Crain's Detroit Business, June 11, 2018 issue by Crain's Detroit Business

A few questions for Fern Capital Inc.’s Ina Fernandez

El-Sayed campaigns as doctor, but isn’t licensed as one Page 3

Page 4

JUNE 11 - 17, 2018 | crainsdetroit.com EMPLOYMENT

Prevailing wage repeal impact likely to be muted By Dustin Walsh dwalsh@crain.com

The repeal of Michigan’s longstanding prevailing wage law by state legislators may not save taxpayers much money, according to construction insiders and economists. Last week, Michigan’s GOP-majority House and Senate adopted the citizen-led petition to repeal the

Need to know  Repeal of Michigan’s longstanding prevailing wage law may not save taxpayers much money  Michigan needs more than 9,000 new construction workers annually over the projected supply of workers  The Associated Builders and Contractors claims taxpayers paid $2.2 billion more for state-funded projects than they should have between 2002 and 2011

AUTO SUPPLIERS

SPLITTING UP IS HARD TO DO havior at the top — that it’s better for a company to take a small hit of embarrassment than to risk being revealed as hiding something. Federal court records first obtained by The Detroit News detailed the behavior Leuliette hoped to keep private, but Visteon, in an unusual move, asked U.S. District Judge Terrence Berg to unseal the arbitration award. And he agreed.

50-year-old law, which requires union-scale wages and benefits paid by construction firms that secure state-funded projects, whether or no they are unionized. Republican legislators tried to repeal the law through legislation in years past, but Gov. Rick Snyder publicly opposed such a move because the administration believes repeal could lead to a reduction in skilledtrades workforce. A pillar of Snyder’s tenure has been to increase skilled trades throughout the state. Because the repeal was a citizen initiative approved by the Board of Canvassers, Snyder did not get the option to veto. Generally speaking, within the construction industry, unionized contractors support the prevailing-wage law, and nonunion contractors oppose it. Nonunion contractors argue the law inflates the bill on taxpayer-funded projects. The Associated Builders and Contractors, which largely represents nonunion shops, claims taxpayers paid $2.2 billion more for state-funded projects than they should have between 2002 and 2011.

SEE LEULIETTE, PAGE 17

SEE WAGES, PAGE 21

PHOTO ILLUSTRATION BY DAVID KORDALSKI

Visteon-Leuliette severance fight shows old rules are changing By Dustin Walsh

While longtime automotive industry executive and former Visteon Corp. CEO Timothy Leuliette walked away with a $16.7 million severance after the company terminated him in 2015, it came at a cost to his reputation. A two-year legal battle, which Leuliette, 68, sparked after demanding

arbitration to receive a more than $60 million golden parachute, triggered what legal experts are calling a “personal vendetta” by Visteon. Leuliette’s fight was settled in January, but the arbitration settlement revealed the executive downloaded pornography and solicited prostitutes on company devices while on business trips to Asia — which the company used as a

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means to terminate his employment for cause. The severance dispute between Visteon and Leuliette went beyond the old rules of engagement when it comes to potentially embarrassing allegations in an industry that’s still more of an old boys’ club than most, experts say. It’s also a signal that big companies may be getting less tolerant of misbe-

INSIDE

THE TOP-PAID CEOS

The top-paid CEOs in Southeast Michigan lean heavily toward the automotive industry, which is still humming. For this year’s complete executive compensation report, see Pages 10-14. 1. R. Bruce McDonald Adient plc $24.3 million

2. Mark Fields Ford Motor Co. $23.5 million

3. Mary Barra General Motors Co. $22 million

4. James Hackett Ford Motor Co. $16.7 million

5. Gerard Anderson DTE Energy Co. $15.8 million

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MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

Mobility startups can tap up to $1M for state testing

The state’s business development arm for mobility plans to offer up to $1 million in grants to startups looking to test transportation ideas in Michigan. PlanetM announced the new yearlong funding program last week during the 2018 Intelligent Transportation Society of America annual meeting at Cobo Center in downtown Detroit. Detroit is already home to the product of the program’s first grant. Through PlanetM, the Michigan Department of Transportation enlisted Dubai- and Detroit-based Derq Inc. to install artificial intelligence-based software at the intersection of Jefferson Avenue and Randolph Street to study risk factors, said PlanetM Vice President Trevor Pawl. Two types of grants will be available, with application periods opening within a month. Testing grants would provide startups with discounts of up to 75 percent to access vehicle- and technology-testing facilities, and pilot grants would be available for in-state and out-of-state startups that want to try technology on public roads. PlanetM wants the pilot grant projects to solve real-world road issues,

so it's working with MDOT and municipalities to identify problem spots, Pawl said. For testing facility use, PlanetM is working with Mcity, the University of Michigan’s autonomous vehicle testing center. It is also in talks to use the American Center for Mobility in Ypsilanti and plans to enlist others. With the one-year pilot grant program, Pawl said, PlanetM aims to address local startups’ funding struggles and draw tech companies from out of state. Grant figures will vary based on businesses and local government requirements.

Bayview Mackinac Race enters 94th year

The Bell’s Beer Bayview Mackinac Race is heading into its 94th year with more sponsors, a pool of competitors that includes Michigan business luminaries and expectations to attract more than 75,000 spectators to Port Huron and Mackinac Island for the popular annual sailboat race. Sixteen monetary sponsors and seven in-kind partners will support the event scheduled for July 14, race chair Gary Shoemaker said. Hosted by Bayview Yacht Club in Detroit since its inception, the event includes two races with routes that trace the Lake Huron coast from Port Huron to Mackinac Island. About 2,500 people and more than 200 boats are expected to compete.

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Corporate sponsorship revenue for the Bell’s Beer Bayview Mackinac Race increased 5 percent from last year.

Revenue from corporate sponsors increased about 5 percent from last year when there were 10 sponsors. Shoemaker declined to give a dollar amount but said it accounts for more than half of the $500,000 that it costs to produce the race. New sponsors include Connecticut-based sail maker North Sails, Grand Rapids-based Legal Copy Services Inc. and Plymouth-based Vortexx Pressure Washers. Comstock-based Bell’s Brewery Inc. is returning for its eighth year as title sponsor of the event. Brewery owner Larry Bell was a staunch supporter of the race for many years before signing on as its largest sponsor.

“From the time I’ve been in Michigan and known about it, I’ve always thought it was one of the great, iconic events in the state,” he said. “It celebrates the Great Lakes. It celebrates good boating skill — it’s not for the faint of heart — and it drives tourism.”

Michigan voters will decide whether to legalize recreational use of marijuana. The Legislature did not approve a citizen-initiated measure before a 40-day deadline last Tuesday, the Associated Press reported. That means the ballot initiative will get a public vote in November. Michigan has allowed medical-marijuana use for nearly a decade. If the ballot measure is successful, Michigan would become the 10th state to legalize recreational marijuana.

CORRECTION A story in the May 28 issue did not include all of the background checks Downtown Boxing Gym does for its employees and volunteers. The organization conducts free background checks through the DHHS child abuse registry; free, ICHAT criminal history checks through the Michigan State Po-

lice; and in-person interviews. Additionally, it does driving-record checks and random drug testing for its van drivers who transport youth and requires its coaches to take an annual class through USA Boxing that trains them to detect warning signs of physical, mental and other abuse.

Notable Women in IT/Tech are on the front lines of cutting-edge technology development in Michigan. They protect network systems from ever-present cyber threats. They mentor and recruit other women in the technology field and put community service

above all else. Crain Content Studio, the marketing storytelling arm of Crain’s Detroit Business, will name the 2018 Notable Women in IT/Tech in a special section on August 12. In that report, we’ll profile women in the information technology industry who are considered leaders in their workplaces and in the community.

ay ate d o s t omin n tio m/n a 15 n .co i E m UN no troit J r SE ou sde y O t CL mi crain S b N Su ting O I i AT vis N I y b M NO

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POLITICS

El-Sayed touts his doctor credentials — but he never practiced medicine Abdul El-Sayed has made his doctor credentials the focal point of his campaign for governor, offering a “Medicare for all” state-run health insurance program last week as the prescription to fix what ails the state'’s economy and people. But El-Sayed is not licensed to practice medicine in Michigan, according to state records, a fact he tends to omit from his resume in campaign literature, in which he uses the professional title of “physician.” On the campaign trail, in published commentaries and at debates with other candidates vying to be Michigan’s next chief executive, El-Sayed, a pro-

CHAD LIVENGOOD clivengood@crain.com

gressive Democratic firebrand, routinely talks about being a doctor and has made strong suggestions that he has practiced medicine. “I’m a doctor,” El-Sayed said during

the May 31 bipartisan gubernatorial debate at the Mackinac Policy Conference. “I’m the only person up on this stage who has had to deliver a diagnosis — and then watch as somebody had to worry about how they were going to pay for it, let alone what the treatment was for that ailment. That should never happen in Michigan.” El-Sayed made similar comments about diagnosing ailments in a June 6 speech in front of the Spirit of Detroit statute, where he laid out his vision of a single-payer government-run health insurance system that abolishes premiums, copays and the need for the Blue Cross Blue Shields of the world to exist.

“I’m the only person running for governor who has had to look somebody in the eye, deliver a diagnosis, and then realize that their worst day that week wasn’t the day they got their Abdul El-Sayed: diagnosis,” ElCampaigning for Sayed told supgovernor. porters. “It was the day they realized they didn’t have the means for payment for their care.”

The Detroit Tigers, thanks to scrappy play in a terrible division, have turned out to be an interesting, middle-of-the-pack team when it comes to payroll efficiency. Detroit opened the season laboring under dire predictions it would languish at the bottom of the America League Central. That’s because ownership and the front office pivoted in 2017 to a business strategy of rebuilding — to become younger, smarter and cheaper — that began with a flurry of major trades last sum-

spending for wins

JJLeading MLB in payroll rarely wins a World Series JJRebuilding key is the right mix of talent, contracts

mer. The moves slashed $70 million in payroll as part of a long-term, analytics-guided process predicted to take about five years. Through Thursday, Detroit was 2934 (.460) and lingering in second place behind Cleveland in the A.L.

Central. That’s better than many expected. Fans and pundits agree they’re kinda fun (and often frustrating) to watch. Their 20 victories at Comerica Park were the second-most home wins by any team through Thursday, while their nine road wins were the fewest in baseball.

Spending standings Financially, Detroit ranks 16th among Major League Baseball’s 30 clubs in terms of financial-winning efficiency. To win a game, it costs the Tigers

swelch@crain.com

SEE RESCUE, PAGE 18

Tigers are middle of pack in spending efficiency JJTigers are middle of the pack in

By Sherri Welch

SEE TIGERS, PAGE 20

PAUL SANCYA/ASSOCIATED PRESS

Need to know

Rescue Mission drops housing contract, alters revenue plan

$4.5 million in salary. That’s based on cocktail napkin math dividing the team’s total payroll ($132 million) by its number of victories (29) and then doing the same for the other 29 teams. Detroit’s payroll includes $19 million earmarked for ex-players, and the roster is heavy with bloated guaranteed deals for aging veterans such as Miguel Cabrera ($30 million) and Victor Martinez ($18 million).The payroll/ wins formula not a perfect metrics but an interesting snapshot of how teams conduct the business of baseball.

SEE EL-SAYED, PAGE 18

Detroit Tigers’ James McCann (right) celebrates his grand slam with Jeimer Candelario (from left), Nicholas Castellanos and Dixon Machado against the Los Angeles Angels in Detroit.

bshea@crain.com

NONPROFITS

Detroit Rescue Mission Ministries is working to reverse two consecutive years of annual operating losses of more than $1 million by reconfiguring its programs and building use and dropping one of three permanent supportive housing contracts Detroit Continuum of Care awarded. DRMM is one of the largest providers of services for homeless people in Detroit and serves about 2,200 people daily. The nonprofit is on a course to increase revenue through expanded contracts and the creation of new affordable housing in Detroit, CEO Chad Audi said. Aimed at stabilizing its finances, the plan Chad Audi: On enable course to increase will DRMM to conrevenue. tinue operating Need from the former to know YWCA building JJNonprofit has on Woodward been operating at Avenue in Higha loss of more than land Park. In$1 million for two stead of closing years the site that provided housing for JJIt is returning a about 70 people, federally funded the nonprofit is housing contract returning the to Detroit housing contract Continuum of Care to Detroit ConJJDRMM is tinuum of Care reconfiguring and moving othprograms and er programs into building use to the building. cover costs and In addition, increase revenue Detroit Rescue Mission plans in July to consolidate beds from housing programs at other sites in Detroit, Highland Park and Roseville, which other sources fund, to the Highland Park building. Relocating beds from some of its other programs will free up two apartment buildings, one in Midtown at Third Street and Mack Avenue and another nearby on Livernois and Tireman avenues. Audi said DRMM would then convert those to buildings into affordable housing for homeless veterans and for graduates of its substance abuse, transitional and permanent supportive housing programs. The low rents, he said, will not only meet a community need but also provide DRMM with a new source of earned revenue. He plans to seek subsidies from the city to support the housing.

