower than ComEd’s were allowed to continue.

Overall, households getting their power from a company other than ComEd in the year between May 31, 2018, and May 31, 2019, paid $124 million more than they would have, according to the ICC. That was more than $10 extra monthly for the average household, or $120 in that year alone.

3/4/22 2:55 PM

Greg Bro

CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 9

How Boeing wins and loses in the Ukraine conflict

BY JOHN PLETZ Boeing’s long-held strategy of selling aircraft for defense and civilian use to limit the damage from recessions and other economic shocks is in play again with the Russian invasion of Ukraine.

The Chicago-based company, along with other defense contractors, likely will benefit from an expected uptick in military spending by the U.S. government and its NATO allies. But Boeing also likely will be harmed by fallout from the war in Ukraine that has sent oil prices skyrocketing past $100 a barrel, as well as economic sanctions, both of which could hurt travel demand, which could cool demand for commercial aircraft.

Boeing gets more than onethird of its revenue from its defense, space and security business—which includes everything from fighters, surveillance planes and helicopters to satellites and missiles. Because of continued challenges with production of the 737 Max and 787 commercial jets, Boeing is more dependent on its defense business than in the past.

“I suspect they’ll benefit more from the increase in defense than

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they’ll be hurt from the damage in the commercial market,” says Richard Aboulafia, managing director of AeroDynamic Advisory, an aerospace consulting firm. “Damage to commercial aviation will be containable. It will prolong the recovery period from COVID-19.”

DEFENSE SPENDING

Defense budgets in the U.S. and overseas are on the rise. Germany is doubling defense spending this year to about $111 billion and increasing future spending by roughly one-third to at least 2% of gross domestic product.

“Generally, any time there’s a military crisis, it bolsters defense spending across the board,” says Loren Thompson, a defense analyst in Arlington, Va. “The Pentagon is operating on last year’s budget.

This could encourage Congress to pass new budget to increase military spending up to $37 billion.

“If Germany sends weapons to Ukraine, it will need to replenish its weapons. If we move troops forward, they’ll need more logistics support. If the Russians rattle their nuclear sabers, there could be more money for missile defense.”

Other companies appear to

be seeing more immediate benefits. Allies are providing Javelin anti-tank missiles, which are made by a joint venture between Raytheon and Lockheed Martin; as well as Stinger anti-aircraft missiles, which also are made by Raytheon. Raytheon’s stock was up 8% in a recent five-day period, while Boeing shares were up 4.5%.

Cowen analyst Cai Von Rumohr notes that ground warfare benefits General Dynamics, which produces tanks and other combat vehicles.

Longer term, Aboulafia sees Boeing’s helicopter business as a beneficiary.

The conflict underscores a challenge Boeing faces in the fighter aircraft business, where its fortunes have diminished since the company lost out to rival Lockheed Martin two decades ago to make a next-generation plane for the U.S. military.

Boeing has continued to find customers for its F-15 and F-18 fighters. Aboulafia says it looked as though Germany was going to buy F-18s. “Unfortunately, with the rise in German defense spending, they now think they’re going to upgrade to F-35s,” he says.

BLOOMBERG NEWS

The Chicago aerospace company benefits as a global defense contractor more than it loses from new headwinds in commercial aviation, analysts say

Boeing has commercial relationships in Russia and Ukraine, with more than 2,000 engineers in Moscow and Kyiv. Boeing said Feb. 28 it had closed its office in Kyiv and “paused” operations at its Moscow training campus.

Headaches in Boeing’s commercial-aircraft business will get worse the longer the conflict drags on.

Restrictions on flights involving Russian airspace and Russian aviation companies already are creating challenges for Boeing’s commercial-aircraft business. Russian cargo planes fly sections of aircraft from suppliers in Florida to Boeing plants in Washington for final assembly, Bloomberg reports. Those

flights have been suspended.

Boeing has commercial aviation customers in Russia, and it’s suspending maintenance and technical services, as well as spare parts.

Russia also is a major supplier of titanium, a key material for making aircraft, and Boeing’s space program partners with leading Russian aerospace companies on the International Space Station program.

“We see little direct impact on Boeing, given delivery of its huge inventory of completed 737s and 787s isn’t dependent on titanium supply; but supplier production rates could be affected,” Von Rumohr wrote in a note to clients.

3/4/22 1:44 PM

10 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

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EDITORIAL

‘The Madigan Enterprise’ is just the beginning Mike Madigan

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lot of us—OK, let’s face it, most of us—thought Mike Madigan was untouchable.

The old saying “where there’s smoke, there’s fire” never seemed to apply to him. This was a man engulfed by smoke—plumes of it—and yet, he seemed to breathe free, walking the corridors of power with an easy gait even as the flames of ever-escalating investigations singed his longtime associates.

The line on Madigan was always that, if he was guilty, he was too smart to get caught.

And we should emphasize the “if” in that sentence—the allegations against him have yet to be tested in a court of law. That said, the 22-count indictment issued March 2 alleges his connection to many of the crimes that have already been exposed, adjudicated and, in some cases, even flat-out admitted to was far closer than even the most cynical among us might have imagined.

“The Madigan Enterprise,” as the U.S. attorney is calling it, was a decadelong, multifaceted scheme that crossed all the sources of power Madigan accumulated over the years: House speaker, state representative, 13th Ward committeeman, chairman of the Illinois Democratic Party and the 13th Ward Democratic Organization, and partner at the Chicago real estate law firm of Madigan & Getzendanner. The details paint a picture of an elaborate network of connected individuals and organizations, leveraging the power of government to enrich some while depriving others. Madigan appears, according to the indictment, to have been a hub of this racket. But given the history of political corruption in this city and this state—a tradition that stretches back to the very beginning, and crosses both sides of the aisle—it’s fair to wonder

if, by pegging Madigan, the feds have fully cut to the root of the problem.

As far back as 1894, British journalist and minister William T. Stead in his treatise “If Christ Came to Chicago” described in inflammatory terms the graft and backroom dealing he witnessed on a visit to the city—and noted the population’s utter indifference to the social injustice that resulted. Decades later, Ald. Paddy Bauler would famously declare that “Chicago ain’t ready for reform yet.”

The “yet” rings in our ears as we pore through the 106-page Madigan indictment. Chicagoans have managed to take a

certain strange pride in our reputation for corruption and self-dealing, as if pols lining their own pockets is so inevitable that you might as well be charmed by it. We’ve rationalized that steady garbage pickup and freshly plowed snow is worth the price of letting a few insiders wet their beaks now and then.

It’s this sort of easy cynicism that makes the job of reformers so difficult. Because reform is indeed necessary, but it won’t take hold if the public doesn’t understand how damaging corruption is to Chicago’s reputation in the 21st century. In the global competition for corporate recruitment

and business investment, we’re already swimming upstream against a tide of negative publicity surrounding crime and fiscal mismanagement. The perception that City Hall and the Statehouse are a pay-toplay environment doesn’t help.

So if the Madigan indictment is to have a lasting impact on our political and government culture, voters have to demand better of our elected officials and the people they surround themselves with. Alisa Kaplan, executive director of Reform for Illinois, has plenty of suggestions for where to begin, and she shared them with Crain’s in the wake of the Madigan bombshell: Public financing for campaigns to cut off lawmakers’ reliance on the wealthiest power brokers.

Closing a self-funding loophole enabling legislative leaders to take in even more money than Madigan apparently did.

Tightening conflict-of-interest rules so private firms that lawmakers work for can’t benefit from legislative dealmaking.

Further empowering the state’s legislative inspector general to publish all reports about ethics violations and complaints.

Creating a real revolving-door cooling-off period for former legislators before they can take post-legislative lobbying and advocacy jobs.

We may not all agree on every point on Kaplan’s wish list—public financing in particular seems potentially thorny given recent legal rulings—but it’s a good place to start the conversation.

The indictment of Mike Madigan feels like a capper on a years-long search for justice—and it may be. But true reform of our broken political system will require more than just putting one man away.

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Points in favor of state bill payments reform

’d have liked the chance to explain to columnist Joe Cahill before his column ran (“Don’t let the state backslide on bill payments,” Feb. 28) why I think we need to reform the state program that offers politically connected wealthy private lenders the chance to make 12% profits on the backs of state taxpayers.

Here are some of the points I would have made: It is Illinois taxpayers, not the government, who ultimately pay the 12% interest pocketed, in most cases, by the politically connected private lenders who benefit from the current flawed system.

The fact that taxpayers had to shell out more than $1 billion in late payment interest penalties under the program proves it does not work as a deterrent to keep the state from paying its bills late.

Cahill asserts that the Vendor Payment Program and the Prompt Payment Act offer future protections if the state budget

goes off the rails. I argue Illinois’ history proves these programs had the opposite effect. They provided an expensive crutch for state government to continue hobbling down the path of fiscal malpractice, harming taxpayers without having to make corrective decisions on the budget.

The same arguments that financial analysts and pundits use about the state needing to watch costs and live within its means—when the subject is worthwhile programs proven to help state residents— should also apply when it’s a government program that benefits the politically connected wealthy elite.

I do not suggest abolishing interest on late bills. I suggest lowering the rate from 12% a year down to something more reasonable, like 3%, or a formula tied to the rate of inflation.

The nonprofits and small businesses that care for the state’s most vulnerable have had no greater advocate in state gov-

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Illinois Comptroller Susana Mendoza

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

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Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

3/4/22 1:42 PM

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 11

LETTER TO THE EDITOR Continued

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ernment than me. When I took office in 2016, nursing homes and hospice centers were waiting six months or more to be paid, while the administration speed paid connected consultants, and yes, the connected private lenders mentioned in Cahill’s column. I reversed that and moved the state’s struggling small businesses and nonprofit social service and human service providers to the front of the line. The “slow-walking” of payments to vendors is what I encountered when I took office and I ended that indefensible practice.

Yes, the state will inevitably have economic downturns that will challenge its ability to pay bills on time. But forcing taxpayers to pay politically connected private lenders 12% interest to float loans to those

providers is hardly the best or only tool the state has to protect the interests of the service providers.

Illinois is finally positioned to replenish the Rainy Day Fund that the previous administration emptied. State Rep. Mike Halpin has introduced a bill, HB 4118, that would automatically put money into the Rainy Day Fund and the Pension Stabilization Fund when the state’s backlog of bills is less than $3 billion. I am a strong proponent of this measure. Gov. J.B. Pritzker proposes putting nearly $900 million into the Rainy Day Fund. Having the Rainy Day Fund as a backstop that can help during emergencies—as other states do—is a better path forward than the private-lender-enrichment option.

Creative director Thomas J. Linden

Editor Ann Dwyer

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Director of audience and engagement Elizabeth Couch Assistant managing editor/columnist Joe Cahill

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human service providers never saw a penny of that 12% interest. Shouldn’t they have been the ones to see the benefit, instead of the politically connected private lenders getting richer? This is no longer a dichotomy between enriching politically connected private lenders and service providers closing their doors. The state has moved beyond that.

These issues are less complicated when you put taxpayers first, as I have. It all comes down to profit and loss. In this case, the wealthy elite profited. Taxpayers lost. I’m trying to change that moving forward.

CHICAGO BUSINESS

Group publisher/executive editor Jim Kirk

as

were either not used or did not exist during the self-inflicted budget impasse of 2015-2017, nor during the last economic downturn prior to the pandemic, including interfund borrowing or borrowing internally from the treasurer at low interest and paying the Illinois Treasury back instead of paying Wall Street. Under these tools, the state can access billions of dollars to pay bills without having to owe 12% interest per year to private lenders. In fact, under these tools, the state invests in itself, providing a win for taxpayers. These tools make it less likely that vendors will see the kinds of delays they faced when I first took office.

Most small businesses and social and

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A Conversation with Fritz Kaegi When he took office in 2018, Fritz Kaegi set out to make the Cook County property-tax assessment process more accurate, transparent and fair.