SPORTS BUSINESS

By Bill Shea

MUST READS OF THE WEEK First-of-its-kind center in Detroit nears opening

Fast-growing company opens office in England

Tax credit for train station renovations?

Center for Nonprofit Support plans a soft opening for September. Page 7

Ann Arbor Artificial Intelligence firm opens in London’s financial district. Page 22

Reviving historic building-rehab tax credit gaining steam in Legislature. Page 6

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WOMEN IN LEADERSHIP

A few questions for Ina Fernandez By Rachelle Damico

Special to Crain's Detroit Business

CONNECTION TO

COM M U N IT Y We travel your roads and live on your streets so we know well what is important to your community. Local knowledge and personal understanding – it’s all connected.

Ina Fernandez is the president and CEO of Fern Capital Inc., an investment advisory firm that specializes in managing portfolios using individual stocks and bonds. Fernandez founded the Dearborn Heights-based company in 2015. Fernandez received her bachelor’s degree in physics and mathematics from St. Xavier’s College, Mumbai University. She immigrated from India to the U.S. in 1972 to pursue her MBA with a finance concentration from University of Detroit Mercy. After Detroit Mercy, Fernandez was a trainee in financial management for General Motors Corp. She began her career in investments in 1989 at Comerica Capital Management as vice president and portfolio manager. Fernandez later directed more than $200 million in assets in her 13-year career at Munder Capital Management in Birmingham. She also served as managing director and shareholder of Birmingham-based Liberty Capital Management Inc. When you were younger, did you know what you wanted to do?

FISHBECK , THOMPSON, CARR & HUBER engineers | scientists | architects | constructors

No, I knew what I didn’t want to do. I grew up in India, and if you were considered smart, you were expected to get into the sciences and technical expertise, which was highly regarded in India at the time. My mother wanted me to go into medicine, but I knew I didn’t want to be a doctor. I chose

Ina Fernandez PHOTO BY GLENN TRIEST

someone (to build your career). When I came here, I saw the world was my oyster. I didn’t need someone to speak up for me to get a job or my foot in the door, I could do it on my own. That’s one reason why I think immigrants do so well. They realize if they work hard, they’re going to get ahead on their own efforts. How did your first job opportunity come about?

the math track, and when my parents found out, it was too late for me to change course. When I graduated with my undergrad, I had an opportunity to come to the U.S. and get an MBA at University of Detroit Mercy, which my physics professor at St. Xavier’s had recommended. Why did you decide to move to the U.S.?

I was looking for opportunity and adventure. At the time, India was pretty socialistic. You needed to know

It was difficult because I didn’t have a green card, I had a training visa. At the time, If you trained in the U.S. you could work for a year and a half. It was difficult to get a job because (employers) knew I’d likely have to go back to India. When my year and a half was up, I got a deportation notice taped to my door. I knew this was coming. However, I met the man I wanted to marry, and I wanted to stay. I was helped by attorney Harry Koebel, who had a law office in the Penobscot building in 1974. He was able to arrange for my employer at the time to sponsor me for a green card. What drew you to investment advising?

I received an opportunity to move into the trust division of Comerica working with investment sensitive accounts, which was mainly endowment and foundation accounts or large family trusts. That’s where I found what I wanted to do. Later, I received an opportunity for an executive-level position at Comerica to manage a department that was somewhat troubled. It was a difficult decision because I would have received an executive-level car, profit-sharing and other benefits. I was in a quandary because I really loved investments, but it was a big opportunity. It so happens that I met a woman at a concert who owned an investment firm. She said, “it’s really tough getting into investments, I would stay if I were you.” I decided to stay. A couple of years later, Comerica merged with Manufacturers Bank, and that department that was troubled was eliminated. If I had chosen this big opportunity, I would have been out of a job in a few years. I firmly believe I was lucky, but in a way I made my luck. Why did you decide to branch off on your own?

It was something I always wanted to do when the time was right. I’m glad it went the way it did because when I was at Munder Capital my responsibilities were becoming narrower and narrower. After Munder, I joined Liberty Capital Management, where I learned how to manage a smaller company. When I decided to go out on my own, my clients came with me to Fern Capital. The scariest part was making phone calls to clients and asking them to join me. It’s been a good choice for me in the long run. I’m happy doing what I do, and I’m well compensated for my efforts. In an investment advisory role, people are trusting me with their future. I have to feel honored by that.

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The Michigan Central Station has been sitting vacant since 1988. The 114-year-old train station has been on the National Register of Historic Places since the mid-1970s.

A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

Reviving historic building-rehab tax credit gains steam in Legislature By Chad Livengood

clivengood@crain.com

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Preservationists are hoping Ford Motor Co.’s potential rehabilitation of the long-vacant Michigan Central Station will win over Gov. Rick Snyder to bring back the tax credit for restoring historic buildings that he axed in 2011. Legislation resurrecting Michigan’s historic preservation tax credit cleared the House Tax Policy Committee on Wednesday after legislators capped the annual amount of credits at $15 million. “We knew that Snyder was not in love with this so House leadership suggested we put some caps in place to rein in the scope,” said Dan Austin, a Detroit historian and spokesman for a coalition of preservationists backing the legislation. Senate Bill 469 would restore the tax credit Michigan previously had on the books that subsidized up to 25 percent of the costs of rehabilitating historic buildings and homes. “The place where that might come in handy is if an automaker wanted to renovate an old train station in Detroit,” said Austin, who represents the MI Impact Coalition. Snyder got rid of the tax credit in 2011 as part of a sweeping overhaul of the state’s tax code that included the elimination of other popular credits and tax breaks, such as an exemption on pension income. The Republican governor, who leaves office at year’s end, has no position yet on SB469, spokeswoman Anna Heaton said Wednesday. “Generally, I am not a tax credit fan, they have to be very limited in nature,” Snyder said in a statement to Crain’s. “So, I will have to look carefully at this particular credit before being supportive of it.” Under the legislation, a building or home on the National Register of

Need to know

Preservationists trying to restore tax credit for rehab projects 

 Coalition pushing Snyder to re-consider his past opposition  Rehab of Michigan Central Station could benefit from tax subsidies

“The place where that might come in handy is if an automaker wanted to renovate an old train station in Detroit.” Dan Austin

Historic Places would have to get the first 20 percent of credit through the federal historic preservation tax credit and the remaining 5 percent could come from the state. The amended bill would require at least $2 million of the $15 million in annual tax credits to go toward the preservation of historic, owner-occupied homes, Austin said. Austin said the credit could be vital to financing the restoration of the 114-year-old Michigan Central Station, which has sat vacant since Amtrak stopped running trains through Detroit’s depot in January 1988. Ford Motor Co. has not officially confirmed its plans for the train station. However, an entity linked to the Dearborn automaker became the official owner of the train station last month in a transaction with Crown Enterprises Inc., the Warren-based real estate development arm of the Moroun family of companies. Another entity linked to Ford also purchased the former Detroit Pub-

lic Schools book depository building from the Morouns, which sits adjacent to the train station along 14th Street. Ford is expected to formally announce its plans for an expanded presence in Corktown later this month, igniting buzz in the construction industry about the possibility of hundreds of millions of dollars in preservation work in the years to come. Spokespersons for Ford did not return a message seeking comment on whether the automaker had a position on the legislation. The proposed historic preservation tax credits would be transferable, meaning developers could sell the credits to an investor to secure financing for projects. The investors can then use the tax credits to lower their tax liability. The previous historic preservation credit was on the books from 1999 through 2011 and, most notably, was utilized in the restoration of Detroit’s Book Cadillac hotel, Austin said. The legislation, sponsored by state Sen. Wayne Schmidt (R-Traverse City), sailed through the state Senate on a 36-2 vote in December. The House Tax Policy Committee passed the bill Wednesday on a vote of 8-2. Historic building preservationists in the MI Impact Coalition include Midtown Detroit Inc. Executive Director Sue Mosey, The Christman Company’s Ronald Staley, Detroit real estate developers Dietrich Knoerr of The Platform, Ron Castellano of the Herman Kiefer Development LLC and Kathy Makino and Shannon Morgan of Shelborne Development. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Allandra Bulger is executive director of the Center for Nonprofit Support in Detroit.

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Detroit Center for Nonprofit Support plans soft launch for September By Sherri Welch swelch@crain.com

The Center for Nonprofit Support, a first-of-its-kind organization in development in Detroit, is still a ways off from solidifying future services and programs. But the center is planning a soft launch in mid-September, Executive Director Allandra Bulger said at the recent Mackinac Policy Conference. Bulger, who was previously deputy director for Detroit Future City, was named to lead the new center in April. Looking to fill gaps in the local support system for nonprofits, the Ralph C. Wilson Jr. Foundation late last year committed more than $5 million to the development of the center, which will be on the ground floor of the foundation’s Midtown Detroit building. That funding is just the tip of the $1 billion foundation’s planned commitment to nonprofit support and innovation. With a three-year, $4.75 million grant from the Wilson foundation, business incubator TechTown Detroit is managing the center’s day-

Need to know

JJCenter for Nonprofit Support would be first of its kind in Detroit JJPlans to map existing capacity support services and gauge needs JJGroup would serve as forum to lift best practices in areas

to-day operations, marketing staff, event planning and communications, and transferring the supportive approach and collaborative, innovative environment it created for entrepreneurs to the region’s nonprofits. The Michigan Nonprofit Association will use a $315,000 grant from the Wilson foundation to help shape the services The Center for Nonprofit Support will offer and provide initial operating assessments, referrals to expert providers in its network and case management. The Lansing-based association, which also has a Detroit office, is working with Michigan Community Resources to map the ecosystem of existing capacity support services

available to nonprofits, Bulger said. In addition, the center convened intermediary nonprofits, which provide services to other nonprofits, to get feedback on the sector’s support needs. Nonprofit officials have said they want more opportunities to informally connect through events and a dedicated space, Bulger said. They also are seeking shared data and help strengthening various parts of their business infrastructures, such boards and financial and accounting practices. Initial programs at the Center for Nonprofit Support will focus on lifting up what other nonprofits are doing in those areas through group gatherings as the center develops its one-on-one support services and nonprofit programs, she said. “This center, this moment in time, provides the opportunity for transformational change in the nonprofit sector vs. transactional change,” Bulger said. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Ann Arbor area book printer to close By Kurt Nagl knagl@crain.com

Edwards Brothers Malloy is stopping the presses after 125 years in the printing business. The company — based near Ann Arbor, with plants in Illinois, Pennsylvania and North Carolina — is one of the largest independent book printers in the country. It will permanently close by June 15. The move will cause 282 employees to lose their jobs in Scio Township near Ann Arbor, where the company is headquartered at 5411 Jackson Road, according to a notice filed with the state of Michigan. The company is being forced to close after its financial institution cut its line of credit to the book printer, “making it impossible for the company to continue operations,” accord-

Need to know

Company to permanently close facilities by June 15 J

J Printing company has been in business 125 years J Edwards Brothers merged with Malloy in 2012

ing to a letter written by John J. Edwards, president and CEO of Edwards Brothers Malloy. “It is with heavy hearts we announce that Edwards Brothers Malloy will be closing our doors as of June 15,” the company says in a message posted on its websites. “As you can imagine, this is a difficult time for our employees as we work through the process of shutting down our facilities while finishing projects for our customers with work in-house.

We do, however, want to take this moment to thank you for your support and business through the years. Our employees and customers have been the cornerstone of our 125-year history.” The company is in talks with prospective buyers for its digital and fulfillment operation, according to its website. A message was left with Edwards seeking further comment. Established in 1893, Edwards Brothers merged with Ann Arbor-based Malloy in 2012 to form a company with total sales of $115 million at the time, according to a report from Publishers Weekly. It also planned to consolidate all operations into its Scio Township headquarters by the end of the year due to shrinking demand for offset printing.

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OPINION EDITORIAL

Wage law repeal will need to be watched

he repeal of Michigan’s prevailing-wage laws last week raises tricky questions. The laws required government contractors to pay their workers “prevailing” wages, which functionally means the wages paid by union shops, whether the contractor is unionized or not. Getting rid of those requirements, focused unfairly on a single industry, is a long-overdue reform that gets the government’s thumb off the scale in favor of unionized contractors. Even the name of the laws was a misnomer. In a free market for labor, the “prevailing” wage will be set by the market for labor without state intervention. And we’re squarely behind anything that opens up markets and levels playing fields among competing businesses. Ramping up honest competition The fear is that if typically results in better this legislation quality and lower prices. The repeal doesn’t come succeeds in driving without concerns, voiced by down wages, Gov. Rick Snyder and some construction jobs will become even less in the construction community. Michigan already has a appealing, shortage of workers in the exacerbating the skilled trades, and an abunshortage. dance of projects both public and private on the books, looking for “shovels.” The fear is that if this legislation succeeds in driving down wages, those jobs will become even less appealing, exacerbating the shortage. Which should raise wages. Where it all lands is hard to predict and will need to be watched for a full economic cycle to know for sure. Michigan has some experience with the prevailing wage law disappearing. In the mid-1990s, Michigan’s law was ruled invalid by the courts. What happened then: It made it harder for unionized contractors to compete, so they went looking for work outside Michigan. That reduced the supply of available contractors and workers, which actually reduced competition and served to support contractors’ prices. Now, this isn’t 1995. It’s a different economy and a different landscape. That’s why businesses and lawmakers should remain watchful for any fallout from this change, because the law of unintended consequences never sleeps.

LETTERS

Schuette: It's not politicizing to hold people to account To the Editor: Crain’s June 3 editorial on my department’s handling of the investigations into the Flint water crisis and the sexual assaults at Michigan State University misses the mark. As attorney general, I enforce the law regardless of political considerations. In Flint, the “political thing” to do would have been to sweep the crisis under the rug. Instead, I have conducted a thorough investigation of the tragedy called Flint. To date, we have brought 51 criminal charges against 15 state and local officials and secured four convictions. Let us not forget that the water was poisoned in Flint. Thousands suffered from drinking lead-contaminated water, 12 people died and the residents of

the city still do not trust that their water supply is clean and safe. I have fought to ensure that the people of Flint receive justice, and that officials who broke the law are prosecuted and held to account. Flint is all about accountability and one system of justice for every citizen of Michigan. Regarding MSU, my department led the prosecution ensuring that Larry Nassar spends the rest of his days in a prison cell. Nassar’s crimes against hundreds of young women are the most outrageous incidents of sexual assault I have encountered during my years on the bench and as attorney general. During Nassar’s sentencing hearings, I insisted that the survivors be allowed to deliver victim impact statements. More than 150 brave women told their stories and changed MSU and the debate on sexual assault in our society forever. Shortly after these impact statements were delivered, we began to see

immediate accountability at MSU. Independent Special Prosecutor William Forsyth is continuing his investigation into who knew what, and when, at Michigan State University regarding Larry Nassar and whether or not crimes were committed. To date, my department has brought felony charges against Nassar’s boss at MSU, and we are determined to ensure that any individuals who broke the law at the university are made responsible for their actions. The survivors of Nassar’s horrible crimes deserve nothing less. Bill Schuette Michigan Attorney General

More on WJR Hear Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning on WJR 760 AM’s Paul W. Smith Show.

The difference between winning and losing

e have discussed recently the importance of economic development on our community and how many different ways we can develop and attract dollars and talent. I have also been a keen proponent of sports as a business and how important our sports teams are to the vitality of our community. Sure, it is nice to have all the professional and college teams in our hometown, but I also am a great believer that if we want to maximize the effectiveness of our teams, we also want winners.

KEITH CRAIN Editor-in-chief

It is nice to have our pro teams now all living downtown in Detroit. It is a real plus for the fans and the potential for greatness in our com-

munity. We know the owners want winners just as much as the fans, although sometimes we are at a loss to figure out how to encourage the owners to put together a winning team. The business realities for professional sports teams may make it impractical to win at any cost. Certainly the Detroit Tigers tried that for a few years, and it simply did not work out the way we all hoped. And if we want to confuse the issue a bit, we should not forget the impact that our two universities and their football and basketball

teams have on our community. Even Michigan State, almost 100 miles away and still smarting after the scandal of the century, has a huge impact on our economy as well as Lansing. But the fact is that CEOs of most Fortune 500 companies are big sports fans, and successful sports teams are absolutely a part of the tapestry of factors that helps drive decisions on corporate locations and investments. And before everyone starts yelling at me: Yes, our cultural and educational institutions play a huge

role in economic development and always will. We all know the obvious drivers for building new companies and encouraging the expansion of existing ones, but I am not sure how many people would think that winning sports teams are important. There are lots of things that will help build a thriving business community in Detroit, and we want winning teams for more than just personal reasons. There are plenty of reasons we should be cheering for our teams to win. Now we have one more.

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

Embracing innovation could accelerate progress in philanthropy

he Bill and Melinda Gates Foundation’s new investment of nearly $160 million to fight U.S. poverty, while needed and welcomed, will be deployed alongside millions more philanthropic dollars granted for the same purpose, without any measurable impact on rising poverty rates across the country. U.S. foundations gave an estimated $60 billion in 2016, and not one of them can tell you which problem they solved. Each can easily describe a litany of ills requiring their financial intervention but none can describe the innovation that would make them irrelevant. That is unfortunate but fixable. I’ve worked in philanthropy for 20 years, managing grant relationships with hundreds of organizations nationwide. I help direct a small piece of that $60 billion in a quest to lift families out of poverty, increase educational attainment and fuel economic mobility, which can remain painfully stagnant for generations without intervention. I can’t tell you which problems I have helped solve, either. Things have gotten better with new policies positively influencing issues we fund. And stories abound about communities that are significantly different. But I can’t give you one example where a problem that plagues the communities concerning me most has been solved. Now, the whole field is not challenged in this way: Our colleagues in the arts solve problems all the time. They build buildings, fund shows and support artists so they can create with freedom — valuable investments that strengthen the cultural fabric of our society. Investing in the freedom to create something new, without a preconceived notion of what it should look like, is an idea to remember. I wonder whether iPhone designers were motivated by the freedom to create something different? Grantmakers in health are also supporting substantive changes in the way we live and think about wellness. They are investing in research and innovation that will continue to lead us to actual solutions — cures. My “innovation beef” is primarily with my own philanthropic tribe. They include those committed to less poverty, better education, stronger communities, equitable outcomes and inclusive processes. That is a long list of code words we use while simultaneously defining the limits of what we think we can actually accomplish. The tech sector, Gates’ tribe, gives me hope. What if philanthropy invested in solving problems the same way that sector invests in creating new technology? What if philanthropy invested the way Apple created the iPhone? Tech tribe members use a triedand-true process: invest, research, ideate, fail, iterate, invest again. They rinse and repeat until they’ve gone from a phone in a bag weighing five pounds to a phone in our hand with as much computing power as NASA used to put a man on the moon. It doesn’t take them decades. In philanthropy, we ask partners to give us solutions without providing resources to research. We low-ball our investments in the name of risk mitigation. Most egregiously, we fail to iterate. If one grantee fails, we move on to the next. It is not easy to embrace innovation and failure. The burden of fiduciary responsibility carried so seriously by

OTHER VOICES Cory Anderson

the staff and trustees of modern philanthropy has effectively killed any tolerance for the high-risk/high-reward paradigm that drives so much successful innovation in the tech sector. We’re afraid to disappoint the

name on the door when, in reality, our founders may already be disappointed by our lack of progress on the issues about which they cared so deeply. There are bright spots in the anti-poverty space, though. The Skillman Foundation and the Campaign for Black Male Achievement recently launched their second Detroit Innovation Challenge. They are investing $500,000 in programs to improve life outcomes for youth of color. Skillman is “crowdsourcing” community solutions and may provide additional investment rounds for the ideas that stick. Philanthropists and community members from Arkansas have visited Detroit twice in the last year to see

DTE Energy wants your business to do more business. Being more energy efficient can save you money and improve productivity and safety. Using LED lighting increases visibility and reduces injury and error rates. ENERGY STAR® rated equipment can help you decrease processing times resulting in less energy waste. Adequate insulation and ENERGY STAR® rated windows help block outdoor sounds making the work environment quieter and more comfortable, so workers are more productive. You’re the expert at what you do. Let our energy efficiency expertise help you save money while you do it.

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Hungry folks are fed, and homeless are housed, but who is investing to end hunger and homelessness forever? their investments in action. With the Innovation Challenge, Skillman continues to invest in the city’s infrastructure needs and support public policy change on behalf of young people. They haven’t used the challenge to supplant their other

grantmaking but are using it to surface ideas that will not naturally come from traditional sources. There are many positive results in philanthropy. Hungry folks are fed, and homeless are housed, but who is investing to end hunger and homelessness forever? We could quickly accelerate our progress by taking just a fraction of the $60 billion in grants and changing how we use them. Invest in research, ideate solutions, embrace failure and invest again. The Rev. Cory Anderson, a BMe Public Voices Fellow, is executive vice president of the Winthrop Rockefeller Foundation, based in Little Rock, Ark.

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

FOCUS

CEO COMPENSATION

Auto industry dominates 10 top-paid CEOs By Dustin Walsh

The industry, which is down slightly from its peak but still humming he automotive industry dominates the upper echelons of this along, accounts for eight of the 10 top-paid CEOs. year’s list of top-paid CEOs at Michigan’s publicly traded com- Below, we take a look at the performance of those CEOs and their companies. panies.

dwalsh@crain.com

R. Bruce McDonald

Mark Fields

Mary Barra

James Hackett

Gerard Anderson

Adient plc, Plymouth

Ford Motor Co., Dearborn

General Motors Co., Detroit

Ford Motor Co., Dearborn

DTE Energy Co., Detroit

Total compensation: $24,263,753

Total compensation: $23,500,111

Total compensation: $21,958,048

Total compensation: $16,731,724

Total compensation: $15,835,907

Biggest source of compensation: Stock awards ($17 million)

Biggest source of compensation: Stock awards ($14 million)

Biggest source of compensation: Stock awards ($10.7 million)

Biggest source of compensation: Stock awards ($10.4 million)

Biggest source of compensation: Stock awards ($8.8 million)

McDonald has led the seating supplier since its spinoff from Johnson Controls Inc. in 2016, which proved a tumultuous year for Adient, which reported a $1.5 billion loss that year. It performed better in 2017, buoyed by a growing backlog and restructuring. Adient reported net income of $877 million last year, with shares rising 39 percent through the year. However, the company’s financials have sunk again in fiscal 2018.

Fields stepped down from Ford in May 2017 after leading moves that pinned the automaker against the administration of President Donald Trump. Fields originally planned to move production of the Ford Focus from Michigan to San Luis Potosí, Mexico, which caught the ire of the president, who highlighted the move as how the North American Free Trade Agreement was anti-America. Fields then canceled the $1.6 billion investment against the board’s wishes. Ford’s stock price also fell 35 percent during Fields’ tenure as CEO.

Last year was a big year for GM. Barra led the automaker to release the Chevy Bolt, the first mass-produced car to reach 200 miles on a single charge. However its financial performance was marred by a one-time tax charge from its European operations resulting in a $3.9 billion loss last year. That did not avert investor interest, and the automaker’s share price rose roughly 12 percent in 2017.

Hackett replaced Fields in May 2017, tasked with cutting Ford’s global workforce to address its declining share price and improve profits. Hackett targeted $3 billion in cost reductions, a move that has moderately increased Ford’s earnings and income — it reported net income totaled $7.6 billion, up 65 percent from 2016. However, it’s still not a Wall Street darling, with share prices dropping nearly 10 percent since Hackett took over. Hackett’s next act is expected to be a charge into mobility.

Despite several power outages in Michigan, DTE Energy performed well financially in 2017. The energy provider reported increased income of $1.13 billion on revenue of $12.6 billion last year and announced plans to build a $1 billion natural-gas power plant in St. Clair County. The new addition is part of its plan to reduce its carbon emissions by 30 percent by the early 2020s and more than 80 percent by 2050. Wall Street rewarded its efforts with a more than 10 percent increase in share value over 2017.

Matthew Simoncini

James Verrier

Kevin Clark

Gary Shiffman

BorgWarner Inc., Auburn Hills

David Dauch

Lear Corp., Southfield

Aptiv plc, Troy

Sun Communities Inc., Southfield

Total compensation: $14,833,466

Total compensation: $14,085,523

Total compensation: $13,800,347

Total compensation: $13,630,313

American Axle & Manufacturing Holdings Inc., Detroit

Biggest source of compensation: Stock awards ($8.8 million)

Biggest source of compensation: Stock awards ($8.6 million)

Biggest source of compensation: Stock awards ($10.1 million)

Biggest source of compensation: Stock awards ($11.9 million)

Lear recorded record years in income, $1.3 billion, and revenue, $20.5 billion, in 2017 while transitioning from a traditional automotive seat supplier as the industry changes around it. Last year, Lear closed on a acquisition of Grupo Antolin’s automotive seating unit in a deal valued at $307 million and a plan to build a $30 million plant at the old Buick City complex in Flint. Simoncini led efforts to acquire several software and technology companies in recent years before announcing his retirement in October 2017, officially stepping down at the end of February.

BorgWarner increased market share in 2017, largely thanks to its $1.2 billion acquisition of electric motors manufacturer Remy International Inc. in 2015. It also closed on a $200 million acquisition of U.K.-based engine controller supplier Sevron Inc. in the fourth quarter last year. It reported net income of $439.9 million on revenue of $9.8 billion, up from income of $118.5 million on revenue of $9 billion, a year earlier. The result was a 24 percent increase in share value. Verrier, however, announced last week that he would step down from the company in August.

Delphi Automotive plc spun off its powertrain segment in December 2017, leaving Aptiv as a separate public company made up of its electric architecture and autonomous driving-focused business. The supplier weathered dwindling car production and took advantage of its specialization in mobility technologies in the fourth quarter of 2017 to post $256 million in net income, an 8.9 percent decrease from a year earlier. Aptiv reported $3.44 billion in revenue, up from $3.19 billion for the fourth quarter in 2016.