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 13

2022

EXECUTIVES OF COLOR IN HEALTHCARE

These accomplished executives of color have broken barriers as they ascended to positions of influence in health care. This group includes administrators at hospitals and health systems as well as educators and executives in pharma and insurance.

With the pandemic hitting Black and Brown communities hard, these Notables worked to provide relief, make vaccines and boosters available and educate families on safety measures.

They led their own organizations through the response to COVID, securing personal protective equipment, implementing protocols and ensuring the safety

of patients and staff. With heightened awareness over racial inequality, they established or expanded diversity programs.

And they led initiatives to educate physicians and staff on unconscious bias and the impact of racism on health.

Many have led pioneering work on health care issues—from the impact of fatigue on medical residents to the effect of opioids on mothers and newborns. Others have taken an active role in nonprofit and civic organizations. They are breaking new ground.

By Judith Crown and Lisa Bertagnoli

VINEET ARORA Dean of medical education University of Chicago, Pritzker School of Medicine

Dr. Vineet Arora was named dean of medical education last year and leads COVID response, curriculum redesign and professional development.

She’s pivoted to ensure UChicago trainees are engaged in clinical training and community investment.

Arora has led the development of innovative programs to reduce burnout, improve ease of practice and augment teambased care. She founded the nonprofit Illinois Medical Professional Action Collaborative Team to organize Illinois clinicians to advance evidence-based policy during the pandemic. Last year, she won funding to assist female and minority faculty facing pandemic-related career delays.

Before assuming the deanship, Arora served as the Herbert T. Abelson professor of medicine and assistant dean for scholarship and discovery. She’s led pioneering work on resident sleep, fatigue and handoffs that have informed changes in residency hours.

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DONNICA AUSTIN-CATHEY President Holy Cross Hospital

Appointed in 2020, Donnica Austin-Cathey is the first African American woman to serve as president of Holy Cross, which is part of the Sinai Health System. She’s been instrumental in meeting the changing needs of a safety net environment in the midst of a global pandemic.

Austin-Cathey has been a leader in Sinai’s ongoing transformational efforts, as well as in opening new units at Holy Cross Hospital, including the Center for Addiction Treatment & Recovery, Center for Advanced Wound Healing, as well as a new infusion center and shortstay unit. Austin-Cathey has led initiatives to drive positive patient experience, improve quality scores, build new programs and create a diverse leadership team. Previously, she served as vice president of operations for acute care hospitals in the Sinai Health System.

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METHODOLOGY: The individuals featured did not pay to be included. Their profiles were drawn from the nomination materials submitted. This list is not comprehensive. It includes only individuals for whom nominations were submitted and accepted after a review by editors. To qualify for the list, nominees must have demonstrated leadership in expanding the business, service or technology side of health care.

EARL BARNES II

PRIYA BATHIJA

BRENDA BATTLE

Executive vice president and chief legal officer Amita Health

Vice president, strategic initiatives American Hospital Association

Senior vice president for community health transformation University of Chicago Medicine

At Amita Health, Earl Barnes II has served as strategic adviser to the board and senior leadership as the health system contemplated a breakup. Last fall, Lislebased Amita announced plans to split up the health system formed in 2015 by Ascension and AdventHealth. During the pandemic, Barnes shepherded the health system through a maze of regulations and protocols.

He also actively promoted the hiring, retention and promotion of people from diverse backgrounds in the legal profession and in health care. Barnes also has advocated for establishing specific metrics in order to better measure an organization’s achievement of diversity and inclusion goals. Barnes joined Amita Health in 2019 from Drinker Biddle & Reath. Earlier, he served in general counsel positions at Advocate Health Care, OhioHealth and Northwestern Memorial Hospital.

During the pandemic, Priya Bathija led AHA’s 100 Million Mask Challenge, which brought together individuals, businesses and manufacturers to increase availability of personal protective equipment for health care workers.

Bathija also leads AHA’s maternal health portfolio and designs resources to help hospitals reduce disparities and improve outcomes for women and children. This year, Bathija will take on additional leadership responsibilities for AHA’s Institute for Diversity & Health Equity. She led the launch of AHA’s D&I Council and helped start a training program to combat Asian hate.

Bathija teaches health care payment and policy as an adjunct professor at Loyola University Chicago School of Law. She serves on the board of the South Asian Bar Association of North America, where she founded a professional development program now in its second year.

At UChicago Medicine, Brenda Battle helped launch and lead the South Side Health Transformation Project, which secured $146 million in state funding over five years to transform health care on the South Side. She led the effort to secure an $8 million grant from AbbVie to expand UChicago Medicine’s team of community health workers.

Battle also is chief diversity, equity and inclusion officer and led the development and 2020 launch of the medical center’s Equity Plan, which led to staff training, collaborations to develop department-specific DEI initiatives and increases in promotion rates for employees from diverse backgrounds.

Through her leadership role with the city’s Racial Equity Rapid Response Team and the Illinois Hospital Association, Battle helped develop and launch a tool for organizations to document their health equity work.

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14 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

ROSALIND BREWER

HERBERT BUCHANAN

SHEELAH CABRERA

VALERIA COHRAN

DONNA COOPER

CEO Walgreens Boots Alliance

Chief operating officer AdventHealth Midwest region

Chief information officer La Rabida Children’s Hospital

Chief operating officer Duly Health & Care

After holding top executive positions at Sam’s Club and Starbucks, Rosalind Brewer joined Walgreens Boots Alliance as CEO in March 2021.

To the role, she brings expertise in strategic development, marketing, digital transformation, innovation and technology, supply chain and store development.

One of Brewer’s first initiatives was to join with Chicago Mayor Lori Lightfoot and 70 Chicago faith-based organizations to vaccinate more than 10,000 people at Walgreens-run clinics in local churches. The retailer has been at the center of fighting the pandemic, with more than 56 million vaccinations and 22.9 million tests as of early January.

And the chain surpassed expectations in the first quarter of 2022 with comparable U.S. sales up 10.6%. Brewer serves as chair of the board of trustees for Spelman College, her alma mater.

With the breakup of Amita Health, Herbert Buchanan assumes the chief operating officer position at AdventHealth Midwest region.

Previously, Buchanan served as CEO and president of Amita Health St. Joseph Medical Center in Joliet and oversaw Amita’s South region.

He led the organization through the health system’s COVID-19 response and recovery. Buchanan established an operating model that included frequent staff meetings on safety, monthly operating reviews and a 90-day action plan.

Buchanan grew the organization through recruitment of medical staff and restored volumes to pre-COVID levels. He built a diverse executive team in Joliet, developed a productivity system to achieve operating efficiency targets and launched a home pilot program. Before joining Amita, Buchanan was president of Indiana University Health Methodist & University Hospital in Indianapolis. He serves on the Illinois Hospital Association Diversity & Inclusion committee.

As chief information officer, Sheelah Cabrera has led recent campuswide IT infrastructure upgrades, including wireless enhancements and upgrades to two electronic medical record systems.

Her team implemented security upgrades for protection from ransomware, phishing and spoof attacks. The improvements helped facilitate staff work-fromanywhere opportunities during the pandemic. It also opened telehealth access, and the number of patients and families receiving care this way increased dramatically. Cabrera’s team provided tools, tips and direct support to help patients connect with their care teams. Cabrera joined La Rabida as manager, clinical informatics, in 2011 from University of Chicago Hospitals, where she was an informatics nurse specialist. She’s a longtime member of the American Nursing Informatics Association and a regular volunteer at the St. Vincent DePaul Parish Food Pantry & Food Distribution Center.

Medical director, intestinal rehabilitation and transplantation Ann & Robert H. Lurie Children’s Hospital of Chicago

As associate chair for equity, diversity and inclusion, Valeria Cohran led the hospital to double its recruitment of pediatric residents and fellows from underrepresented groups and facilitated DEI training for 70% of the hospital’s workforce. Nationally, she is helping expand diversity of patients in pediatric research, having been named co-chair of The Journal of Pediatrics’ DEI Task Force last year. Cohran also is the visionary behind Lurie’s Intestinal Rehabilitation & Transplantation Program, which emphasizes serving patients

of color. Cohran is co-chair of the Diversity Special Interest Group at the North American Society for Gastroenterology, Hepatology & Nutrition and a member of the Northwestern University Feinberg School of Medicine Academy of Medical Educators.

Donna Cooper led Duly’s COVID response, ensuring access to care in the clinic and through telehealth sessions. Duly, which changed its name last year from DuPage Medical Group, was among the first to offer drive-thru testing and vaccine storage. Cooper led the creation of testing sites and clinics that administered hundreds of thousands of vaccinations. As COO, she oversees care for nearly 1 million patients at 125 sites.

Cooper joined DuPage Medical Group in 2018 from Advocate Medical Group, where she was chief operations officer. She participates in Women Build, a Habitat for Humanity endeavor that encourages women to build and advocate for affordable housing in their communities.

And she’s led volunteer teams in Duly’s annual Week of Service, which teams Duly staff members with local nonprofits.

Congratulations to

Valeria C. Cohran, MD, MS Medical Director, Intestinal Rehabilitation and Transplantation Attending Physician, Gastroenterology Ann & Robert H. Lurie Children’s Hospital of Chicago Associate Professor of Pediatrics Northwestern University Feinberg School of Medicine Associate Chair for Equity, Diversity and Inclusion Lurie Children’s and the Department of Pediatrics at Northwestern University Feinberg School of Medicine

on being selected as one of Crain’s Chicago Business

2022 Notable Executives of Color in Healthcare.

All the leadership. All, for your one.®

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KIMBERLEY DAREY

ALLISON DAVENPORT

ESTHER DAVIS

LAKSHMI EMORY

CLAUDIA FEGAN

TER

Chief medical officer/vice president, medical affairs Elmhurst Hospital

Chief executive officer Riveredge Hospital

Senior vice president Alden Management Services

Chief medical officer Aetna Better Health of Illinois

Chief medical officer Cook County Health

Senio Gate

Allison Davenport last year was named CEO of Riveredge Hospital in Forest Park, the largest free-standing psychiatric hospital in Illinois, with 210 licensed beds. She leads a team of 400.

It’s a return to the hospital for Davenport, who served as chief operating officer between 2017 and 2020. Before returning to Chicago, she was CEO of Brynn Marr Hospital, a 102-bed psychiatric hospital in Jacksonville, N.C. As the top administrator at Riveredge, Davenport oversees clinical and nursing operations, risk management, quality, talent management and community engagement. The hospital offers training and continuing education for Chicago-area clinicians. In North Carolina, Davenport led a weekly televised segment sharing tips and guidance on managing mental health during the pandemic.

At Alden Management Services, Esther Davis oversees health outcomes, strategic planning, regulatory compliance, revenue management and satisfaction of employees, residents and families. Alden operates more than 40 facilities for seniors in the Chicago area, including skilled nursing, assisted living and rehabilitation. During the pandemic, Davis focused on infection prevention, which involved educating thousands of employees, residents, families and vendors.

Recently, she’s taken the lead on the development and implementation of employee engagement initiatives that include recognition programs, improved onboarding, enhanced education and training, as well as the development of career advancement pathways that help employees achieve personal and professional goals. Davis has worked at Alden for 12 years, with previous positions that include vice president of operations and risk management, regional director and director of rehabilitation/ therapeutic recreation programs.

Dr. Lakshmi Emory leads a vaccination campaign for Aetna’s 420,000 Medicaid members, targeting vulnerable members on Chicago’s South and West sides.

She participates in virtual and in-person community events to build confidence in COVID vaccines and the importance of being fully vaccinated. During the fall, Emory was part of the White House Virtual Conversation: Increasing COVID-19 Vaccination Rates in the Medicaid Community that was led by President Joe Biden’s COVID-19 Response Team. Last year, she participated on expert panels, including the National Association of Health Services Executives C-suite Roundtable and the Illinois Association of Medicaid Health Plans’ Women in STEM panel. Emory started her career as a primary care physician. She joined Aetna in 2019 from Florida-based ChenMed, where she was chief medical officer for JenCare Illinois.

As chief medical officer for one of the country’s largest public health systems, Dr. Claudia Fegan has focused on ensuring care for some of the area’s most vulnerable individuals.

She serves as the primary medical executive over clinical services at Stroger and Provident hospitals, along with a network of community clinics and the health care facility at Cook County Jail. Fegan oversaw the rollout of one the largest mass vaccination efforts in the country. She advocates for universal access to care through her role at Cook County Health, in her capacity as national coordinator for the Physicians for a National Health Program and as board president for Health & Medicine Policy Research Group.

Fegan served as a health care adviser to Sen. Bernie Sanders during his presidential campaign.

Duri Gara pers for G

As chief medical officer, Dr. Kimberley Darey has overseen the delivery of care during the pandemic. Her leadership has been instrumental in the development of practices that ensured treatments are based on science- and evidence-based protocols. As chair of the Diversity, Equity & Inclusion Committee at EdwardElmhurst Health, Darey has led initiatives to educate physicians and staff on unconscious bias and the impact of racism on health. She’s organized physician panels to discuss racial inequities and ways to develop a more inclusive work environment. When she was previously medical director of obstetrics and gynecology, Darey advanced the adoption of evidence-based medicine in the treatment of mothers and babies. She led initiatives to improve outcomes for mothers and newborns affected by opioids and safely reduced the rate of C-sections.

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 17

TERESA GARATE

LACI GATEWOOD

SHAMI GOYAL

Senior vice president Gateway Foundation

Chief operating officer Josselyn

During the pandemic, Teresa Garate led efforts to obtain personal protective equipment for Gateway sites, and Illinois staff members who sought vaccinations received them by February 2021.

The foundation treats drug and alcohol addiction at 16 rehab centers in Illinois, California and Delaware. In the past 18 months, Garate secured more than $10 million in capital grants for program improvements and expansion and an additional $8.5 million for workforce capacity and program development.

Garate also leads the foundation’s multiyear Justice, Equity, Diversity & Inclusion Initiative, a response to the 2020 reckoning over racial inequality. She serves on the board of the Chicagoland Chamber of Commerce and is a founding board member of mental health service Kennedy Forum Illinois. She speaks often on public health and nonprofit management topics.

Laci Gatewood in December joined Josselyn, a Northfieldbased nonprofit community mental health care provider, where she manages six departments and 35 staff members. Gatewood joined Josselyn from Illinois Action for Children, where she worked for 10 years and was most recently vice president of family and community services. In that position, she handled a budget of $30 million and managed 14 programs run by managers, supervisors and a staff of 275. At Illinois Action, Gatewood helped establish a statewide child care assistance program that enabled first responders and emergency workers to gain access to child care during the pandemic. She also launched a process that enabled the agency to return to in-person operations. Gatewood serves on the board of the Illinois Network of Child Care Resource & Referral Agencies.

Chief medical officer and coordinator Illinois Department of Financial & Professional Regulation

LAKSHMI HALASYAMANI System chief clinical officer NorthShore–Edward-Elmhurst Health

Dr. Shami Goyal was a critical member of the agency that licenses medical professionals statewide during the COVID-19 pandemic.

She plans, directs and implements the Illinois Medical Practice Act related to the protection of the public’s health, welfare and safety. To remove barriers to entry to the medical professions and promote international medical graduates, she ensured that critical state regulatory agency documents are in English, Spanish, Polish and Mandarin. Goyal is an HIV/AIDS clinical scholar from the Midwest AIDS Training & Education Center, is a peer reviewer in several journals and has spoken about promoting healthy pregnancies in underserved populations as well preventing obesity in African American children and coronary stenosis in women. She has a master’s in medical management and physician leadership from Carnegie Mellon University.

During the pandemic, Dr. Lakshmi Halasyamani co-led efforts to ensure patients with advanced disease or clinically urgent situations were cared for safely, implemented personal protective equipment requirements that exceeded mandated guidelines and led health equity strategies to improve patient access and outcomes. She presented 20-plus episodes of live, interactive programming and partnered with local educators and communities of faith to educate minority groups that were at particular risk for COVID-19. A graduate of Harvard Medical School, she has Lean and Six Sigma Black Belt certifications and is published widely in the field of hospital medicine and quality improvement. Halasyamani volunteers as a physician at community free clinics, works annually in a rural health clinic in south India and is a member of The Bragdon Society.

BARRETT HATCHES CEO Chicago Family Health Center

During the COVID-19 pandemic, Barrett Hatches led the Chicago Family Health Center as it saw more than 45,000 patients, shifted to telehealth from in-person appointments, worked on COVID testing and vaccination efforts on the South Side, partnered with Fresh Moves Mobile Market to provide fresh fruits and vegetables to food deserts, and began a home blood-pressure monitoring program for patients with hypertension. Hatches also leads collaboration efforts to form the South Side Healthy Community Organization, implementing a comprehensive community model focused on primary and specialty care access, preventive and chronic care management, care coordination and management, provider collaboration, community engagement, and a connected digital and technological infrastructure. Prior to joining the CFHC, Hatches was CEO of Kansas City-based Swope Health Services, which serves more than 45,000 patients in Missouri and Kansas.

Congratulations to

Dana M. Thompson, MD, MS, MBA, FACS Division Head, Otorhinolaryngology-Head & Neck Surgery Lauren D. Holinger, MD Professorship in Pediatric Otolaryngology Vice Chair Ambulatory Practice, Department of Surgery Executive Physician Director, Ambulatory Practice Member, Lurie Children's Surgical Foundation Ann & Robert H. Lurie Children’s Hospital of Chicago Professor of Otolaryngology – Head & Neck Surgery Northwestern University Feinberg School of Medicine

on being selected as one of Crain’s Chicago Business

2022 Notable Executives of Color in Healthcare.

All the leadership. All, for your one.®

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18 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

AUDIEY KAO

ALI KHAN

Vice president of ethics American Medical Association

Chief medical officer, Value-Based Care Strategy Oak Street Health

As editor of the AMA Journal of Ethics, Dr. Audiey Kao has raised awareness of issues such as the structural roots of racial and ethnic health inequities, transgenerational trauma, health care and homelessness, health justice and diversity in medical school admissions, and inequity along the medical/ dental divide. Two-thirds of his unit’s colleagues are women, people of color or LGBTQ, and the journal has an increasingly diverse group of contributors and reviewers. A practicing internist, Kao since 2005 has cared for individuals without health insurance by volunteering at CommunityHealth, a free clinic on the West Side of Chicago that serves a diverse patient population.

Over the past decade, he’s been a volunteer with Tzu Chi USA and its mission to provide medical and humanitarian relief.

In 2021, Dr. Ali Khan established partnerships with Chicago and Cook County to secure vaccine doses, enabling Oak Street to vaccinate more than 500 of its own employees, 3,000 independent health care workers and thousands of Chicago-area patients and community members. In late 2020, he also launched an effort to expand community testing in Chicago’s hardest hit, predominantly Black and Latino ZIP codes. Khan is a co-founder and chief policy officer of the Illinois Medical Professional Action Collaborative Team, a regional group of physicians and professionals working to effect policy, social and community actions. He serves on the clinical faculty of the Pritzker School of Medicine and has also served on the national boards of Doctors for America, the American College of Physicians and Physicians for Human Rights.

RAJLAKSHMI KRISHNAMURTHY Chief clinical transformation officer and vice president-population health UChicago Medicine

Dr. Rajlakshmi Krishnamurthy, who oversees a team of community health workers and social workers, established a Care Transition Clinic for COVID-19 patients and led efforts to administer therapies like monoclonal antibodies to help avoid hospitalizations. She also leads the sickle cell day program and racial equity rapid response team and is leading efforts to include social determinants of health screenings for all inpatients and outpatients.

She co-chairs a medical center DEI task force as well as the care model design for the South Side Health Transformation Project.

Krishnamurthy also is focused on ambulatory quality improvement using an equity lens on diabetes hypertension control, cancer screening and more. Nationally, she’s involved with Vizient work groups on health equity and vulnerability.

THE FOREFRONT OF LEADERSHIP

ANKIT MEHTA

RANI MORRISON

DIA

Neurosurgeon and director of spinal oncology UI Health

Chief diversity and community health equity officer UI Health

Dr. Ankit Mehta’s career has been focused on cancer and, in particular, the poor prognoses of patients with spinal cord tumors. As the director of Spinal Oncology, Mehta leads a diverse, international laboratory team that focuses on examining animal models of spinal tumors to apply findings to new treatments for patients with spinal cord injuries, traumatic brain injuries and cancer.

His lab group has investigated the use of magnetically targeted nanoparticles on tumors and metastases, which potentially could allow drug delivery to the spinal cord (bypassing the bloodbrain barrier) and penetrate the tumor, causing cell death. Mehta is fellowship trained in enfolded stereotactic radiosurgery, complex spine surgery and spinal oncology, and he has published more than 160 peer-reviewed articles and seven book chapters.

During the COVID-19 pandemic, Rani Morrison led the implementation and deployment of video visitation as well as the restructuring of case management, social work and physicianadviser programs for the health system.

She also served as operational lead for the clinical case management transition to Epic. As UI Health’s first chief diversity and community health equity officer, she created the Cultural & Heritage Months Subcommittee as well as the Committee for Anti-Racism & Equity to conduct a hospital policy review. Morrison has also advocated for expanding charity care to improve access to care. Video visits led to less isolation and the ability of family members to engage with patients and caregivers despite pandemic restrictions. She is a founding member and on the steering committee of Women in Healthcare Chicago.

Presi Hosp Patie Advo

Vineet Arora, MD, MAPP

Herbert T. Abelson Professor of Medicine and Dean for Medical Education, The University of Chicago Pritzker School of Medicine

The University of Chicago Medicine congratulates these leaders for being recognized as Notable Executives of Color in Healthcare by Crain’s Chicago Business. We are grateful for their leadership and commitment to advancing our mission by training the next generation of clinicians and providing superior healthcare to the communities we serve.

Brenda Battle, RN, BSN, MBA

Senior Vice President for Community Health Transformation and Chief Diversity, Equity and Inclusion Officer, UChicago Medicine

Rajlakshmi Krishnamurthy, MD UChicagoMedicine.org

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Chief Clinical Transformation Officer and Vice President for Population Health, UChicago Medicine

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 19

DIA NICHOLS

DARRYL PENDLETON

ISRAEL ROCHA

President, Lutheran General Hospital and Central Chicagoland Patient Service Area Advocate Aurora Health

Associate dean for Student & Diversity Affairs, College of Dentistry Executive director, Urban Health Program University of Illinois Chicago

CEO Cook County Health

Dia Nichols is responsible for Advocate Aurora Health’s second-largest service area, Central Chicagoland, which spans more than 3,800 physicians and 8,000 team members across Illinois Masonic Medical Center, Lutheran General Hospital and Good Samaritan Hospital. He regularly makes rounds with physicians and team members—including spending a day helping a staffer named Lola, who has worked at Advocate for 42 years, clean bathrooms and floors.

Nichols serves on the American Cancer Society’s Illinois board and its DEI Committee, among other civic engagements, and is a regular guest lecturer at the University of South Florida’s College of Business. He previously served as CEO with Amita Health-Alexian Brothers Medical Center, where the organization was named among the nation’s top 50 hospitals and top 1% for clinical outcomes by Healthgrades.

In fall 2021, under Dr. Darryl Pendleton’s leadership, the College of Dentistry enrolled one of its most diverse first-year classes ever, with 40% Black and Hispanic students. The college also created a student advocate position, established a Resilience Center and is hiring a licensed clinical social worker to address students’ social and mental health needs. Pendleton also held several fundraisers for Goldie’s Place, a student-run dental clinic for the homeless in Chicago. He also co-authored two important research articles in the Journal of Dental Education: “Enhancing Ethical Behavior” and “The Role of the Dental School Environment in Promoting Greater Student Diversity.” Pendleton is president of the Chicago Dental Society Kenwood-Hyde Park Branch and a member of the executive committee of the Lincoln Dental Society.