Sun Communities has made several multibillion-dollar acquisitions since 2014, growing the Southfield-based real estate investment trust to about 350 manufactured housing communities with about 90,000 units across the U.S. Its manufactured housing revenue grew 17.9 percent from $834 million to $983 million between 2016 and last year. However, its operating costs have grown as well, cutting into profits, reporting a net income of $72.1 million in 2017, up from $26.3 million in 2016 but down from $155 million in 2015.

Total compensation: $13,245,617 Biggest source of compensation: Stock awards ($7.3 million) American Axle completed a $3.3 billion acquisition of powertrain supplier Metaldyne Performance Group in April 2017, reducing the company’s reliance on its largest customer, Detroit-based General Motors Co., and nearly doubling the company’s scope. The company had a 2017 revenue of $6.27 billion, and a premerger revenue of $3.95 billion in 2016. However, its share price fell more than 11 percent in 2017.

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C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

CRAIN'S LIST: TOP-COMPENSATED CEOS

Ranked by fiscal 2017 compensation Total compensation 2017/2016

Salary 2017/2016

Bonus 2017/ 2016

CEO pay ratio 2018

Median employee's total compensation

R. Bruce McDonald Adient plc B

$24,263,753 $21,188,822

$1,500,000 $1,030,000

$0 $0

$17,046,774 $10,550,957

$0 $1,375,368

$877,000,000 ($1,546,000,000)

Mark Fields C Ford Motor Co.

23,500,111 22,102,498

1,050,000 1,787,500

NA NA

389,395 435,639

NA 0

4,607,000,000 4,607,000,000

Mary Barra General Motors Co.

21,958,048 22,582,059

2,100,000 2,000,000

0 0

5,008,792 6,941,777

861,683 640,246

3,250,003 0

295 to 1

74,487

(3,864,000,000) 9,427,000,000

James Hackett D Ford Motor Co.

16,731,724 0

1,344,333 NA

3,600,000 NA

420,971 NA

NA NA

199 to 1

87,783

4,607,000,000 4,607,000,000

Gerard Anderson DTE Energy Co.

15,835,907 12,498,939

1,319,231 1,293,519

NA NA

8,813,700 7,141,380

5,568,249 3,919,689

134,727 144,351

NA NA

91 to 1

173,839

1,134,000,000 868,000,000

Matthew Simoncini E Lear Corp.

14,833,466 14,443,535

1,354,500 1,354,500

0 0

8,819,774 8,524,711

3,834,858 3,837,667

824,334 726,657

NA 0

1452 to 1 F

10,216

1,313,400,000 975,100,000

James Verrier G BorgWarner Inc.

14,085,523 12,367,516

1,260,000 1,245,000

0 0

8,561,811 9,316,086

3,801,391 984,732

462,321 821,698

NA NA

247 to 1

57,127

439,900,000 118,500,000

Kevin Clark Aptiv H

13,800,347 10,366,792

1,275,000 1,175,000

0 0

10,095,699 7,044,063

2,184,000 1,962,000

245,648 185,729

NA 0

2,526 to 1

5,464

1,428,000,000 1,326,000,000

Gary Shiffman Sun Communities Inc.

13,630,313 6,681,207

691,837 691,837

NA NA

11,895,000 5,193,750

1,037,756 791,837

5,720 3,783

NA NA

528 to 1

25,834

65,021,000 17,369,000

David Dauch

13,245,617 11,102,320

1,150,000 1,150,000

0 0

7,319,937 5,617,069

4,688,698 4,260,652

86,982 74,599

NA 0

285 to 1

46,516

337,500,000 240,700,000

Sergio Marchionne I

13,070,260 12,000,000

4,242,050 4,000,000

5,548,600 7,000,000

NA NA

3,279,610 1,000,000

NA NA

Keith Allman

11,504,440 9,765,728

1,177,212 1,126,654

NA NA

3,876,629 2,442,825

4,370,127 4,258,176

405,144 611,019

1,675,328 1,327,054

298 to 1

38,617

533,000,000 491,000,000

9,120,734 3,312,588

640,962 578,689

0 865,800

7,628,636 1,255,157

754,060 527,058

97,076 85,884

NA NA

Jeffrey Brown

8,833,351 7,531,261

1,000,000 1,000,000

2,700,000 2,400,000

5,100,019 3,974,140

NA NA

33,332 157,121

NA NA

84 to 1

105,515

929,000,000 1,067,000,000

Sachin Lawande

8,044,443 8,724,572

1,030,000 1,022,500

NA NA

3,785,854 3,868,842

1,416,250 1,700,000

562,355 883,234

1,249,984 1,249,996

454 to 1

17,727

176,000,000 75,000,000

Patrick Doyle K

7,939,727 8,636,303

1,025,000 1,015,192

0 0

1,859,962 1,888,923

2,498,745 3,292,300

403,144 338,268

2,152,876 2,101,620

461 to 1

17,226

277,900,000 214,678,000

Patricia Poppe L

6,862,295 3,482,555

1,100,000 775,000

0 0

4,263,888 1,627,067

1,144,000 923,544

354,407 156,944

NA NA

40.9 to 1

167,636

460,000,000 551,000,000

Roger Penske

6,807,491 6,537,331

1,375,000 1,200,000

NA NA

5,000,000 5,000,000

NA NA

432,491 337,331

NA NA

168 to 1

40,409

613,300,000 342,900,000

Jeffrey Craig

6,062,250 5,513,133

900,000 891,667

0 0

3,599,991 3,499,998

1,377,900 954,900

184,359 166,568

NA NA

324,000,000 573,000,000

Daniel Coker M

5,586,651 3,350,580

850,000 750,000

650,250 637,500

951,250 731,520

609,361 386,584

1,599,990 94,646

925,800 750,330

83 to 1

67,478

35,227,000 76,598,000

Jeffrey Edwards

4,854,379 5,384,421

998,077 899,231

0 0

2,073,074 1,733,050

616,000 1,522,620

281,284 518,480

885,944 711,040

260 to 1

18,632

135,303,000 139,000,000

Phillip Eyler

4,317,175 0

62,500 NA

1,312,500 NA

1,065,000 NA

0 NA

2,500 NA

1,874,675 NA

35,227,000 76,598,000

Joey Agree

3,944,174 3,696,630

525,168 414,064

61,390 750,000

2,636,987 2,499,992

688,610 0

32,019 32,574

NA NA

42 to 1

94,927

58,790,000 45,797,000

Name Rank Company

1 2 3 4 5 6 7 8 9

Axle & Manufacturing 10 American Holdings Inc.

11 FCA US LLC

12 Masco Corp.

Liam Butterworth J

13 Delphi Technologies PLC

14 Ally Financial Inc. 15 Visteon Corp.

16 Domino's Pizza Inc. 17 CMS Energy Corp. 18 Penske Automotive Group Inc. 19 Meritor Inc.

20 Gentherm Inc.

21 Cooper-Standard Holdings Inc. 22 Gentherm Inc. 23 Agree Realty Corp.

Other compensation 2017/2016

Option awards 2017/2016

$4,774,800 $3,262,020

$942,179 $4,970,477

13,965,230 14,298,356

8,095,486 5,581,003

10,737,570 13,000,036

1,000,000 10,366,420 NA NA

Stock awards Nonequity incentive/ 2017/2016 retirement 2017/2016

Percent change net income

Top compensation for CEOs at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Incentive plan/retirement column is total of nonequity incentiveplan compensation, nonqualified deferred compensation and change in pension value. NA = not available.

B Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. C Stepped down as CEO on May 22, 2017 and was succeeded by Jim Hackett. D Succeeded Mark Fields as president and CEO in May 2017. E Retired effective Feb. 28, 2018. Ray Scott, former executive VP and president of Lear's seating business unit, replaced Simoncini as CEO. F Based on information from proxy. The annual total compensation of the CEO was $14,833,466 and the median of the annual total compensation of all employees of the company (other than our CEO) was $10,216.

G COO Frederic Lissalde will replace Verrier, effective Aug. 1. Verrier is stepping down and will serve in a nonexecutive advisory role until he retires in February 2019. H In December 2017, Delphi Automotive plc spun off its powertrain segment as Delphi Technologies PLC (NYSE: DLPH) while Aptiv PLC (NYSE: APTV) emerged as its electric architecture and autonomous driving-focused business.

I Marchionne is CEO of both FCA US LLC and Fiat Chrysler Automobiles N.V., London. J Served as Senior VP and president of Powertrain Systems at Aptiv from February 2014 until Dec. 4, 2017. K To be succeeded by Richard Allison as CEO on July 1. L Succeeded John Russell as president and CEO who retired July 1, 2016, but still serves as chairman. M Retired Dec. 4, 2017. Succeeded by Phillip Eyler as president and CEO. LIST RESEARCHED BY SONYA D. HILL

SEE PAGE 12

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CRAIN'S LIST: TOP-COMPENSATED CEOS

Ranked by fiscal 2017 compensation Total compensation 2017/2016

Salary 2017/2016

Bonus 2017/ 2016

Other compensation 2017/2016

Option awards 2017/2016

CEO pay ratio 2018

Median employee's total compensation

$3,859,018 $0

$875,852 NA

$0 NA

$1,893,664 NA

$1,051,064 NA

$38,438 NA

NA NA

616 to 1

$7,198

$71,600,000 $120,800,000

Donald Stebbins Superior Industries International Inc.

3,445,239 4,018,675

900,000 900,000

0 0

1,800,005 2,194,234

720,000 894,690

25,234 29,751

0 0

253 to 1 B

13,616

(6,009,000) 41,381,000

James Gouin C

3,435,664 0

800,000 NA

0 0

1,230,011 NA

1,367,500 NA

38,153 NA

NA NA

88:1

39,108

47,625,000 38,579,000

3,424,722 1,395,203

625,000 257,212

0 0

2,000,034 0

776,250 0

23,438 901

0 1,137,090

96 to 1 F

35,730

30,960,000 (39,800,000)

3,383,383 3,218,937

1,030,420 990,938

0 0

1,281,800 1,229,288

950,000 850,000

121,163 148,711

0 0

94 to 1

35,818

54,717,000 18,186,000

Dennis Gershenson

3,335,248 3,456,205

727,204 703,269

0 0

1,602,342 1,763,406

995,972 979,800

9,730 9,730

NA 0

47 to 1

70,920

62,359,000 52,963,000

Robert Taubman

3,023,149 4,908,330

152,719 928,818

NA 0

2,849,591 2,923,032

0 1,025,000

20,839 31,480

NA 0

35 to 1

86,216

112,757,000 188,151,000

2,514,814 3,377,214

398,252 1,000,000

0 0

2,093,613 2,274,600

0 0

22,949 102,614

0 0

71,600,000 120,800,000

2,387,543 3,445,766

1,000,000 1,000,000

0 0

0 900,000

1,305,500 1,258,000

82,043 287,766

NA NA

35.8 to 1

66,724

63,000,000 171,000,000

2,302,139 1,676,548

898,439 847,584

0 805,205

1,396,500 0

NA NA

7,200 23,759

0 0

79 to 1

29,120

(25,921,284) (19,802,916)

1,624,130 1,130,330

830,000 809,000

550,000 310,000

NA NA

0 0

11,330 11,330

232,800 0

NA NA

1,552,268 3,739,102

650,000 600,000

0 600,000

770,980 1,190,700

0 957,000

131,288 128,902

0 262,500

(3,550,000) (12,360,000)

1,472,674 1,511,578

352,469 388,461

0 0

110,003 0

0 0

20,200 20,220

990,002 1,102,897

40.3 to 1

41,648

15,510,000 28,273,000

1,086,964 0

272,767 NA

22,259 NA

624,492 NA

27,920 NA

139,526 NA

NA NA

146 to 1

7,451

166,268,000 (57,390,000)

1,035,800 1,033,092

1,025,000 1,025,000

NA NA

0 NA

10,800 8,092

NA NA

18 to 1

58,312

470,200,000 332,800,000

Jeff Rogers

968,504 731,990

436,876 426,362

397,000 150,000

134,500 155,500

0 0

128 128

NA NA

30 to 1

32,241

28,153,000 24,244,000

David Watza N

853,058 370,992

300,000 194,000

0 25,000

78,914 48,750

156,970 0

15,070 7,647

302,104 95,595

(168,000,000) (22,113,000)

727,930 4,433,370

177,823 380,645

0 102,500

NA NA

0 159,375

550,107 226

0 3,790,624

NA NA

David Burke P Diversified Restaurant Holdings Inc. Q

652,275 650,094

405,000 319,615

35,640 166,863 R

202,500 150,000

0 0

9,135 13,616 S

0 0

(20,458,076) (6,002,481)

James Petcoff

596,700 766,500

550,000 500,000

0 20,000

0 200,000

NA NA

46,700 46,500

NA NA

(21,542,000) (8,437,000)

579,484 640,509

360,000 360,000

NA 0

NA NA

189,000 256,000

30,484 24,509

0 0

6,486,691 6,684,000

407,215 402,893

30,376 0

0 0

NA NA

0 0

23,575 23,831

353,264 379,062

NA NA

352,500 0

265,000 NA

0 NA

87,500 NA

NA NA

0 NA

NA NA

4.75 to 1

63,222

3,834,136 (2,848,256)

259,503 699,030

97,039 V 94,259 V

0 0

0 160,250

0 NA

162,464 160,860

NA 283,661

(168,000,000) (22,113,000)

Name Rank Company

Corona 24 George Kelly Services Inc.