In December 2020, Israel Rocha became CEO of Cook County Health and oversaw the implementation of one of the country’s most extensive vaccination campaigns, administering more than 940,000 doses.

Shuttered big-box stores, community colleges and convention centers were repurposed as vaccine sites, and a vaccine mandate for CCH employees yielded nearly 98% compliance.

Rocha also oversees the health program at the Cook County Jail.

In 2021, CCH opened state-ofthe-art clinics in Belmont Cragin and Blue Island, increased services at Provident Hospital and launched an Office of Equity & Inclusion to bring various sectors of the health system together to collaborate. Rocha came to CCH after serving as vice president at the New York City Health + Hospitals system. He was recently appointed to the Illinois Hospital Association’s board of trustees.

CHERYL RUCKERWHITAKER CEO Complete Care Management Partners

Dr. Cheryl Rucker-Whitaker’s expertise is in translating epidemiologic, acute care and social determinants of health data into services for underserved populations.

She founded Complete Care Management Partners in 2021 when, at the height of the pandemic, a payer needed help reaching several thousand medically complex people in ZIP codes with high death rates. She then built a workforce of 40-strong—and 85% people of color—from that same medically complex population that, once vaccinated and trained, could go out and vaccinate the community. She also advises companies working to understand how to apply equity principles to underserved populations, including breastexam medical-device-maker Bexa.

Rucker-Whitaker is a member of The Chicago Network; the entrepreneur-in-residence to Health2047 Capital Partners, an AMA-backed venture-capital firm dedicated to health care solutions; and a board member of Equality Health.

JOSE SANCHEZ President and CEO Humboldt Park Health

Under Jose Sanchez’s leadership in 2021, Humboldt Park Health launched its new name along with a tagline, “Advancing Health Equity,” to emphasize a renewed commitment that patients have opportunities to be as healthy as possible. The year before, the hospital secured more than $20 million in public funding for the development of a new Wellness Center

in the Humboldt Park community—groundbreaking is scheduled for this year—which will extend the hospital’s continuum of care for area residents. In conjunction with community partners, HPH also launched two major ambulatory clinics, the Aunt Martha’s Integrated Primary Care Clinic and Near North-Razem Health Clinic. Prior to joining HPH in 2011, Sanchez was a senior health care executive with over 30 years of experience.

Congratulationss tto oo our ur on being featured in Crain’s Chicago Business as one of its Notable Executives of Color in Healthcare!

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20 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

MAURICE SMITH

DIANA SOTO

DANA THOMPSON

DONNA THOMPSON

DEI IN HEALTH CARE

President and CEO Health Care Service Corp.

Director of nursing NE Healthcare Services

CEO Access Community Health Network

Under Maurice Smith’s leadership, Health Care Service Corp. acted throughout the pandemic to increase access to care, waiving cost-sharing for COVID-19 tests and treatments, expanding telehealth coverage and waiving early refill limits to support medication adherence. Circumventing hospital shortages, HCSC established an Employee Clinician Volunteer Program that encouraged company clinicians to assist in administering vaccines. It also redeployed mobile health vans to distribute vaccines to high-risk and rural populations. Smith’s commitment to universal access to care is reflective in HCSC’s expansion of Medicare Advantage coverage to 1.1 million individuals, particularly in rural and underserved areas. He serves as a Civic Federation trustee and as vice chair of Roosevelt University, and he is on the boards of Ventas, the Economic Club of Chicago, Executives’ Club of Chicago and the Art Institute of Chicago.

As director of nursing at NE Healthcare Services, Diana Soto guides the agency while working on innovations to its telehealth system. A registered nurse with 25 years of specialty experience in administration and education, as well as 13 years as a traumacertified nurse, she now leads professional development and ensures best practices for staff nurses. She also oversees general clinic operations, including finances, human resources and grant management. She is a member of the National Association of Hispanic Nurses and is a board member at Fenix Medical Clinic. One of Crain’s “Health Care Heroes” for 2020, Soto had more than 70 COVID-19 patients referred to her for care, including many cases in which she was the only person they saw throughout quarantine.

Division head, OtorhinolaryngologyHead & Neck Surgery Ann & Robert H. Lurie Children’s Hospital of Chicago

A look at diversity inside U.S. medical schools and health systems.

Under Dr. Dana Thompson’s leadership during the COVID-19 pandemic, the Department of Surgery extended its telemedicinecare models, increased the digitalization of care coordination across medical specialties and boosted the implementation of online scheduling platforms, resulting in improved patient access to care. Thompson is believed to be the first African American female professor in otolaryngology-head

and neck surgery in the United States. At Lurie, Thompson also is the Lauren D. Holinger, MD, professor of pediatric otolaryngology; vice chair of the ambulatory practice in the Department of Surgery; executive physician director of the ambulatory practice; and professor of otolaryngology-head and neck surgery at Northwestern University Feinberg School of Medicine.

Donna Thompson has driven Access Community Health Network to reimagine its care delivery model to expand access and deliver comprehensive wraparound services and programs to meet the needs of some of the area’s most vulnerable communities.

Under her guidance, the system developed networkwide Medication Assisted Recovery services, which take a comprehensive approach to drug addiction treatment. In 2015, Access opened its NIH-funded Access Center for Discovery & Learning in Chicago’s Englewood/Back of the Yards community to bring meaningful community-led research directly to those most in need. Thompson, a registered nurse, has built a diverse senior leadership team to reflect the multicultural identity of Access’ communities and workforce.

White Hispanic

Black Asian

PHYSICIANS 67%

5%

6%

20%

MEDICAL SCHOOL ENROLLEES 49% 8%

7%

23%

HOSPITAL LEADERSHIP 88%

4%

2%

6%

MEDICAL SCHOOL LEADERSHIP 74%

9%

4%

13%

Source: NEJM Catalyst

2022

EXECUTIVES OF COLOR IN CONSTRUCTION AND COMMERCIAL REAL ESTATE

NOMINATE NOW! LAST CALL Deadline is Friday, Mar. 11

Nominate at ChicagoBusiness.com/NotableConstruction To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 21

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING

BANKING / FINANCE

CONSTRUCTION

LAW

LAW

Porte Brown LLC, Elk Grove Village

Byline Bank, Chicago

Gilbane Building Company, Chicago

Boodell & Domanskis, LLC, Chicago

Thompson Coburn LLP, Chicago

Porte Brown announces that Abe Chidalek, CFP ®, and Randy Ellis, CPA, CCIFP, have been admitted as Partner.

Chidalek is a dedicated Wealth Management Advisor for Porte Brown Chidalek Wealth Management.

He is a CERTIFIED FINANCIAL PLANNER™ professional who holds the FINRA Series 7, 66 and Life, Accident & Health Insurance license.

He also has a BBA in Finance from Texas Tech Ellis University.

Ellis is part of Porte Brown’s tax, accounting and consulting services teams and has more than 20 years of experience. Randy is a leader of the tax services team and the construction team. Ellis is a licensed CPA and a CCIFP. He graduated from Illinois State University with a BS in Accounting and has a Master of Science in Taxation from Northern Illinois University.

Angelique Gerlock joins Byline Bank as Director of Talent Management and Diversity, Equity and Inclusion (DEI). In this newly created role, she is responsible for the development and execution of all talent management strategies, including succession planning, performance management, employee engagement, career development, culture and employee recognition, in addition to overseeing the DEI strategy of the Bank. Gerlock brings more than 20 years of experience in human resources and banking.

Gilbane, a top Chicago builder, announces Ezgi Kosereisoglu Talarico as Business Development Manager.

Ezgi is transitioning to business development to drive strategic growth in the interiors, higher education, cultural, and entertainment markets. Ezgi leads the Midwest chapter of Gilbane’s Rising Contractor program, is an active member of CoreNet Chicago, Lean Construction Institute Chicago CoP, Professional Women in Construction, and The Society for College and University Planning.

Boodell & Domanskis, LLC is pleased to announce the addition of Gerry Weber as a member in our Business & Entrepreneurial and Estate Planning practice areas. Drawing upon 50 years of experience in the tax, financial, real estate, corporate, family and business planning fields, Gerry helps his clients achieve their goals and deliver better outcomes in their businesses. He has served as a director, trustee and advisor to many families, numerous public charities and family charitable foundations.

Katriina McGuire has been named the managing partner of Thompson Coburn’s Chicago office. Katriina, the chair of the Firm’s Real Estate Land Use practice, takes over from Rick Reibman, who has led the office since 2020. As a real estate and land use attorney, Katriina has spent more than two decades advocating for a broad range of clients before the City of Chicago and suburban plan commissions, zoning and economic development committees, zoning boards of appeals and village boards.

ARCHITECTURE / DESIGN Gensler, Chicago Two Gensler Chicago leaders have been promoted to Principal.

Jason Pugh, licensed architect and certified planner, manages projects that engage the community at-large, Pugh leading them from schematic communitybased master plans through full construction.

Jason’s passion and leadership is exemplified through his involvement on Gensler’s Global Race and Diversity Committee Hurst and as the 2021-2022 National President of NOMA. With a passion for community-driven projects, Scott Hurst, a Design Director, leads design for projects spanning innovative higher education spaces, civic and spiritual institutions, and health and wellness facilities. He has completed award-winning work for Fourth Presbyterian Church, Columbia College Chicago, and Kohler Co.

ARCHITECTURE / ENGINEERING Greeley and Hansen, Chicago Greeley and Hansen is pleased to announce that John C. Robak has been elected Chairman of the Board of Directors at Greeley and Hansen.

John has over 30 years of professional experience and directs all business affairs of this Chicago-based global engineering firm. He is also responsible for the international growth operations in Latin America, Africa, and the Middle East. John has been with Greeley and Hansen since 2003 and has served as the firm’s CEO since 2020.

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NON-PROFIT Society of Actuaries, Schaumburg LAW

CONSTRUCTION Skender, Chicago Skender, one of the nation’s top building contractors, is pleased to welcome Eric Fiket to its team. Eric brings 16 years of industry experience. As senior project manager, he is responsible for planning and delivering new construction projects with Skender’s commercial team. Eric earned a degree in architectural studies from the University of Illinois Chicago.

ENGINEERING AECOM, Chicago Bill Abolt has been named AECOM’s U.S. Energy practice lead.

In this role, Mr. Abolt will spearhead efforts to broaden AECOM’s next-generation energy initiatives and further develop a national network to manage grid modernization, vehicle electrification, energy efficiency, and renewable energy. Mr. Abolt brings more than 35 years of experience managing complex environmental, energy, and sustainability programs for utility, government, and private clients.

Croke Fairchild Morgan & Beres, Chicago Croke Fairchild Morgan & Beres welcomes Julie Rhoades as a partner to help lead the expansion of the firm’s taxation practice. Julie advises clients on the tax aspects of a range of complex business and financial transactions, including fund formation and mergers and acquisitions. She also provides advice on transaction structure and the tax aspects of purchase agreements, operating agreements, and related documents.

Julie is based in Detroit and serves clients in Chicago and nationwide.

CONSTRUCTION Skender, Chicago Skender, one of the nation’s top building contractors, is pleased to welcome Jen Haub to its team. Jen brings 20 years of accounting experience. As assistant controller, she works with Skender’s finance and accounting team to maintain records, prepare financial reports, and ensure accuracy across accounts and projects. Jen earned a master’s degree in accounting from Northern Illinois University and a bachelor’s degree in accounting from North Central College.

CONSTRUCTION

LAW ENTERTAINMENT WhirlyBall, Chicago WhirlyBall, a Chicagoland event and entertainment mecca, has appointed Adam Elias as Chief Executive Officer. For the past decade, Elias has played a pivotal role in evolving WhirlyBall including a complete brand refresh, enhancing the food and beverage program and, in 2019, opening a new location in Wisconsin. Now, with five locations across the country, Elias is focused on bringing the joy of WhirlyBall to more communities nationwide and making it the destination to eat, drink and game on!