26 Tower International Inc. Thomas Amato 27 TriMas Corp. Edward Christian 28 Saga Communications Inc. D

Properties 29 Ramco-Gershenson Trust

30 Taubman Centers Inc. Carl Camden 31 Kelly Services Inc. Alessandro DiNello 32 Flagstar Bancorp Inc. Rob Chioini 33 Rockwell Medical Inc. James Scapa 34 Altair Engineering Inc. Mark Zeffiro 35 Horizon Global Corp. Philip Hagerman 36 Diplomat Pharmacy Inc. Rakesh Khanna 37 Syntel Inc. Brett Roberts 38 Credit Acceptance Corp. G

Logistics Holdings 39 Universal Inc.

40 Perceptron Inc. Mina Sooch 41 Gemphire Therapeutics O

43 Conifer Holdings Inc. John Weinhardt 44 Unique Fabricating Inc. Steven Gullans 45 Gemphire Therapeutics Dean Krutty 46 Arotech Corp. W. Richard Marz 47 Perceptron Inc. T

Stock awards Nonequity incentive/ 2017/2016 retirement 2017/2016

Percent change net income

B Based on information from proxy. The annual total CEO compensation was $3,445,239 and the median annual total compensation of all employees of the company (other than our CEO) was $13,616.

C Appointed CEO in January 2017. Also served as president from September 2016 until January 2017. D Succeeded David Wathen as president and CEO, effective July 25, 2016. E Horizon Global Corp. was previously a subsidiary of the TriMas Corp. that became an independent public company pursuant to a spin-off that was effective as of June 30, 2015. F Based on information from proxy. CEO 2017 total compensation was $3,424,722 and median of 2017 total compensation for all employees of the company, excluding CEO, was $35,730. G Retired in May 10, 2017. Former COO, George Corona succeeds him as president and CEO. H Terminated by the board of directors on May 22. I Announced closing of initial public offering on Nov. 6, 2017. J Resigned May 8. Carl Bizon was named interim president and CEO. K Horizon was previously a subsidiary of the TriMas Corp. that became an independent public company pursuant to a spin-off that was effective as of June 30, 2015. L Retired in January. Succeeded as CEO by Brian Griffin, effective June 4. Benjamin Wolin was appointed chairman of the board. M Succeeded Nitin Rakesh in November 2016 as interim CEO and president. Appointed CEO and president on July 17, 2017. N Succeeded by W. Richard Marz as president and CEO in November 2016. O Resigned as president and CEO in 2017. Replaced by Steven Gullans. P Succeeded T. Michael Ansley as president and CEO in October 2016. Q Spun off Bagger Dave's Burger Tavern into a separate company on Dec. 27, 2016. R Includes a $100,000 signing bonus. S Consists of a $9,000 car allowance, $4,496 in 401(k) matching contributions, and $120 in gift cards. T Preceded by Mina Sooch, who resigned effective May 23, 2017. U Succeeded by David Watza as president and CEO in November 2016. Marz will continue as chairman. V Reflects the salary paid for services as president and CEO. LIST RESEARCHED BY SONYA D. HILL

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

CRAIN'S LIST: TOP-COMPENSATED NON-CEO EXECUTIVES

Ranked by fiscal 2017 compensation Rank

Name Company

Total compensation 2017/2016

Salary 2017/2016

Bonus 2017/2016

Stock awards 2017/2016

Nonequity incentive/ retirement 2017/2016

Other compensation 2017/2016

Option awards 2017/2016

William Clay Ford Jr. executive chairman Ford Motor Co.

$15,626,099 $13,862,938

$1,650,000 $1,625,000

$0 $0

$10,266,426 $8,737,761

$2,192,132 $2,212,739

$1,517,541 $1,287,438

NA $0

James Farley executive VP, global marketing sales and service, Lincoln Ford Motor Co.

13,473,558 6,609,453

973,417 918,750

200,000 246,050

8,807,539 3,597,900

1,000,000 703,000

2,492,602 1,143,753

NA 0

Joseph Hinrichs executive VP and president, the Americas Ford Motor Co.

12,124,550 6,723,531

1,081,000 1,053,500

0 0

8,677,955 3,926,842

2,257,817 1,643,232

107,778 99,957

NA 0

Daniel Ammann president General Motors Co.

9,258,318 10,223,984

1,450,000 1,450,000

0 0

4,078,222 4,700,032

2,138,800 3,513,100

356,918 560,852

1,234,378 NA

Mark Reuss executive VP, global product development, purchasing and supply chain General Motors Co.

7,726,508 8,412,661

1,200,000 1,200,000

0 0

3,345,168 3,900,018

1,824,390 3,039,777

344,446 272,866

1,012,504 0

Charles Stevens III executive VP and CFO General Motors Co.

7,101,039 7,603,085

1,100,000 1,100,000

0 0

3,076,744 3,450,007

1,676,614 2,808,946

316,430 244,132

931,251 0

Karl-Thomas Neumann former executive VP; president, Europe General Motors Co.

6,888,039 0

916,936 NA

2,000,000 NA

1,961,676 NA

1,403,113 NA

12,563 NA

593,751 NA

Neil Marchuk executive VP and CHRO Adient plc B

6,856,578 4,377,473

625,000 600,000

400,000 1,500,000

4,400,013 1,399,973

1,189,377 855,000

242,188 22,500

0 0

Byron Foster executive VP Adient plc B

6,780,072 3,339,562

750,000 540,004

0 0

3,700,002 569,566

2,102,250 1,206,481

227,820 773,448

0 250,063

Bob Shanks executive VP and CFO Ford Motor Co.

6,744,218 6,293,462

879,750 858,000

309,750 0

3,677,962 3,793,207

1,778,185 1,547,172

98,571 95,083

NA 0

Alan Batey executive VP & president, North America General Motors Co.

5,975,628 6,415,164

1,025,500 950,000

0 0

2,224,928 2,700,035

1,764,401 2,540,051

287,373 225,078

673,426 0

Eric Mitchell executive VP Adient plc B

5,736,096 2,801,770

700,000 479,999

0 0

2,999,997 447,547

1,831,552 1,097,917

204,547 528,717

0 247,590

David Paja senior VP and president, advanced safety and user experience segment Aptiv C

5,702,741 0

517,917 NA

917,500 NA

3,402,373 NA

571,712 NA

293,239 NA

NA NA

Jeffrey Stafeil D executive VP and CFO Adient plc B

5,602,912 1,463,444

750,000 725,000

0 0

3,199,977 0

1,427,250 725,001

225,685 13,443

0 0

Raymond Scott E former executive VP and president, seating. Lear Corp.

5,475,322 4,863,810

855,098 855,098

0 0

2,686,101 2,422,618

1,627,109 1,294,046

307,014 292,048

NA 0

Michael Simonte president American Axle & Manufacturing Holdings Inc.

5,036,913 4,166,262

727,300 640,000

0 0

2,144,593 1,797,486

2,108,241 1,677,940

56,779 50,836

0 0

Terrence Larkin executive VP, business development, general counsel and corporate secretary Lear Corp.

4,929,600 4,747,332

855,098 855,098

0 0

2,566,739 2,422,618

1,197,137 1,202,705

310,626 266,911

0 0

Jeff Vanneste senior vice president and CFO Lear Corp.

4,896,840 4,497,603

827,750 787,437

0 0

2,378,790 2,218,859

1,391,477 1,223,390

298,823 267,917

0 0

Gerardo Norcia president and COO DTE Energy Co.

4,871,914 3,869,764

730,385 650,926

NA NA

2,252,390 1,942,107

1,798,629 1,191,880

90,510 84,851

NA NA

Steven Kurmas F former vice chairman of DTE Energy DTE Energy Co.

4,731,905 4,463,126

680,385 659,815

NA NA

1,752,947 1,933,398

2,200,715 1,781,694

97,858 88,219

NA NA

Ronald Hundzinski VP and CFO BorgWarner Inc.

4,626,647 4,546,403

708,750 665,750

0 0

2,169,724 2,360,819

1,440,000 1,206,111

308,173 313,723

NA NA

David Meador vice chairman and chief administrative officer DTE Energy Co.

4,510,255 4,241,019

717,692 694,815

NA NA

1,596,259 1,802,763

2,108,150 1,653,505

88,154 89,936

NA NA

Majdi Abulaban senior VP and president, Signal and Power Solutions Segment and Engineered Components Group Aptiv C

4,347,831 3,754,829

667,500 652,500

0 0

2,019,136 1,464,351

642,380 581,490

1,018,815 1,056,488

NA NA

Frank Orsini senior VP, and president, electrical Lear Corp.

4,346,773 4,063,990

736,375 736,375

0 0

2,151,892 2,024,162

1,220,965 1,077,908

237,541 225,545

NA 0

John Sznewajs VP, treasurer and CFO Masco Corp.

4,144,148 3,503,171

672,867 653,353

NA NA

1,107,228 701,325

1,690,962 1,577,798

141,241 128,344

531,850 442,351

Top compensation for non-CEO executives at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available.

B Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. C In December 2017, Delphi Automotive plc spun off its powertrain segment as Delphi Technologies PLC (NYSE: DLPH) while Aptiv PLC (NYSE: APTV) emerged as its electric architecture and autonomous driving-focused business.

D Left the Visteon effective March 31, 2016, and joined Adient later in the year. E Former executive VP and president, seating. Succeeded Matthew Simoncini as president and CEO in February. F Effective April 4, 2016 Gerardo Norcia succeeded Kurmas as president and COO. Kurmas became vice chairman; however he left that position effective Feb. 1, 2018. SEE PAGE 14

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CRAIN'S LIST: TOP-COMPENSATED NON-CEO EXECUTIVES

Ranked by fiscal 2017 compensation

Total compensation 2017/2016

Salary 2017/2016

Bonus 2017/2016

Stock awards 2017/2016

Nonequity incentive/ retirement 2017/2016

Other compensation 2017/2016

Option awards 2017/2016

Catherine Reynolds senior VP, CMS and Consumers Energy CMS Energy Corp.

$3,828,145 $2,952,405

$600,000 $516,667

$0 $0

$1,015,195 $762,703

$2,185,169 $1,647,843

$27,781 $25,192

NA NA

Peter Oleksiak senior VP and CFO DTE Energy Co.

3,645,373 2,930,603

592,385 553,519

NA NA

1,498,329 1,358,604

1,475,450 944,675

79,209 73,805

NA NA

Joseph Massaro senior VP and CFO Aptiv B

3,451,873 2,319,313

619,125 539,717

0 0

2,019,136 1,206,913

766,740 540,688

46,872 31,995

NA 0

Frederic Lissalde C VP, president and general manager, turbo systems D BorgWarner Inc.

3,414,799 3,456,959

673,173 606,630

0 0

1,407,454 1,531,424

1,062,889 1,041,544

271,283 277,361

NA NA

Diane Morais CEO and president, Ally Bank Ally Financial Inc.

3,399,902 2,989,703

594,231 550,000

1,100,000 1,075,000

1,675,037 1,307,713

NA 0

30,634 56,990

NA 0

John McLaren E president and COO Sun Communities Inc.

3,295,876 3,655,876

525,000 525,000

NA NA

1,982,500 1,731,250

787,500 1,398,750

876 876

NA NA

Christopher A. Halmy CFO Ally Financial Inc.

3,233,086 3,059,027

600,000 600,000

950,000 1,050,000

1,650,024 1,336,544

NA NA

33,062 72,483

NA NA

Liam Butterworth F senior VP and president, Powertrain Systems Aptiv B

3,201,484 3,312,588

525,282 578,689

0 865,800

1,912,915 1,255,157

674,206 527,058

89,081 85,884

NA NA

Timothy Russi president auto finance Ally Financial Inc.

3,156,108 3,025,266

594,231 541,800

900,000 1,025,000

1,625,011 1,359,636

NA NA

36,866 98,830

NA NA

Alberto Satine president, driveline American Axle & Manufacturing Holdings Inc.

3,147,797 2,597,427

588,825 510,000

0 0

1,114,572 934,146

1,385,301 1,095,151

59,099 58,130

0 0

Par Malmhagen G president and former president, Europe Tower International Inc.

3,129,393 1,545,859

663,940 422,378

772,393 422,378

498,149 138,992

899,258 462,818

295,653 99,293

NA NA

Steven Jones president Credit Acceptance Corp.

3,065,031 1,483,783

723,074 705,469

NA NA

2,064,500 0

265,852 766,603

11,605 11,711

NA NA

Karen Dearing executive VP, treasurer, CFO and secretary Sun Communities Inc.

3,046,337 3,137,659

425,000 425,000

NA NA

1,982,500 1,385,000

637,500 1,325,000

1,337 2,659

NA NA

Thomas Webb former executive VP and CFO; former vice chairman, CMS and Consumers CMS Energy Corp.

2,988,442 3,024,850

587,500 705,000

0 0

1,392,884 1,271,148

980,876 1,015,653

27,182 33,049

NA NA

Tonit Calaway executive VP and chief human resources officer BorgWarner Inc.

2,858,393 0

477,500 NA

440,986 NA

996,846 NA

816,000 NA

127,061 NA

NA NA

David Sherbin senior VP, general counsel, chief compliance officer and secretary Aptiv B

2,808,123 0

591,250 NA

0 NA

1,487,855 NA

639,880 NA

89,138 NA

NA NA

Christian Garcia executive VP and CFO Visteon Corp.

2,804,017 1,904,920

590,000 147,500

0 500,000

1,135,657 979,296

590,000 155,851

113,368 28,018

374,992 94,255

Rejji Hayes executive VP and CFO, CMS and Consumers Energy CMS Energy Corp.

2,786,421 0

400,000 0

775,000 0

1,249,978 0

291,200 0

70,243 0

NA NA

Richard O'Reagan group president, global plumbing Masco Corp.

2,741,068 1,924,137

512,019 481,188

NA NA

843,641 528,863

918,403 531,847

104,380 102,351

362,625 279,888

Sunil Bilolikar H senior VP, operations and procurement Visteon Corp.

2,657,262 0

385,733 NA

NA NA

767,233 NA

440,128 NA

977,387 NA

86,781 NA

John Gasparovic EVP, chief legal officer and secretary BorgWarner Inc.

2,612,727 2,559,076

507,000 477,250

0 0

1,172,878 1,276,226

772,500 647,279

160,349 158,321

NA NA

John Elkann chairman FCA US LLC

2,606,705 0

2,121,020 NA

0 NA

NA NA

485,685 NA

NA NA

Simon Leopold executive VP, CFO and treasurer Taubman Centers Inc.

2,561,531 2,067,291

521,154 500,000

NA NA

1,708,921 995,112

315,000 550,000

16,456 22,179

NA 0

Gregory Deveson president, powertrain American Axle & Manufacturing Holdings Inc.

2,538,820 0

375,417 NA

0 NA

1,512,287 NA

610,785 NA

40,331 NA

NA NA

Keith Stephenson executive VP and COO Cooper-Standard Holdings Inc.

2,374,535 3,039,238

678,615 658,523

0 0

801,478 794,600

286,656 761,408

265,318 499,487

342,468 325,220

Rank

Name Company

B In December 2017, Delphi Automotive plc spun off its powertrain segment as Delphi Technologies PLC (NYSE: DLPH) while Aptiv PLC (NYSE: APTV) emerged as its electric architecture and autonomous driving-focused business.

C Assumed the role of COO effective Jan. 1, 2018. Will replace current CEO James Verrier, effective Aug. 1. D Assumed the role of COO effective Jan. 1, 2018. E Succeeded Gary Shiffman as president in February 2014. F Served as senior VP and president of Powertrain Systems at Aptiv from February 2014 until Dec. 4, 2017. G Appointed president in January 2017. H Appointed senior VP, operations and procurement in December 2016. An expanded version of this list is available with a Crainâ&#x20AC;&#x2122;s membership at crainsdetroit.com/lists

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

Q&A

Susannah Fox talks health care, innovation and data Susannah Fox, former chief technology officer for the U.S. Department of Health and Human Services under the Obama administration, will be the keynote speaker at TechTown Detroit’s “Fueling Innovative Cross-Sector Collaboration” event at NextEnergy on June 14. The meeting, co-sponsored by Lear Corp. and TechTown, also features an interactive workshop with Joyce Lee, M.D., and a group of industry experts and innovators who will provide hands-on training for health professionals and others on design thinking and social media. Lee is a pediatrician and researcher at the University of Michigan. Fox, who is currently leading a national survey project focused on adolescents’ and young adults’ use of social media to gather and share health information, is a frequent speaker who advises companies and nonprofits how to stay close to their customers and become learning organizations. She specializes in advice related to research, health data, technology and innovation. The meeting, at 440 Burroughs St. in Detroit, starts at 5 p.m. with refreshments and the program runs 6-8 p.m. Fox spoke last week with senior reporter Jay Greene about her career and TechTown talk. What did you do as HHS chief technology officer?

The CTO plays a role almost like an ambassador within the divisions of HHS and to the external startup community and technology community. We are ambassadors to Silicon Valley. What we have tried to do, and there have been four of us so far, is to open as many doors to entrepreneurs as we could. We want them to contribute to government and encourage innovation and the entrepreneurial spirit. You said there have been four CTOs?

President (Barack) Obama created the position of CTO in 2009. I was the third one in the Obama administration. The Trump administration has recognized the value of the CTO and appointed Bruce Greenstein. He took over our portfolio. (Greenstein announced he is leaving the post this month for a job in the private sector). As CTO in 2015 and 2016, you must have had plenty of projects to work on. Describe some of your favorites.

At the end of the administration, we had created an innovation pipeline (Ignite Accelerator). For example, someone at the FDA or Indian Health Services could come to our innovation lab or my office as CTO with a seed of idea. We convened an interdisciplinary team to help grow and incubate the idea. Once completed, we had a venture fund that invests in and supports the ideas to continue those projects. Can you give an example?

At the NIH (National Institutes of Health), we launched a 3-D print exchange. Lots of people use 3-D printing in their work and come up with models. Others not in NIH came up with interesting 3-D printers. One was a biomedical model to explain a molecule. The NIH real-

Need to know

JJFormer federal health chief technology

officer Susannah Fox gives speech at TechTown event June 14 at NextEnergy

JJFox advises companies and nonprofits how to think out of the box, stay close to customers and become learning organizations.

ized they needed a platform where they could share these files. The platform for these ideas became an open exchange. You have held some interesting jobs after graduating with a degree in anthropology at Wesleyan College and studying French literature at Smith College. You worked at Pew Research Center on internet research for 14 years; were interactive editor at U.S. News and World Report for five years; and before becoming CTO, you were Entrepreneur in Residence at the Robert Wood Johnson Foundation. How did all this come about?

Data transparency will change the world. There will be pockets of hope and pockets of despair wherever you look. It is important to look where you failed. It is hard to do but important to do. Let’s face the failures so we can pivot, bring in talent and solve the problem. Susannah Fox

Another technique I use is pay attention to edges of any field. In technology, I look at what hackers are doing because they push the limits. They can show you what is possible in the future. In health care, those are the people who push the edges with a life-changing diagnosis like ALS

It’s Good to Be Flexible

In the 1990s, I was a startup kid. After I got out of school, I wasn’t sure what to do, and neither were my parents. Anthropology is a discipline of being curious, which is helpful for innovation, and I migrated toward research. At Pew, I studied health care but I didn’t have a background in it. But I met the late Dr. Tom Ferguson, who was an advocate for patient empowerment. That has driven my career for last 15 years. I am for opening up access to data and information for people.

Do you kknow off a company that D th t could ld use an experienced equity partner, but doesn’t want to sell a majority equity stake? Do you know of a business owner that would like to buy out an inactive shareholder’s interest? Or bring on a partner with capital for growth, or make that long sought-after add-on acquisition?

You support health care price and quality transparency for patients on the internet?

I remain hopeful and intrigued about how we can open up data to benefit us as a country. At the practice level, one clinician can understand their patient panel better; but if we can open spigots of data, we can benefit populations. At HHS, we developed the health data initiative to provide health and social service data to the public. The Blue Button initiative started at the VA (Veterans Affairs) and now has been rolled out to the Centers for Medicare and Medicaid Services. It allows Medicare beneficiaries to access a very basic text file and opens the spigot to the data. Data transparency will change the world. There will be pockets of hope and pockets of despair wherever you look. It is important to look where you failed. It is hard to do but important to do. Let’s face the failures so we can pivot, bring in talent and solve the problem. We did that in government. We would recruit someone. They would take an enormous pay cut to come in, and they would help us move ahead. What will you talk about at TechTown in your keynote address?

One of the things I will talk about is how I have been able to stay ahead of the curve. As CTO, part of my job was to serve as lookout on the crow’s nest, to look ahead across the landscape and tell leadership what I see coming on the horizon on health and technology. That is a useful exercise for anybody.

(amyotrophic lateral sclerosis, or Lou Gehrig’s disease). They change the conversation, show us the gaps, where change is needed and can get people thinking differently. I look for those kind of people and listen to them. Another technique I will share with

the group is to look for unexpected partners. People who might not be right in your lane, not in your industry, but adjacent to it. They make you think of new ideas, maybe have common causes. Detroit has a very strong legacy of manufacturing. People build and fix things. Why not bring it into medical-assisted devices? Growing up in the 1990s and walking around HHS, not a lot of people knew what I was talking about. I was often five or 10 years ahead of the field. I am comfortable now with people thinking I am weird. I am OK with it. I was talking with the deputy administrator with NASA. I was telling her what I am seeing in health care, the Maker movement (users developing ideas rather than researchers); we are trying to build that (flexibility) in our astronauts in our mission to Mars.

At Huron Capital, we do our best to be flexible. Our Flex Equity solution can provide attractive non-control solutions for owners seeking to diversify their estate, secure growth capital, shore up their balance sheets or repurchase inactive shareholder interests. If the business owner would prefer to sell a majority interest, we can do that too. It’s all about flexibility.

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C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

CALENDAR TUESDAY, JUNE 12 Networking Roundtable: Connect, Network & Build. 6:30-8:30 p.m. Roundtable is designed to discuss business and business growth. Hosted by Angelita Thomas, connection coach. Free. Chase Great Enterprises, Eastpointe. Contact: Angelita Thomas, phone: (248) 631-4341; email: angelitathecoach@gmail.com; website: networkingroundtable.eventbrite. com

WEDNESDAY, JUNE 13 Meet the Buyers: A Procurement Matchmaking Event. 9 a.m.-2 p.m. Schoolcraft College. Meet with procurement professionals from federal, state and local governments. Designed to help small businesses begin or expand their business with government agencies. Meet buyers, understand buying requirements, learn how to get into the buying system. $65. VisTaTech Center, School-

SPOTLIGHT craft College. Contact: Shannon Wilson, phone: (734) 462-4438; email: ptac@schoolcraft.edu; website: www.schoolcraft.edu/college-events/2018/06/13/college-events/meet-the-buyers-2018 Global Security Means Local Problems: Security, Intelligence, Space, Cyber & Politics. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Former Congressman Mike Rogers discusses the rapid changes of technology, the Mike Rogers emergence of new (and old) national security problems and how technology and security will change interactions with the world. Ford Field. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org

FRIDAY, JUNE 15 Tech Talk and Tech Trek 2018. 9 a.m.-6 p.m. Ann Arbor Spark. Tech Talk: Speakers will each have six minutes to talk about their innovations, what they see happening in the world of tech and what they foresee for the future. Tech Trek: Technology companies will open their doors to the public and showcase their latest innovations. Michigan Theater and downtown Ann Arbor. Free. Website: techtrek.annarborusa.org

UPCOMING EVENTS 2018 Women’s Business Enterprise National Council National Conference & Business Fair. June 19-21. Great Lakes Women’s Business Council. “Discover the Difference,” is an event for Michigan’s women business owners to meet with corporate purchasing representatives of national and international corporations. Cobo Center. Passes range from $200-

$1,050. Contact: Robin Kinnie, phone: (734) 838-3862; email: rkinnie@greatlakeswbc.org; website: wbenc.org Is Overtime Overtaking Your Business? 8:30-10:30 a.m. June 20. Michigan Manufacturing Technology Center. Learn how manufacturing companies can get back on track and on schedule while still keeping up with demand in a strategic planning workshop. Free. Michigan Manufacturing Technology Center, Plymouth. Contact: Theresa Gaston, phone: (734) 451-4208; email: inquiry@ the-center.org; website: the-center. org To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

ADVERTISING SECTION

DEALS & DETAILS

www.crainsdetroit.com/onthemove

CONTRACTS

To place your listing or for more information, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

INSURANCE

Josh Hunegs

Christine M. Tricoli

Corporate Vice President

Vice President, Human Resources

H.W. Kaufman Group Josh Hunegs was named Corporate Vice President at the H.W. Kaufman Group, a global network of companies dedicated to shaping the future of insurance, at its headquarters in Detroit / Farmington Hills, Michigan. In his new position, Hunegs will work on a variety of financial and corporate opportunities, including investments, real estate, foreign exchange, premium financing and acquisitions. He will also manage the investment portfolio for Kaufman subsidiary, Atain Insurance Companies.

H.W. Kaufman Group Christine M. Tricoli has joined the H.W. Kaufman Group executive team as Vice President, Human Resources and will be based at their company headquarters in Detroit / Farmington Hills, Michigan. She will assume responsibility for all of Kaufman’s HR activities and functions.Christine joins Kaufman from CIT Group, a financial services company headquartered in New York City. At CIT Group, she served as Senior Vice President, Head of Talent Services since 2013.