Davis Friedman, Chicago Joy Feinberg, one of Chicago’s most decorated family attorneys, is now a Partner at Davis Friedman, the highly respected and oldest Illinois family law firm.

A trailblazer in her own right, Joy has been at the forefront of representing business owners, executives, and their spouses for over forty years, and will now be joining Davis Friedman’s team of twenty excellent lawyers in their work to offer clients effective planning, integrity, and resolutions whether by settlement or trial.

Skender, Chicago Skender, one of the nation’s top building contractors, is pleased to welcome Andy Reinhard to its team.

Andy brings 17 years of industry experience. As senior estimator on the commercial team, he guides new construction projects through the planning, design and execution phases, supporting project budgeting, bidding, scheduling, constructability, logistics and value analysis. Andy earned a degree in civil engineering and construction management from the University of Wisconsin-Madison.

LAW Benesch Law, Chicago Chelsea Wender has joined Benesch as an associate in the firm’s Corporate & Securities Practice Group. Prior to joining Benesch, Chelsea worked as an associate at a multi-national law firm where she gained experience with private equity transactions and mergers and acquisitions. She assists companies in a variety of transactional matters, including entity structure, formation, corporate governance, and financing transactions.

The Society of Actuaries has hired Rose Fealy as its new Chief Administrative and Financial Officer. Fealy will lead the SOA’s new Administration and Finance Division. Four key areas of operations will report to her: Finance and Facilities, ITS, Human Resources, and Customer Service. From 2015 to 2021, Fealy served as Vice President of Finance and Administration and CFO for the Museum of Science and Industry in Chicago. She also served as a Principal for the Civic Consulting Alliance of Chicago.

REAL ESTATE Entre Commercial Realty LLC, Chicago Brian Bocci, SIOR, has been promoted to Principal of the firm.

Brian joined Entre in 2009 and has been a consistent top producer, specializing in industrial brokerage while leading Bocci Entre’s north suburban and southeast Wisconsin brokerage activities.

Brian is a licensed real estate broker in both Illinois and Wisconsin.

Elisabeth Lazzara has joined Entre as an associate broker for the Lazzara team of Mike DeSerto and Cory Kay where her focus is on sales and leasing of industrial properties in the DuPage and Kane County submarkets. Prior to Entre, Elisabeth served as an Asset Manager and Property Manager for Karael Management Inc. She holds a double major in PR + Advertising and Industrial Organizational Psychology from DePaul University.

LAW

REAL ESTATE

Davis Friedman, Chicago

Urban Innovations, Chicago

Expert family attorney Jennifer Tier is now a Partner at the renowned Davis Friedman family law firm, with whom she will be sharing her vision and dedication to the field and her clients. Jennifer’s practice covers every stage of divorce and parentage disputes, including pre- and post-marital agreements, the allocation of parental decision-making and parenting time, asset division, and business valuations, and she looks forward to becoming an integral member of the Davis Friedman team.

Jeremy Zednick has been promoted to President & CFO. He has served as CFO of the Chicago-based real estate company since joining in 2017. Prior to joining UI, Zednick spent 20 years in financial leadership roles at commercial real estate firms and is a Certified Public Accountant. Urban Innovations pioneered the creation of Chicago’s River North and their current portfolio of owned and managed properties totals more than 1 million square feet of space in Chicago and Milwaukee.

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Steakhouses are starting to lose their luster STEAKHOUSES from Page 1 the restrictions that came with it.

Chicago’s archetypal restaurants now face an uncertain future. Outof-town business diners and their corporate credit cards haven’t returned in full, nor have celebratory meals that bring large groups to restaurants. And with more people working at home, downtown lunch crowds remain thin. Steaks do not travel well, a drawback as restaurants turn to alternative revenue streams like to-go orders.

On top of that, inflation is pushing steak prices too high for many consumers to stomach.

The pandemic has forced surviving steakhouses to rethink their business models, and in doing so, taken aim at the heart of Chicago’s culinary identity. As they struggle to adapt to post-COVID realities, some are dropping the priciest steaks from their menus and diversifying offerings to reduce their reliance on prime beef.

“Chicago’s always going to be meat and potatoes and red sauce,” says Nick Lombardo, chief operating officer of Rosebud Restaurant Group. “But I do think that (restaurants) that have steaks as an option rather than a full steakhouse menu are going to be more successful.”

Rosebud Prime, which has been serving steaks on white tablecloths at the corner of Dearborn and Madison streets since 2007, is turning into an Italian restaurant.

Pasta dishes will comprise about 70% of a menu that was 80% steak and seafood. The restaurant group makes all the pastas and sauces for its nine establishments at a central location, eliminating beef supply chain issues. Another advantage: Profit margins on pasta dishes are higher.

Lombardo hopes the lower prices will bring more people through the door when the restaurant—which is getting a new name, too—reopens after a two-year hiatus. Broader appeal is key for the restaurant group, which saw 2021 revenue that was 25% lower than 2019.

“People look and they know what a steak should cost,” whether it was $40 at Rosebud or $50 somewhere nearby, Lombardo says.

“Now people are spending $70 on the same steak, and they’re not willing to do that anymore.”

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Steakhouse operators around the city, some whose families have been in the business for generations, see the same customer reactions. Though not all are switching their restaurants fully from steakhouse to Italian, they are cutting back on steak.

Mentions of beef entree dishes on steakhouse menus were down 2.2% nationally over the past year, while mentions of other protein options have increased 14.6%, according to market research firm Technomic.

It’s a matter of survival, says Michelle Durpetti, third-generation owner of Gene & Georgetti in River North. “We’ll never lose being a steakhouse, but we’re also at a point now where we understand the importance of evolution.”

Chicago establishments with

BIGGEST LOSSES No restaurant category escaped unscathed from the pandemic. Here’s a look at which types of sit-down establishments were hit hardest in Chicago. For example, the city lost 28.8% of its steakhouses between January 2020 and January 2022.

Buffet -52.9% Spanish/Tapas Peruvian

-39.1% -30%

Steakhouse

-28.8%

Ethiopian

-28.6%

Other European

-25%

Polish Diner/Breakfast

-23.5% -20.1%

Coffee/Tea

-20%

French/Bistro

-20%

Note: Excludes categories with three or fewer Chicago locations in 2020.

Source: Datassential

varied menus, like sports bars and chophouse was “the scene of many pubs, have fared better during potent political gatherings and imthe pandemic than steakhouses, promptu caucuses,” where mayoral according to Datassential. Broad- candidates and aspiring lawmakers er menus gave them levers to pull were “made and unmade.”

The article notes that the chopwhen things got bad, a luxury most steakhouses did not enjoy, house didn’t draw just politicians.

“Its clientele represented every says Mark Brandau, an analyst at walk of life. The broker sat down Datassential.

Restaurants offering food that and munched his chop at the same travels well, like pasta or sushi, table with the gambler. The sneak also had a higher survival rate. thief and the bank president orChicago lost 14.9% of its Italian dered from the same bill of fare. restaurants and 10.2% of its Jap- The actor and the prize fighter, the anese and sushi joints over the past two years, compared with 28.8% of “WE’LL NEVER LOSE BEING A its steakhouses, accord- STEAKHOUSE, BUT WE’RE ALSO AT A ing to Datassential.

Even before the pan- POINT NOW WHERE WE UNDERSTAND demic, trends were shifting away from the THE IMPORTANCE OF EVOLUTION.” old-school, high-dollar Michelle Durpetti, third-generation owner of downtown steakhouses Gene & Georgetti in River North in favor of more intimate neighborhood restaurants. Consuming giant hunks of merchant and the turfman, the meat was falling out of fashion, too, highwayman and the capitalist, particularly with younger crowds quaffed wine out of the same glasswho taste environmental guilt in es, enjoyed rarebits off the same cheese, signed their ‘tabs’ with each bite.

Pastas are a different story, says the same pencil, and paid for their Ian Rusnak, chef and co-owner of purchases through the same little opening on the cashier’s desk.”

Elina’s in West Town.

Today’s steakhouse exudes the “It’s easy to take an extruded pasta that’s made with semolina same ethos, Kraig says.

“You can see there’s a connecand water and make it vegan,” he tion between the shakers and dosays.

Chicago’s steakhouses are almost ers and men working in the middle as old as the city itself, says Bruce of the city who are going to chopKraig, culinary historian and profes- houses and eating steaks,” he says. sor emeritus at Roosevelt University. “This is one reason for the glamour Meat dominated the menus of early and cultural apparatuses that surrestaurants in a city that became the round steakhouses.”

Some predict Chicago steakdestination for railroad cars packed houses will bounce back. Others with beef on the hoof.

Decades later, the Union Stock- argue that Chicago was overdue yards began shipping meat from for a steakhouse culling.

“To me, it’s not hard to see why” coast to coast by rail. But Chicago chophouses offered fresher, better- so many steakhouses closed the past tasting meat without the costs of two years, says Amy Morton, who cross-country shipping built into operates three restaurants, including The Barn Steakhouse in Evanthe price.

Chophouses quickly became ston. The daughter of Morton steakgathering places for city politicians, house founder Arnie Morton, she newspapermen and other movers remembers serving crepes in her and shakers who worked down- father’s restaurants as a teenager.

Morton agrees the city was overtown. Billy Boyle’s Chophouse, which opened in the late 1870s, is an saturated with steakhouses, many example. An 1898 story published of which weren’t owner-operated. in the long-defunct Chicago Inter “Did we need all those steakhousOcean newspaper notes that the es?” she asks.

3/4/22 3:17 PM

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CANNABIS CONSOLIDATION Mergers and acquisitions (M&As) have taken off in the cannabis industry, as startups and larger companies alike jockey for position in the highly dynamic (and highly regulated) space.

Legal cannabis is rapidly coming of age in Illinois and a growing number of other states. Amidst fierce competition, capital access challenges and a highly complex regulatory landscape, M&As are on the rise. Three seasoned Chicago-based M&A deal attorneys with deep knowledge of the unique pressures shaping the emerging cannabis industry shared with Crain’s Content Studio what’s behind all the action—and what to expect in the coming years.

What’s fueling the recent surge in cannabis M&A activity? Do you think it will subside any time soon?

Kevin Slaughter: The surge in M&A activity has been fueled by two things: fierce competition in a highly regulated industry, and ongoing valuation compression that has dramatically slowed capital-raising. I expect the surge to continue as larger multi-state operators (MSOs) look to increase market share, enter new markets and scale ahead of federal legalization and traditional industries entering the market. Also, there are some markets that are experiencing over-saturation, which is an environment ripe for M&A activity as smaller companies look to partner to increase market share and reduce costs.

Anthony Zeoli: First, many of the larger acquiring entities are expected to create high rates of investor return. To achieve those returns, these companies need to continue to expand profitability, which necessarily leads to expansion. Second, acquisition funding is relatively cheap today—the average cost of acquisition capital across the board still remains near historic lows. But interest rates are expected to rise significantly in the near future, leading many to try to get deals done now while rates are low. Finally, in states where cannabis licenses are limited (e.g. Illinois), there is significant pressure to get acquisition deals done before the next wave of licenses are issued. I

players continue to seek out deals to increase their scope and market share, while smaller firms and new entrants search for sources of liquidity, investment capital and the safety of business combination. Continued regulatory evolution at the federal, state and local levels is also fueling transaction activity, as companies navigate the shifting sands of opportunity, and peril, in the industry.

What unique factors can make cannabis M&A transactions different from other M&As? Zeoli: Regulatory compliance, both at the state and federal level, is by far the biggest factor. Cannabis laws vary significantly from state to state, creating added complexity in deal structuring. This issue is further exacerbated by the fact that many states (e.g. Illinois) do not yet have a streamlined process for approving license transfers. Generally speaking, state regulatory approval is required prior to the actual sale and transfer of a cannabis license (or any regulated assets such as cannabis inventory).

The lack of a definitive transfer process typically creates uncertainty, leading to significant closing and funding delays.

- BILL DORAN, BENESCH

Bill Doran: The legal cannabis industry remains in its early stages, relatively speaking, so we’re seeing both rapid growth and consolidation simultaneously. Larger, established

P023_025_CCB_20220307.indd 23

Partner Benesch wdoran@beneschlaw.com 312-212-4970

definitely does not fit all in cannabis M&A. Slaughter: Cannabis companies often have complex organizational structures to comply with applicable regulations, which may increase

KEVIN SLAUGHTER

ANTHONY J. ZEOLI

Partner Levenfeld Pearlstein, LLC kslaughter@lplegal.com 312-476-7527

diligence costs and difficulty of transactions. At a minimum, most cannabis M&A transactions require regulatory approval. That adds a higher level of complexity to cannabis transactions relative to other M&As. For example, where sellers hold

Partner Freeborn & Peters LLP azeoli@freeborn.com 312-360-6798

conditional licenses, lack necessary capital, and regulatory approval is contingent on operational inspection, the financial exposure to buyers will increase because they will need to pay significant build-out expenses prior to regulatory approval.

Doran: The cannabis industry is highly regulated, and regulations vary by jurisdiction. Like the healthcare industry, this creates a unique overlay to traditional M&A activity because the regulatory issues influence

“CONTINUED REGULATORY EVOLUTION AT THE FEDERAL, STATE AND LOCAL LEVELS IS FUELING TRANSACTION ACTIVITY, AS COMPANIES NAVIGATE THE SHIFTING SANDS OF OPPORTUNITY, AND PERIL, IN THE INDUSTRY.”

expect the current surge will taper off significantly in the next 12-24 months as interest rates rise and the cost of acquisition funding increases.

BILL DORAN

everything from due diligence to deal structure to legal documentation.

Ownership requirements and change in control rules often influence deal timing and structure, and flexibility and creativity is required to successfully complete each deal.

For example, many states impose ownership rules tied to state residency or social equity status. One size

Doing business in the cannabis industry is multifaceted and extends beyond regulatory approval.

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3/1/22 10:10 AM

CANNABIS CONSOLIDATION Cannabis brands don’t have the demonstrated longevity or persistence that’s achievable in other sectors. How does that shape what buyers consider when embarking on an M&A transaction?

Zeoli: I don’t personally see this as a concern to buyers in this industry.

Like it or not, the recreational use of cannabis products has been around for a very long time. While there might not be “demonstrated” longevity in terms of the legal cannabis market, the fact that the recreational use of cannabis has not only endured, but increased, over the last couple of decades evidences the sustainability of the cannabis market.

Slaughter: Currently, positive product experience rather than brand loyalty is what drives consumer choice in the cannabis industry. This is a direct result of the complex web of regulations that make it difficult to deliver consistent customer experiences across state lines. The ability of companies to develop brand awareness is also impacted by state regulations that restrict advertising and marketing of cannabis products.

MSOs that have vertically-integrated operations in states across the country are in the best position to develop national brands. Many expect 2022 to be the year of the brand. I expect an increased number of licensing deals

and joint ventures between MSOs and brands with national potential.

Doran: Investors and operating consolidators in cannabis are continuing to wrestle with the issue of brand and brand equity. An early wave of branding association with celebrity, personality and influencer status is slowly being replaced with brands associated with product, packaging, and performance. As the

Zeoli: One of the biggest issues I have encountered is having to navigate the state regulatory approval process. Each state has its own unique regulatory approval requirements and process. Many states are still playing catch-up and simply do not have a clearly documented approval process.

This often results in participants being subject to the whims and requests of the individual regulators they are dealing with.

“THE CANNABIS INDUSTRY IS STILL IN ITS INFANT STAGE. WHAT WE ARE SEEING NOW IN TERMS OF M&A ACTIVITY IS SIMPLY THE INITIAL SHAKE OUT OF MANY SMALLER PLAYERS.” —ANTHONY ZEOLI, FREEBORN industry achieves more widespread legal and social acceptance, I believe that branding around products and performance will achieve longevity over those tied to personality. For the time being, as the pathway to brand development remains unresolved, I believe you will see more activity around licensing and commercial collaboration rather than outright M&A in brands.

On the regulatory front, there’s still a lot of uncertainty. What are some of the current issues both at the state level and federal level impacting cannabis M&A activity?

Slaughter: At the federal level, infighting among cannabis advocates has been an obstacle to major federal reform. Democrats have proposed legislation with broad sweeping reforms, while Republicans prefer incremental reform. I am optimistic that an enhanced version of the Secure and Fair Enforcement (SAFE) Banking Act, which reduces the tax burden on cannabis companies, opens capital markets access, and adds equity provisions and an excise tax, will pass in 2022. Until this legislation passes, cannabis companies will continue to face financing challenges, which will fuel M&A transactions.

The cannabis industry may be

regulated , but it’s anything but regular.

Rapid growth, conflicting regulations, unclear jurisdiction, inconsistent—at times nonexistent—enforcement.

Tremendous opportunity tempered by significant risk.

What was true of yesterday’s Wild West could also describe today’s cannabis industry.

My clients count on me to help them navigate this varied and often uncharted territory with confidence.

I work with growers, distributors, product manufacturers, and all manner of ancillary businesses.

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> Partner, Regulated Industries Practice Group > Advises cannabis companies of all sizes on issues of regulatory compliance; risk avoidance; company formation; contracts and licensing; corporate transactions; advertising and product packaging; and brand strategy and intellectual property protection. > 312.624.6340 | bdahlin@beneschlaw.com

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Doran: Regulatory change in the cannabis industry is a fact of life and its impact on M&A activity varies by jurisdiction. Here in Illinois, the awarding of new dispensary and cultivation licenses remains in legal limbo more than two years after the initial rollout of adult recreational use legislation. While acquirers and investors are beginning to move cautiously towards deals in Illinois, the uncertainty has until recently

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slowed the pace of M&A in this state. In other states with established medical cannabis programs that have either passed adult recreational use (e.g., New York) or are anticipated to do so (Ohio, Florida, Pennsylvania), M&A activity remains robust as investors seek to gain presence ahead of the expansion that will come from full adult use legislation.

At the federal level, frankly the successful passage of any regulation should have an immediate visceral uplift to deal values and deal activity. Whether it’s the SAFE Act or the Cannabis Administration and Opportunity Act proposed last year

by Senators Cory Booker and Chuck Schumer, we’d see greater amounts of capital investment into the industry, driving increased M&A activity.

How do you see the relative lack of liquidity and capital resources in this space affecting cannabis M&A in the coming year?

Slaughter: The lack of access to capital resources will present M&A opportunities in this capital-intensive industry. Until the SAFE Banking Act or similar legislation is passed, cannabis companies will continue to rely on alternative financing (with rates as high as 15%) to fund the buildout of operations and/ or expansion. While lenders are becoming more comfortable with the financial sustainability of larger cannabis companies, resulting in better terms, smaller companies still struggle to obtain financing.

Zeoli: There is certainly a lack of readily available funding in this industry. Some of the smaller players may find it harder to find costeffective capital to support expansion, possibly leading them to seek an exit altogether. That said, I believe there are a decent amount of cost-effective private funding alternatives available to larger players. Over the next year, I anticipate seeing a significant influx of additional private capital flowing into the cannabis markets, whether

through direct investment or lending vehicles.

Are there lending considerations specific to cannabis M&A? Is it relatively difficult for buyers to obtain a loan for M&A funding?

Doran: Access to traditional banking and traditional bank capital is a major problem facing the cannabis industry. It is symptomatic of a larger issue: The industry lacks consistent or meaningful access to financial products and the traditional financial system plumbing generally.

Industry cannibis regulations make it difficult to provide leaders with traditional collateral sources and structures in cannabis lending.

Many traditional lenders do not yet provide loans or banking services to the cannabis industry. A growing group of private, non-traditional lending sources do exist, but access to debt capital remains expensive and access is typically skewed in favor of larger players. This disparity in access to debt capital will tend to fuel consolidation.

Zeoli: First, given the highly regulated nature of the target entity, the general cost and level of diligence involved is significantly increased as the lender will need to be assured of the regulatory compliance of both the borrower and the target entity.

Second, the lender needs to consider what the loan collateral will be and how to properly secure its collateral interests. A target company’s most valuable assets will be its license, its inventory and its cash. Each of these assets is highly regulated in some manner, and properly securing the lender’s interest in such collateral can be complex. Given the relative lack of current funding sources in this market, lenders are being highly selective as to what deals they fund. This makes it difficult for some borrowers, particularly the smaller players, to obtain acquisition funding.

Interstate commerce might eventually drive economies of scale in certain matters.

But the timing—or even reality—of this remains uncertain. Do you think that long-term possibility is having a near-term influence on buyers’ M&A strategies?

Slaughter: Most market participants are not expecting legislation that will allow for interstate commerce any time soon and are preparing for a relatively static regulatory environment. Accordingly, I expect that companies will continue to look to M&A as a primary means to increase their market share, enter into new markets and build scale ahead of federal legalization and further consolidation expected to occur when traditional industries enter into the market.

3/1/22 10:10 AM

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ABOUT THE PANELISTS Doran: Even with a rapid federal legislative breakthrough, the era of true interstate commerce in cannabis likely remains a long way off. For example, just look at how long the alcohol industry remained regionally balkanized after the repeal of prohibition. That said, longterm investments are being plotted, particularly around cultivation and logistics, for the eventual opening of commerce in cannabis across state lines.

participants to get to market is usually longer compared to larger companies. In the past year, however, state regulators have become increasingly aggressive in enforcing the requirement that licensees become operational in a timely manner.

Accordingly, some equity participants that are awarded cultivation licenses, for example, may find it increasingly difficult to raise the funds needed to build out their operations fast enough to meet deadlines.

Rules regarding cannabis delivery vary by state— it’s not allowed in Illinois, for instance, but is well established in California. How are buyers thinking about delivery-driven assets as part of their M&A and growth strategy?

Doran: Social equity programs will influence M&A activity primarily around deal structure. Licensed cannabis businesses held by social equity-based partnerships look for investment capital and liquidity, and buyers/investors look to invest in and acquire social equity-based assets to comply with the ownership rules.

The goal should be to ensure that M&A activity does not just result in short-term financial windfall for a lucky few but instead can create pathways to sustained and meaningful participation in the cannabis industry by those who have historically been victimized by illegality in cannabis. A key to enforcing social equity program legislation will be to focus not just on restrictions but on incentives.

The interpretation and enforcement of social equity program rules should be designed to incentivize mentorship, training, and long-term participation.

Zeoli: Some states are behind the curve in terms of allowing for cannabis delivery, but I believe that eventually all states that allow for the sale of cannabis will also allow for its delivery. By way of example, there are at least three Illinois bills now pending focused on cannabis delivery. Interestingly, the existence of COVID-19 accelerated legislative action to permit delivery in many states. Many states decided to open up delivery since in-person sales were curbed by the pandemic.

Doran: I agree that delivery will likely expand to be present in many, if not most, legal markets in the midterm. Investment and M&A activity in delivery assets, licenses and logistics technology is not where everyone will focus, but a select subset of investors in the cannabis industry will continue to explore and exploit opportunities to establish themselves in what will ultimately become a vital industry component.

Zeoli: I believe many cannabisrelated social equity programs are well-intended but often very poorly executed—in particular, Illinois’ social equity program. Having done a deep dive into the program, I can say there are several loopholes in the current regulations that can be easily exploited, ultimately defeating the intended benefits of the programs.

“WHILE LENDERS ARE BECOMING MORE COMFORTABLE WITH THE FINANCIAL SUSTAINABILITY OF LARGER CANNABIS COMPANIES, RESULTING IN BETTER TERMS, SMALLER COMPANIES STILL STRUGGLE TO OBTAIN FINANCING.”