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

J Near Perfect Media, Bloomfield Hills, a public relations firm, has been named the agency of record for CJ Chemicals, Brighton, a chemical distribution company, and TIR Equities LLC, Birmingham, a developer. Website: nearperfectmedia.com J Xoran Technologies LLC, Ann Arbor, a biotechnology company, and Fiagon AG Medical Technologies, Hennigsdorf, Germany, maker of electromagnetic-based surgical navigation systems, have expanded their relationship to collaborate in the neuro and spine markets. Websites: xorantech.com, fiagon.com J HoMedics Inc., Commerce Township, manufacturer of sound-therapy products, is partnering with the National Sleep Foundation. Some HoMedics sleep-conditioning and sleep-therapy products for adults and infants will feature the National Sleep Foundation’s seal, indicating they align with the foundation’s mission of improving sleep health and well-being. Websites: homedics. com, sleepfoundation.org

EXPANSIONS J LAFCU, Lansing, a credit union, has received approval from the

Michigan Department of Insurance and Financial Services to expand its service territory to the entire state of Michigan. It is now open to anyone who lives, works, worships or attends school in Michigan and to businesses and other entities located in Michigan. The credit union’s previous geographical service area consisted of 11 counties in mid- to south central Michigan. Website: lafcu.com

NEW SERVICES J Gale Group Inc., Farmington Hills, part of Cengage Learning Inc. and a publisher of research and reference resources, is providing Hanover County Public School Division, Ashland, Va., with Cameron’s Collection, a set of eBooks to support teens who are battling with mental health issues. The collection is accessible online from the division’s middle and high schools’ library web pages, enabling students and parents to privately access the resources and school staff to use them instructionally to assist students in need. Website: gale. com

Submit Deals & Details items to cdbdepartments@crain.com

PEOPLE LAW

REAL ESTATE

J Kevin Hirzel to managing member, Hirzel Law PLC, Farmington, from partner, Cummings, McClorey, Davis & Acho PLC, Livonia.

J Jacqueline Trost to vice president, marketing and communications, Redico LLC and American House Senior Living Communities, Southfield, from director, marketing and communications, Redico, Southfield.

MANUFACTURING J John Daugherty to vice president, sales and engineering, Ultimation Industries LLC, Roseville, from general manager, product sales, Daifuku North America Holding Co., Novi.

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form.

CEO Miller retires from IAC

International Automotive Components Group announced last week it hired Natale Rea to replace auto industry veteran Robert “Steve” Miller as its president and interim CEO. The change is effective immediately, the Miller company said in a release. Miller, who spent three years leading the Southfield-based supplier, is retiring. The company said in an email to Crain’s that the 76-year-old “had always planned to retire from IAC after achieving several growth and stability objectives ...” though no formal announcement was made before his immediate retirement. IAC’s board expects to announce a permanent CEO soon, Julie Noyes, director of corporate communications, said in an email. Rea will remain president after a new CEO is hired, she said.

Lear brings on chief technology officer

Lear Corp. hired longtime automotive technology veteran John Absmeier as its chief technology officer. Absmeier will assume the newly created role June 18, the company said in a news release. Prior to joining Lear, Absmeier was Absmeier the vice president of smart machines at Samsung Electronics Co. Ltd. Before that, he served as senior vice president of Harman International Industries Inc.’s advanced safety and autonomous vehicle business.

Scarab Club director to step down

Ashley Hennen, who joined the Scarab Club just more than a year and a half ago, will step down from her position as executive director July 13 to rejoin Hatch Detroit as its ope r a t i o n s director. There she will lead its strategic planning process and play a role Hennen in ensuring its programs are evolving to serve the shifting needs of entrepreneurs and people looking to open brick-and- mortar locations in Detroit, Highland Park and Hamtramck. Prior to joining The Scarab Club, Hennen served as communication manager for Hatch for three years.

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

LEULIETTE

“Generally CEOs and companies agree that it’s in everyone’s best interests to keep their dirty laundry under wraps. ... But this must’ve have reached a very personal nature, to the point where Visteon’s board wanted to humiliate Leuliette.”

FROM PAGE 1

“This smacks of a personal vendetta,” said Jennifer Lord, partner at Royal Oak-based law firm Pitt McGehee Palmer & Rivers PC, which is currently representing Flint residents in the Flint water crisis lawsuits. “Generally CEOs and companies agree that it’s in everyone’s best interests to keep their dirty laundry under wraps. They have an institutional incentive not to reveal their top executive was soliciting prostitutes in the Philippines or wherever on company time. But this must’ve have reached a very personal nature, to the point where Visteon’s board wanted to humiliate Leuliette.” Visteon declined to comment on the arbitration. Leuliette’s attorneys at Chicago-based Crotty & Schiltz LLC did not respond to inquiries. It’s unclear where things went wrong between Leuliette and Visteon’s board of directors. Leuliette, who began is career at Ford Motor Co. and later helmed Metaldyne and Dura Automotive Systems, joined Visteon as a member of its board of directors in 2010. After 12 years of hemorrhaging cash, the construction of a major Southeast Michigan headquarters and a debt-clearing bankruptcy, Visteon parted ways with CEO Donald Stebbins in 2012. The executive spent months sparring with Visteon’s board over its direction, which ultimately led to his termination in August of 2012 after Visteon failed to acquire a 30 percent stake in its South Korean joint venture Halla Climate Control Corp. Leuliette was appointed interim president and CEO in August 2012 and became permanent president and CEO two months later. During his tenure, Leuliette was credited with a massive restructuring that helped boost the company’s share price from the high $20s to a high of $106 within two years. Leuliette also spent much of his career as an advocate for suppliers and the industry, including during the Great Recession. Leuliette led Visteon in a $265 million acquisition of Johnson Controls Inc.’s electronics unit, cost cutting and selling its 50 percent stake in Korean joint venture Duckyang Industry Co. Ltd. for $24.1 million in 2014. He left Visteon in June 2015 upon the completion of the a $3.6 billion deal to sell Visteon’s 70 percent stake in Halla Visteon Climate Control to Seoul-based Hankook Tire Co. and private equity firm Hahn & Co. At the time of his departure, Leuliette said the company had finished its reorganization under his leadership and a new CEO should set the company in its next direction. But behind closed doors, a feud was clearly brewing. Upon Leuliette’s termination, he petitioned in court to arbitrate his severance package, as outlined in his employment agreement, over a $43 million discrepancy in pay. The argument, filed in U.S. District Court in Detroit in April 2016, was over whether Visteon terminated Leuliette with cause or if the termination was deemed a change in control under his employment contract. Visteon immediately petitioned to have the court documents sealed, which they were. The two parties reached an agreement in arbitration in October 2017, according to court documents. In a turn, Leuliette requested in January that the court keep the arbitration agreement filings sealed, as they concerned “sensitive and private conduct.”

— Jennifer Lord, partner at Pitt McGehee Palmer & Rivers PC

Tim Leuliette, who began is career at Ford Motor Co. and later helmed Metaldyne and Dura Automotive Systems, joined Visteon as a member of its board of directors in 2010.

That’s when the gloves came off. Visteon responded by asking the court to vacate at least part of the arbitration award — twice. When denied, the auto supplier sought to unseal the court documents. It even sought to reveal the pornographic content from Leuliette’s work devices, but the judge denied that request. Miriam Rosen, partner in the labor and employment practice at McDonald Hopkins LLC in Bloomfield Hills, called the case unusual but said it is becoming more common when top executives demonstrate bad behavior. “I think it’s these situations where an executive has an indiscretion that makes the company so mad, they go against following the terms they set out in an employment agreement, which are usually designed to end relationships amicably,” Rosen said. The days of companies looking the other way in cases where the top boss misbehaves are ending, she said. “Until recently, there has been some level of overlooking certain types of behavior by the highest level of executives that might not have complied with company rules,” Rosen said. “People at the top always had more latitude, but it’s tightening now, and there’s much less tolerance of that behavior.” James Hermon, a partner in the labor and employment practice at Dykema Gossett PLLC in Detroit, said the “Me Too” movement — an international social movement against sexual harassment and assault — may have also influenced Visteon to seek to unseal the documents. “We’re seeing an increased backlash against private arbitrations, especially with public companies,” Hermon said. “Companies are more and more saying they don’t want to hide this behavior in a sealed environment.” Rosen and Lord agreed the movement likely played a role and unsealing gives the bad situation a positive spin for protecting Visteon’s image. “They are sending out a PR message that ‘we’re a large company and we’re not going to put up with this crap from anyone, even our CEO,’” Lord said. But porn and hookers were not the original reason Leuliette was terminated. Visteon originally provided more traditional reasons, including spending too much time away from the office

and engaging in M&A negotiations without the board’s awareness. Only after the arbitrator denied those claims as “cause” for dismissal did Visteon trot out the salacious material against Leuliette — leaving more questions than answers, Rosen said. “Did they know about (the por-

nographic material and prostitution solicitation) at the time and not want to use it?” Rosen asked. “It’s a really risky move to come back to an arbitrator with a completely different set of reasons for termination. But the arbitrator allowed it, which isn’t common, either.”

And what did Leuliette know? “Given he knew about his own conduct, he was still willing to challenge (Visteon),” Rosen said. “At some point he knew they knew, but he had no shame in his conduct, maybe thinking they wouldn’t expose him. There are types of executives that are arrogant enough to think they are untouchable; it’s their organization and they can do what they want.” Until they can’t and their employer aims to humiliate them for trying. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

LUXURY REAL ESTATE GUIDE Advertising information: Kate Rozek at (313)446-0485 • krozek@crain.com

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Award Winning Design inside of The Boardwalk Community on the shores of Lake Michigan in South Haven. This home has it all. With classic architecture and interior design this remarkable retreat will meet even the most discerning of seekers desires. The main floor boasts an open floor plan with a floating river rock fireplace complete with sitting hearth and custom mantle detail. The upper floor offers a master suite with walk in closet, claw foot tub and lovely full tile shower all of which are filled with beautiful light. There are two other large bedrooms, a shared bath, a recreation space with veranda and a staircase leading to the light keepers watch complete with custom bar area and some of the best views in the area from the three story deck. The lower level rounds out this lakeside paradise. Call Meg Heritage today for your private showing.

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

RESCUE FROM PAGE 3

“I’ve had sleepless nights because there is no way I can have people going on the street while I’m helping people get off the street,” said Audi said of laying off employees, many of them former homeless and substance abuse treatment clients. The prospect of leaving a vacant eyesore in Highland Park also troubled him, he said. “I had to come up with a plan where it doesn’t make (us) bankrupt but keeps the organization surviving and helping people.”

Burning through reserves Although, DRMM is still completing its fiscal 2017 audit, Director of Finance Esther Gwilly projects a $1.08 million loss, with $20.18 million in total revenue. In fiscal 2016, the organization reported a $1.1 million loss and net assets/fund balances of $20.2 million, down from $21.3 million the year before. DRMM, which is operating on $19 million budget this year, burned through about $1.5 million in reserves over the past couple of years, Audi said, adding the nonprofit is

A Detroit Rescue Mission Ministries location in Detroit.

out of cash. The 62 buildings it owns represent roughly $20 million in as-

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sets. Those buildings are located across 15 campuses in Detroit, Highland Park and Roseville and include a youth summer camp in Howell and a new shelter it took over from Blue Water Safe Horizons in Port Huron on May 1. Safe Horizons was set to close. “We can’t say no to people,” Audi said. “If there’s a need, we have to meet it. I always count on the good heart of the donor. They usually step up.” In late May, DRMM launched a campaign to raise $1 million by Sept. 30, the close of its fiscal year, to help cover its costs. So far it’s raised $150,000. Audi expects the moves the organization is making to narrow its loss to $1 million or less this fiscal year

EL-SAYED FROM PAGE 3

Columbia University records show El-Sayed graduated in 2014 with a Medical Doctorate degree from the prestigious Ivy League school. El-Sayed says he worked as a sub-intern during med school at NewYork-Presbyterian’s Allen Hospital near the Bronx, where he treated patients as part of his study of medicine. “My job was, in effect, to be the junior doctor who took care of the patient,” El-Sayed said in a June 1 speech in Southfield, where he detailed his “Michicare” single-payer plan. As part of their education, fourthyear medical school students go on rounds with attendant doctors in hospitals. "But you don’t do diagnosis — you’re still a student," said Mohammed Arsiwala, M.D., a Livonia internist and president-elect of the Michigan State Medical Society. "You’re under supervision. You can’t do patient management.” Arsiwala, a member of the Michigan Board of Medicine, the state's physician-licensing body, thinks ElSayed is walking a fine line in publicly presenting his medical credentials as a candidate for governor. "Once you finish medical school,

In recent years, DRMM’s losses stemmed from a few factors, among them unreimbursed costs for people unable or unwilling to leave its shelters, who exhausted the 90 days DRMM is paid through city and state contracts to shelter them. Also, the nonprofit has been unable to cover operating costs for permanent supportive housing under the rate Detroit CoC renewed for two recent contracts, Audi said. Allocations for those contracts dropped about $500,000 between 2013 and 2015 and afterward were renewed at the same lower rate .