BILL DORAN is a partner in Benesch’s Corporate & Securities Practice Group. He focuses his practice on M&A’s, general corporate and commercial transactions, private equity, and debt and equity finance. Doran’s diverse industry experience includes advertising and digital media, cannabis, wealth management and financial services, technology, food and health care services. He is a seasoned deal attorney with over 30 years experience helping clients successfully complete a variety of public and private transactions.

KEVIN SLAUGHTER is a partner in Levenfeld Pearlstein’s Corporate Practice Group. He is a go-to attorney for clients in the cannabis industry, advising them on a range of issues including license applications, corporate governance and funding. Slaughter also assists cannabis clients with organizational structure, real estate matters, branding and licensing agreements and supply agreements. His broader experience includes complex commercial transactions such as M&As, financing agreements, joint ventures and private offerings.

ANTHONY ZEOLI is a partner in Freeborn’s Corporate Practice Group and the leader of its Emerging Industries Team. He concentrates his practice in the areas of M&As, banking and commercial finance, securities, real estate and general corporate law.

Zeoli is an industry leader in the areas of crowdfunding, blockchain, securitiesbased cryptocurrency/token offerings, peer-to-peer (P2P) lending, and Regulation A+ offerings. He was named to the National Law Journal’s inaugural list of Cryptocurrency, Blockchain and FinTech Trailblazers.

industries, such as pharmaceuticals and alcohol, entering the market.

As consolidation continues and the current MSOs become more dominant, I also expect smaller companies will find it increasingly difficult to survive and will partner with other smaller

companies to increase market share and reduce costs.

Zeoli: The cannabis industry is still in its infant stage. What we are seeing now in terms of M&A activity is simply the initial shake out of many

smaller players. This will most likely continue while there are still licenses to be acquired. Once markets are a bit more saturated, I believe you will start to see the larger regional, or even national conglomerate entities, pick off competitors.

Growing and Nurturing Success

— KEVIN SLAUGHTER, LEVENFELD PEARLSTEIN

What are your thoughts on how social equity programs and goals set by Illinois and other licensing jurisdictions might influence cannabis M&A activity?

Slaughter: I expect more M&A activity (including joint ventures) between larger companies looking to expand and social equity participants that have a license but lack funding.

Despite the best intentions of the Illinois legislature and other state legislatures, the reality is that social equity participants typically have limited access to capital—yet cannabis is a capital-intensive industry. The amount of time it takes social equity

P023_025_CCB_20220307.indd 25

If the regulations are properly tightened, I believe Illinois’ program could significantly increase equity within the state’s cannabis markets.

Until then, however, I unfortunately see the program more as a political talking point than a significant vehicle for change.

How do you see current and near-term M&A activity shaping the cannabis industry going forward?

Slaughter: I believe that over the next couple of years, larger MSOs will continue to rely on M&A to increase their market share, enter into new markets, and build scale ahead of federal legalization and traditional

We have a particular strength in helping cannabis companies achieve their full potential, supporting the passion and effort of entrepreneurs as emerging industries become household ones.

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CHICAGO | NEW YORK | RICHMOND | SPRINGFIELD | TAMPA

3/1/22 10:10 AM

26 MARCH 7, 2022 • CRAIN’S CHICAGO BUSINESS

KIRKLAND from Page 3 law, painting the firm and the lawyers it hires as mercenaries.

The demands of billing 2,500 to 3,000 hours a year, though, has come at a cost. Big Law firms are facing a retention crisis, and Kirkland is no exception. More than 325 of its associates left in 2021— up more than 70% from 2020, according to data from Leopard Solutions and a Bloomberg Law analysis of LinkedIn profiles.

It’s a major challenge for a firm that only expects its workload to grow.

CHANGING THE NARRATIVE

Kirkland’s reputation has been around so long, it’s hard to determine where it even began. References to the firm as a pack of “wolves in wolves clothing” have circulated for decades.

That makes Ballis’ task all the more difficult.

Soon after he became Kirkland’s chairman in 2020, Ballis remembers, he tried to woo a partner from a rival firm in London. The potential hire would’ve filled a hole in the firm’s antitrust practice, convincing regulators that transformational corporate deals won’t harm consumers. It’s an important job for law firms these days, and especially for the firm that last year handled more M&A deals than anybody.

She’d be part of a team at Kirkland doing more important, interesting work than anywhere else, Ballis told her.

The potential hire demurred, telling Ballis she wasn’t planning to leave her firm. Three months later, he learned she’d joined a different firm. Whatever her actual reasons, Ballis took it as confirmation that Kirkland has a branding problem.

While Ballis admits Kirkland demands much of its people, his argument that the firm is misunderstood boils down to this: He says it’s been working to ferret out selfish, greedy behavior for more than a decade. The description of its so-called eat-what-you kill compensation system, which has bred part of its reputation, is a mischaracterization, he says.

And his own leadership style, characterized by a dedication to managing the firm like a sports team, represents its dedication to a high-performance, collaborative culture.

“We have a system that demands a lot from people, gives them a lot of responsibility, and requires people to work together,” Ballis said. “And if you don’t want to work together, we’re not your kind of firm.”

Ballis rallied more than half a dozen partners Kirkland hired from other firms who said the culture they’d been warned about just didn’t meet their reality at the firm.

“That view of a sharp-elbowed, tough institution where nobody helps each other, I just don’t think it exists,” said Andy Calder, who joined from Simpson Thacher in

P026_CCB_20220307.indd 26

2014 to build out the firm’s Houston office.

Still, many in the legal industry laugh at the idea that Kirkland has quietly changed its style.

“It’s not a good culture,” said one former share partner who left the firm recently. “There is an arrogance that we’re the best. We’re Goldman Sachs or McKinsey of the law firm world.

We can destroy everybody else, and let’s actually go destroy other people.”

FROM SIDLEY, WITH LOVE

As a high school senior, Ballis captained the Highland Park High School basketball team to a 1-23 record. The 5-foot-6 point guard was known for passing and outworking everybody on the court, according to his high school teammate, Jon Gray, who is now a client and chief operating officer at Blackstone, one of the largest alternative investment management companies in the world.

“I’m not surprised at all he ended up being very successful,” Gray said of Ballis. “Because Jon was so driven and cared so much and was a tenacious competitor.”

Ballis graduated with a Soviet studies major from Lehigh University in 1991, took out loans to go to Harvard Law School, and returned to Chicago to work at Sidley Austin. By 2005, his practice was virtually all private-equity work, and he found himself routinely across the table from Kirkland lawyers. He liked how private-equity clients expected him to solve their problems, rather than just offer advice.

“He’s someone who makes you want to run through walls, and he does it by earning it,” David Hutchins, a former Kirkland lawyer who’s now a client at Bain Capital, said of Ballis. “You see what type of lawyer he is, and you want to be that.”

TAKING ON ‘LOCKSTEP’

Ballis joined Kirkland after a recruiting lunch at the Mid-America Club atop Chicago’s 83-floor Aon Center with Jeff Hammes.

Hammes led the firm from 2009 to 2019, and is credited with orchestrating Kirkland’s rise to the top by cutting huge checks to lure up-and-coming partners from the most prominent Wall Street firms.

He took advantage of what he saw as a hole in his competitors’ armor: They paid their lawyers based on how long they’d worked for the firm, not in proportion to their individual contributions. To Hammes, it meant young, talented partners could feel stymied.

He promised them more control over their futures, and doubled or tripled their salaries.

Litigator Sandra Goldstein was paid $11 million a year to join Kirkland in 2018, according to The New York Times. She joined from Cravath, which paid its average partner $4.6 million that year, data compiled by The American Lawyer show.

The tenure-based compensation system used by elite firms

like Cravath since the 1970s was branded “lockstep.” Firms advertised it as crucial to their willingness to pick the right lawyer for every job without arguing over pay.

Before Hammes, Kirkland’s compensation system was dubbed “eat what you kill.” Lawyers took home shares of the hours they were responsible for generating. It fostered internal competition, Kirkland partners said, creating fiefdoms managed by individual partners wary of losing money by sharing clients.

Hammes worked hard to break that culture, Kirkland partners said. He eliminated the concept of “billing partners” who earn credit for work done by clients they brought into the fold.

Today, only two major law firms maintain a pure lockstep model. The rest have been forced to pay their most important lawyers more money so they won’t be plucked away.

SUCCESS DEFINED

How well you contribute to Kirkland’s overall success is now what drives compensation decisions, firm leaders say. The firm resets partners’ allocation of shares every other year, and the key questions reward behavior that leaders view as putting the firm first.

For instance, how much business you generated, how many lawyers you brought in to work on your matters or whether you gave up a client so the firm could advise its more lucrative adversary.

“That’s the definition of success here,” said Sophia Hudson, who joined Kirkland from Davis Polk, a longtime lockstep firm, in 2018. “It completely overshadows individual success.”

Edward Sassower, who leads Kirkland’s bankruptcy practice, said the firm could be a “rough place at times” when he first joined in 2003, but he now views it as “the most collaborative Big Law firm in the world.”

“It took a lot of work to get here from there,” he said. “In those early days, Jeff sometimes had to threaten the loss of shares to promote good teamwork. Now that’s such a part of who we are that it happens naturally.”

Kirkland’s leaders also said the firm has taken steps to become a more diverse, inclusive workplace. Like many large firms, though, it declined to provide diversity statistics of its recent partnership classes.

Melissa Hutson, a member of Kirkland’s executive committee, said Kirkland has hired a dozen senior women and diverse partners recently. That will ultimately help the firm achieve its goal of promoting more diverse partner classes internally, she said.

Part of the culture change has been required by the scale of Kirkland’s business.

The firm’s roster of investment funds went from 100 clients in 2016 to more than 700 in 2021, said John O’Neil, who heads

PHOTO PROVIDED BY KIRKLAND & ELLIS

Kirkland battles ‘tough place to work’ image

Jon Ballis took charge at Kirkland & Ellis 68 days before the pandemic was declared. He now faces the challenge of driving success while competition for top legal talent is fierce.

Kirkland’s investment funds practice. He credits the growth in part to hiring partners with no billing responsibilities who manage client relationships and hand off work to the most logical teams of lawyers.

“The old math was: One partner has a book of business. They service that book of business, and they collect revenues for it,” O’Neil said. “I hate the term ‘book of business.’ ” One former share partner said it didn’t ring true that Kirkland had quietly transformed into a collaborator’s dream. The partner had difficulty bringing in clients that others deemed too small—and he said he didn’t get any credit for agreeing to pass up those opportunities.

“Collegiality and everything, talk is cheap,” the former partner said. “It’s very dependent upon who you are. If you’re a privateequity guy with a couple of big clients, I’m sure everyone is very collegial at that level.”

THE NEXT STEP

Ballis was selected the firm’s chairman in 2018 by a group of senior partners. There was no vote; he was the consensus choice. He served as chair-elect for a year.

The COVID-19 pandemic was declared a national emergency just 68 days into his job as chairman. “This is not in the playbook of how to run this law firm,” he remembers thinking.

From 2009 to 2019, the firm’s revenue increased 11.5% per year on average while its profits per equity partner rose 7.6%, The American Lawyer reported. If Ballis can replicate those growth rates over another 10-year period, he’d be leading a law firm that’s bringing in more than $14 billion a year and paying its average shareholding partner more than $10 million a year.

But early in the pandemic, lockdowns and closed courtrooms threatened to make that kind of growth an impossibility.

The firm largely halted hiring, anticipating a two-month to twoyear slowdown. But the worstcase scenario never panned out.

Kirkland’s restructuring practice exploded. Capital markets lawyers went into overtime helping companies raise debt to survive.

New private-equity funds formed to take advantage of distressed opportunities. By September, the firm’s M&A engine pushed to a new level that continued through last year.

Revenue in 2020 grew more than 16% while profits per partner soared nearly 20% to $6.2

million. Ballis declined to provide 2021 financial figures, citing the firm’s fiscal year ending in March. But there’s good reason to believe the firm did even better in 2021, considering that it set a record for activity levels in its M&A practice, according to data compiled by Bloomberg.

“It’s not irrational to think, ‘Oh my goodness, how are we going to do better than this?’ ” Ballis said. “I will tell you with full candor, I see tremendous opportunity and upside.”

BARGAINING POWER

The surge in demand has forced Kirkland into a hiring binge during a year in which the 50 largest firms saw compensation costs soar 16.5%, according to Citi Private Bank.

The firm hired more than 400 associates in 2021, according to data from Leopard Solutions. That’s roughly four times the number the firm hired in 2020, even as two-thirds of the associates it lost last year departed to rival firms, according to a Bloomberg Law analysis of LinkedIn profiles.

For its part, Kirkland disputed that its attrition in 2021 had grown more than 70% from a year prior, putting it instead at 59%. It says attrition grew 50% from a more normal 2019 to 2021, and that the poaching by other law firms is indicative of the value that the Kirkland experience adds to a lawyer’s resume.

The firm’s hiring strategy acknowledges the bargaining power junior lawyers now hold. Kirkland opened offices in Austin, Texas, and Salt Lake City, just to access people in places where they were already living. And it shaved a year off how long it takes before lawyers are considered for the life-changing status of holding shares in Kirkland’s profits.

There’s no sign Kirkland or other Big Law firms will be asking their lawyers to work less.

Ballis is unapologetic about the firm challenging its lawyers. He wants people like him who relish the hard work.

But he wants them to believe that at Kirkland they’ll be doing it with a group of people who play well together. And his reasons for making the sales pitch are pragmatic: Kirkland’s reputation is making it harder to win the next game on his schedule.

“We’re like college sports: The players pick us,” he said. “And the misconception of who we are is not helpful to our institution.”

Bloomberg News

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CRAIN’S CHICAGO BUSINESS • MARCH 7, 2022 27

ART from Page 3 Chicago. The “Immersive Van Gogh” team last month opened “Immersive Frida Kahlo” in rotation with Van Gogh.

The success of the new take on the early 20th-century Mexican artist will go a long way toward answering whether these immersive presentations—soundtrackbacked video animations cast by multiple projectors throughout a large room as patrons walk, stand or sit amid the imagery—are a flash in the pan, fueled by novelty and Van Gogh’s star power, or something that might become an American entertainment fixture.

If it’s the latter, it’s a safe bet that more and more museums will incorporate at least some of the tactics the immersive shows employ: new ways to animate or augment the in-real-life art they are showing.

“After all of us got through the freakout moment, everybody’s grappling with whether this will have a long-term impact on art museums or not,” said Nannette Maciejunes, executive director of the Columbus Museum of Art, who saw “Immersive Van Gogh” open in her Ohio city at about the same time her museum debuted “Through Vincent’s Eyes: Van Gogh and His Sources” last November.

“I think there’s a general concern that this might replace an art experience, and I don’t think it will.

I think it’s something that we will live alongside for a while,” she said.

At least one observer sees the new experiences as a wake-up call for traditional museums. “In a good way, experiences like the ‘Immersive Van Gogh’ and the ‘Immersive Frida Kahlo’ are putting some pressure on museums to be more relatable, to offer some experiences outside of the traditional things they offer,” says Debra Kerr, CEO of Intuit: The Center

for Intuitive & Outsider Art and an instructor in museum studies at Northwestern University’s School of Professional Studies.

That’s not to say fresh thinking hasn’t been happening. Kerr was impressed by video she saw of a Monet image coming together at a Denver presentation of the “Claude Monet: The Truth of Nature” exhibition. She also noted the Art Institute’s 2016 blockbuster “Van Gogh’s Bedrooms” gave people the chance to see the three versions of that famous painting together in North America for the first time, but also to stay in an Airbnb that replicated the iconic room.

And at the Art Institute’s recent “Monet and Chicago” show, the final room in the exhibition used the artist’s many takes on lilies atop a pond to create its own type of immersion, but with actual Monets.

OUTSIDE THE BOX

The Museum of Contemporary Art Chicago last decade had two of its three most popular exhibitions ever by going outside the art museum box to present the work of streetwear-turned-high-fashion-designer Virgil Abloh and of David Bowie, profoundly immersive with individual headphones and a concert video room at the end.

“Art museums need to study what makes these immersive exhibitions attractive and see if there are elements that can be applied to their own offerings,” said Michael Darling, the former MCA chief curator who brought Bowie and Abloh to the Chicago Avenue museum.

“A couple of those elements seem to be an impression of accessibility, the opportunity for a special experience that they can photograph and post to social media, and a general sense of wonder.

Art museums should be able to nail those attributes,” said Dar-

ling, co-founder of the Museum Exchange, a startup that matches museums with art donors.

With museums in the past yearplus striving to bring back audiences amid various pandemic starts and stops, it was impossible not to be struck by the wave of new entertainment based on Van Gogh, one of the old-school art world’s most reliable draws. Indeed, two of the Art Institute’s most popular shows ever were “Van Gogh’s Bedrooms,” drawing 434,000 people in just three months, and 2001’s “Van Gogh and Gauguin: The Studio of the South.”

Gloria Groom, the Art Institute’s chair of European painting and sculpture and curator of “Van Gogh’s Bedrooms” said she has no qualms recommending the immersive Van Gogh exhibit to people looking for family entertainment.

“It is entertaining, and it is an experience,” said Groom, who said she also plans to see the immersive Kahlo presentation soon. “But looking at art in a gallery is a different kind of experience. I don’t see them as being in opposition to each other.”

In a few cases, old-line museums are incorporating the new immersive art directly.

The immersive Mona Lisa show is the first part of a plan by French cultural authorities to install a dedicated immersive art space in Paris’ Grand Palais “to make art accessible to as many people as possible, by promoting digital innovation in all its forms,” its website says.

Closer to home, the Indianapolis Museum of Art at Newfields—an institution founded, like the Art Institute, in the late 19th century— has given over 30,000 square feet of gallery space to The Lume, a digital art projection experience that debuted last summer with a dedicated Van Gogh show.

“Some folks are a little intimi-

KYLE FLUBACKER

What immersive exhibits mean for museums

“Immersive Frida Kahlo” is a new take on the early 20th-century Mexican artist. dated going into an art museum,” said Jonathan Berger, vice president of marketing and external affairs at Newfields. “Our immersive experience just kind of breaks that down and acts as an invitation for people to come in and experience art differently.”

The advantage his museum has over other immersive shows, he said, is that in the final room, visitors get to see the museum’s actual Van Gogh landscape alongside a Cezanne and a Gauguin.

Though Berger declined to say how many tickets were sold, he said The Lume has contributed to a “substantial” recent boost in attendance.

But yet to be seen is whether immersive art will draw crowds for subjects other than Van Gogh, or perhaps Frida Kahlo, who both have compelling life stories and have had feature films made about them. Also in question: Will people pay the pricey fees (“Immersive Van Gogh” starts at $40 for the 40-minute experience, while patrons can spend all day at MCA Chicago for $15) for a second or a third immersive show?

Lighthouse Immersive, the Canadian company presenting Van Gogh and Kahlo here, is so confident that it took a five-year lease on its Chicago space.

Corey Ross, a Lighthouse

co-founder, sees traditional museums getting into his line of work, plus the 5.4 million tickets his company has sold nationwide, as validation and proof that this is a new genre emerging with its own artists, such as Italian light designer Massimiliano Siccardi, creator of Lighthouse’s Van Gogh and Kahlo animations.

“So many Americans have now seen an immersive show and have been introduced to this concept,” he said. “And some will love it, and some might not. But it’s created a new type of entertainment.”

He said shows like his will inspire some “Immersive Van Gogh” patrons to say, “‘This is really cool.

Let me go delve into this deeper,’ ” and then go check out the Van Gogh canvases at the Art Institute.

That’s essentially how it worked in Columbus, said museum director Maciejunes. As the two Van Gogh shows opened almost in parallel, the not-for-profit museum got outspent in marketing.

But some initial confusion over what was happening where soon sorted itself out and “everybody in Columbus, Ohio, was talking about Van Gogh, and I think that a number of people decided they wanted to do both,” said Maciejunes. “We outperformed our attendance projection by 85%, and it was the second-highest-attended show we ever had.”

How Bellwood’s development strategy turned the village into a homebuilder BELLWOOD from Page 3 far, sold 22 since Pasquale launched the innovative program a decade ago.

Bellwood has an unusual program, with enough success in its first 10 years that it could serve as a model for other towns whose housing stock needs a refresh but whose demographics aren’t high enough to attract private builders. It may also work for those that need to enhance their supply of affordable housing.

Ten years in, Bellwood’s program has turned an important corner, attracting a commercial homebuilder to work in the town.

“Their houses are 100% what convinced me to do it,” says Juan Fragoso, whose West Humboldt Park firm, J. Fragoso Construction, just completed a three-bedroom,

1,600-square-foot house on Englewood Avenue. It’s across the street from a row of five houses the village built in one of its earliest rounds.

“My wife saw those houses and she said they show the potential in Bellwood,” Fragoso says.

The village-built houses on Englewood sold in the $250,000 range in the late 2010s; Fragoso’s is $100,000 more. Built on a lot he bought for $64,000 in December 2020, the house came on the market Nov. 8 priced at $375,000, which later dropped to $349,000.

After the price cut, Fragoso says, he got multiple offers. The home went under contract to a buyer Dec. 8. Fragoso cannot disclose the sale price until the deal closes.

Fragoso, who previously had built about 10 houses, all in the city, says he plans at least two

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200 CUSTOMER SERVICE. . . . . . . . . . . . . . . . . . 877-812-1590 ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5492

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more homes in Bellwood. He is not the first commercial builder to follow Village Hall’s lead. A builder who put up a new home in 2016 ultimately lost it in foreclosure, and the house was sold in 2020 by the foreclosing lender. That makes Fragoso the first commercial builder to succeed at it.

EARLIER SUCCESS

The village’s successes as a builder, meanwhile, came earlier.

“It’s a beautiful face-lift for Bellwood,” says Carmelita Campbell, who with her husband, Craig, bought a village-built house on 23rd Avenue in 2019. She grew up in Bellwood—and was future mayor Harvey’s grammar school classmate—but raised her children in Naperville.

Looking to move closer to the

city, she heard from Harvey and others about the village’s building program.

When Campbell took a look at the latest offering, a threebedroom, 2,100-square-foot house with an attached garage priced at about $260,000, “it made me smile to see this happening in my old town,” she says.

That’s precisely why Pasquale launched the village building program. In 2011, he came to understand that, as he told Crain’s five years later, “I had people exiting because they outgrew the homes we have in Bellwood,” which were mostly built in the decades just after World War II, modestly sized at 900 to 1,200 square feet and not suited to modern families’ space needs.

Pasquale found that “I didn’t have builders who wanted to

build in my town.” They were more interested in building in affluent places, he said. The solution Pasquale devised was to make Village Hall a homebuilder, with an Oak Brook firm, Strategic Project Management, running the program. The village allocated $200,000 from its general fund to build the first house and has rolled the revenue from each sale into the next homes, according to Pete Tsiolis of Strategic Project Management.

Neither Tsiolis nor Harvey would say whether all the homes have been sold for more than they cost to build. But Harvey noted that, as in the case of the old gas station site on St. Charles, “the profit for Bellwood also comes from getting these sites back on the property tax rolls for the long term.”

Vol. 45, No. 10 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the first week of July and the last week of December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

3/4/22 3:07 PM

Our neighbors across the Chicago region deserve equitable opportunities for ssuccess, and we know how to make that possible. United Way of Metro Chicago works k with community groups to help them develop programs and initiatives to bring their visions to life. With your support, we can ensure individuals and families can meet their basic needs—like food, healthcare and housing—and work together to reverse the effects of disinvestment in our Black and Latinx communities.

UNITED, WE WILL BUILD A STRONGER, MORE EQUITABLE CHICAGO REGION. Join us at LIVEUNITEDchicago.org

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