He said rates for the three permanent supportive housing contracts awarded by the CoC are all different: The 70-bed housing contract the nonprofit is returning to CoC is $400,000, or about $5,714 per person. A contract serving about 30 individuals and family members works is $230,000, or $7,667 per person; and a contract to provide 48 beds is $560,000, or $11,667 per person. Audi acknowledges the organization applied for the contracts but said the rates were higher when his nonprofit accepted the contracts. Detroit CoC chairman Curtis Smith, housing director at Central City Integrated Health, and Tasha Gray, executive director of the CoC lead agency Homeless Action Net-

you can call yourself a doctor,” Arsiwala said. “But if you’re not practicing medicine, I don’t think you should call yourself one. If you don’t have a license, how are you going to call yourself a doctor?” El-Sayed dismisses questions about his use of the terms doctor and physician. "I have a degree that’s called a Medical Doctorate, which makes me a medical doctor," El-Sayed said in an interview with Crain's. "People are going to try and chip away, they always do. That’s the nature of politics." At Allen Hospital, El-Sayed said, he found medical treatment limiting in addressing the underlying causes of poor health — factors like the air they breathe, their socioeconomic upbringing and the lack of responsiveness from their government. El-Sayed recalls in campaign stump speeches finding one HIV-stricken patient he had spent weeks caring for in the hospital on a subway car one night and making a decision to rescind a hospital residency application and instead pivot to public health scholarship and, eventually, advocacy. That led El-Sayed back to Detroit in 2015 to become the city’s health department director at age 30 (Because El-Sayed was not actually a licensed physician, the city had to hire Joneigh Khaldun, M.D., to be De-

troit’s chief medical officer, city spokesman John Roach said.). In Detroit, El-Sayed oversaw rebuilding the department after the city emerged from bankruptcy. At times, he found himself at odds with his boss, Mayor Mike Duggan, over the impact of residential water shutoffs on public health and whether housing demolitions stirred up toxic lead in the air that Detroit children breath. “I think there’s a lot of ways that one serves as a physician. And I think the work that I have done and I continue to do is true to the core and the ethos of medicine,” El-Sayed said in an interview. “And when I took my Hippocratic oath, that is still an oath that I use to guide my work today. I’m a physician because I have an MD, but I’m also a physician because of the work that I’ve dedicated my career to.” Whether it matters that the doctor never practiced medicine clinically is up for Democratic voters to decide in the Aug. 7 primary. But one could argue El-Sayed’s campaign literature showing him wearing a doctor’s white lab coat is akin to graduating from law school and presenting yourself as an attorney — even though you never took or passed the bar exam. Gretchen Whitmer, the Democratic Party establishment’s favorite for the gubernatorial nomination, has

and a loss of $500,000 in fiscal 2019.

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C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8 work of Detroit, said in a joint statement that other than federally outlined funding requirements, the CoC does not define standard operating rates for its funded projects. Project budgets vary depending on housing types, scope of services offered, agency operating costs and other factors, the statement said. “It is the responsibility of the agency to ensure that the project’s budget is feasible prior to the application being submitted to HUD.” They added that HUD allows agencies to couple other funding sources with CoC funding. “If, at any point after entering into a contract with HUD an agency determines the budget is not sufficient, the agency has the option to contact HUD to request an amendment to the scope of work,” the statement said. The CoC approved DRMM to add another 25 apartments of permanent supportive housing in fiscal 2019, which begins July 1. However, DRMM recently turned the contract down, Audi said, because the actual costs will be more than double the $300,000 contract. Compounding those issues, are building operating costs. While the nonprofit spent money to upgrade the 120,000-square-foot YWCA building that houses the 70 beds of permanent supportive housing program that’s been operating at a loss, Audi said it’s still expensive to keep the boiler, electricity, elevators and other systems operating. Also costly is a nearby, former YMCA that houses other DRMM programs. DRMM is working to transition the people housed through the 70bed CoC contract to vacancies it has through other contracts from sources such as the Michigan Department of Corrections and the CoC contract for permanent supportive housing with a higher pay rate. It’s also working with the CoC to place some of the people in the program it’s exiting with other providers.

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Business Law Experience

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had a license to practice law in Michigan since November 1998, according the State Bar of Michigan. But we almost never hear her say, “as an attorney” in talking about issues she champions. Ditto for Attorney General Bill Schuette, the Republican front runner for governor. Maybe that’s because society views doctors in higher esteem than lawyers — or journalists, for that matter. On the stump, though, El-Sayed comes across as the most credible top candidate for governor when it comes to health care policy issues because he frequently reminds voters that he’s, well, a doctor. And that fuels the fight he’s asking voters to let him wage against “CEOs from multibillion-dollar corporations” — words he increasingly uses to refer to Blue Cross Blue Shield of Michigan and its CEO, Daniel Loepp — without distinguishing himself from the kind of doctor who sees patients every day and the kind who got a medical degree. “They’ll tell you it’s impossible, you can’t do it,” El-Sayed said in Southfield about his single-payer health care plan. “Well, if you take a paycheck from Blue Cross, you can’t do it. But I’ll tell you, as a doctor, it’s definitely possible.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Business, contracts, transactions, employment and private equity, with a focus on technology, internet and software companies Named in 2014 and 2015 to Detroit Techweek 100; Detroit area leaders significantly impacting business and technology

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June 11, 2018

TIGERS FROM PAGE 3

The MLB average for wins through Thursday was 30. And the average payroll cost-per-victory was $4.6 million, based on salary data from Spotrac.com. The average MLB roster payroll is $138.8 million. Using payroll/wins: J The most financially efficient team in baseball is the Oakland Athletics, which spent $2.33 million for a 31-31 record via a $72.4 million payroll, the lowest in baseball. That efficiency, however, bought only fourth place in the five-team A.L. West Division. J More efficient — lean payroll for cheap wins, but also first place in a division — are the Milwaukee Brewers. They're leading the National League Central with a 37-25 record through Thursday. Their $94.2 million payroll (second lowest in MLB) translates into spending $2.54 million per victory, more than $2 million more efficient than the MLB average. J Boston was baseball’s best team in the standings through Thursday with a 43-19 record. The Red Sox’s $235.7 million payroll is the highest in baseball, but the spending efficiency ranked just 24th at $5.48 million for each win. J The New York Yankees’ 40-18 record is second-best in MLB, and the $167.7 million payroll (7th highest) bought the 10th-best winning efficiency at $4.19 million for each victory. J By far the most inefficient team is Baltimore. The Orioles won just 19 games through Thursday, and with a $144.8 million payroll (13th highest), each victory was at a price of $7.6 million. Next worst were the San Francisco Giants at $6.7 million per win thanks to a $208.3 million payroll that had bought 31 victories. J Detroit, as it has the past few seasons, is trying to catch Cleveland in the division. The Indians are baseball’s 13th most efficient spender at $4.33 million per win (32-28) on a

The Tigers say they have invested significant but undisclosed sums on their scouting and analytics departments in a bid to improve the data available to make roster decisions that will allow the team to compete for a championship sooner in the typical five-year rebuilding cycle.

payroll of $138.7 million (16th most). J Other analysis more deeply reflects Detroit’s performance so far: Baseball salary tracking site Spotrac.com has a metric called True Value Statistic (TVS) used to value team performance by payroll, victories and accumulated player production. Detroit’s 33.34 TVS ranks 21st in baseball, with the Yankees as the best at 98.27 and Orioles worst at 1.58.The average TVS was 50.43 as of Thursday.

Big spender doesn't equal big winner One flaw with the salary cost efficiency analysis is that it’s much harder to be efficient when a team spends more.

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Many factors can affect cost efficiency beyond talent or smart decision-making, such as injuries. And the payroll cost factor really matters only to the degree that a team owner is willing to bear the spending. Salary exists within a team’s revenue matrix, and MLB teams derive revenue from so many sources, from ticket sales to TV deals, that winning is just one (big) factor in a club’s bottom line. Also, baseball doesn’t have a salary cap. Owners can spend as little or as much as they choose, which differentiates baseball from pro football, basketball and hockey. Spending efficiency, of course, is meaningless to fans and billionaire owners if their team wins the World Series and is raking in cash. Everyone is happy. While spending a lot of money on a roster of stars does generally lead to more victories, even if inefficiently, the owner who spends the most in baseball rarely wins the World Series. A savvy front office can field a consistent winner without spending the GDP of a small country. The sweet spot to winning a World Series now is spending more than the MLB average without over-spending. Some owners seem content to collect profits. The last team with an MLB-leading payroll to win the World Series were the 2009 New York Yankees ($201 million). It was more common for the biggest spender to win it all in the 1990s. In the 21st century, the team with the eighth-highest payroll, on average, has won the series. Last season, the L.A. Dodgers were the top spenders at $265.8 million. They reached the World Series only to lose it to the Houston Astros, which spent $149.9 million to win it all. That was less than the MLB average of $152.1 million last season.

they start to get bigger dollars before even more lucrative free agency); veteran players not yet free-agency eligible; and free-agent eligible players, who likely are the costliest. A team needs cheap players with high Wins Above Replacement (WAR) performance value, he said. It also needs productive veterans with team-friendly contracts for a club to be truly efficient. That’s hard to accomplish. Buying a championship, as the Tigers tried over the past decade, rarely works. The result is a mediocre team saddled with enormous deals for aging stars and an exhausted minor-league system restocked through painful trades and the draft. “I’ve shown that even if a team is good at acquiring free agents at moderate relative costs, it’s basically impossible with even a Yankees-Dodgers level payroll to acquire a playoff team,” Swartz said via email. “All good teams have a decent amount of pre-free-agency guys. But it’s also pretty rare to have a good enough team to make the playoffs without guys with six-plus years of service time, too.” Swartz hasn’t crunched the contract data on Detroit, and no set of comparative data exists for this season at the moment. However, he did have a theory the time was right for a rebuild. “My guess without looking is that what has happened to the Tigers is the young guys have all aged out, and the farm hasn’t replenished those pre-arbitration or arbitration groups with enough WAR. As a result, no amount of plausible free-agent spending is going to get them there,” he said. “The main way you get efficient wins/payroll is to have a decent number of contributors who have less than six years service time, especially pre-arbitration players. Much more important than avoiding albatross contracts.”

A deeper analysis

Getting there

Baseball analyst Matt Swartz said there are better ways to measure spending efficiency, including comparing a roster’s mix of contract statuses — the production of young players under team control not yet eligible for salary arbitration (where

It appears the Tigers front office is adopting the formula that Swartz champions. The Tigers didn’t make General Manager Al Avila available to comment. Detroit’s rebuilding also requires spending other than on players.

Specifically, the Tigers say they have invested significant but undisclosed sums on their scouting and analytics departments in a bid to improve the data available for Avila to make roster decisions that will allow the team to compete for a championship sooner in the typical five-year rebuilding cycle. Nicknamed Caesar, the team’s inhouse analytics software system and database went live late in 2016 amid a wave of hiring analytics staff and new scouts. “Growth in the analytics area is key in our goal of making sound, informed baseball decisions both when evaluating players and in providing data to the big league players, manager and his coaching staff. The additions in scouting are important for us in our search for impact type players to bring into our organization,” Avila said in a statement last year. Analytics, traditional scouting and common sense led the Tigers to take Auburn pitcher Casey Mize with the No. 1 pick last week in baseball’s draft — one of the few benefits of last year’s 98-loss season. Mize will be a cornerstone of Avila’s effort to rebuild the franchise under the new business strategy. When Tigers owner Mike Ilitch died last year, the change in ownership to his son Christopher signaled the end of simply trying to buy a championship. The strategy of winning with young, inexpensive talent that’s developed internally and under long-term team control isn’t unique. Every general manager and analytics department is mulling the same talent pool. It’s harder to find many market inefficiencies because everyone has read “Moneyball,” the strategy made famous by the Oakland As in the early 2000s. Now they have to put it into practice. (Note: The payroll data in this story includes the 25-man roster, any players on the disabled list, money contractual obligated to former players, and salary for certain minor leaguers.) Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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WAGES Unionized contractors, such as Southfield-based Barton Malow, support prevailing wage because the wages attract talent and workers and buoy training programs. “My opinion is that prevailing wage is good for Michigan workers and good for our customers,” said Doug Maibach, chairman of Barton Malow. “I have not heard one public owner or district say repealing the prevailing wage would be good. This repeal will drive down wages across the state, and we’re going to lose the appeal of construction jobs for young people. The state will ultimately pay the price.” Barton Malow employs 1,300 workers in Southeast Michigan, about half of whom belong to a union, Maibach said. While prevailing wage requires workers to be paid union-equivalent

struction worker wages by an average of 8.5 percent but had no impact on the average cost of schools projects in northern Indiana. Ballard compares repealing the prevailing wage with Michigan’s 2015 passing of the Right to Work law, which prohibits the requirement of union membership for employment. “(Right to Work) was sold to the public as giving Michigan’s economy a shot in the arm,” Ballard said. “But less than 10 percent of Michigan’s private sector workers are part of a union, and we’ve seen nothing that shows it’s done anything for our economy. Repealing prevailing wage is much the same. Construction is a small sector in our overall economy, and I don’t foresee any long-term upside.” Frank Mamat, a partner at Foster Swift Collins and Smith PC in Southfield, who represents both unionand nonunion constructions firms

AGAINST REPEAL:

IN FAVOR OF REPEAL:

“This repeal will drive down wages across the state, and we’re going to lose the appeal of construction jobs for young people. The state will ultimately pay the price.”

“Despite the lies, deception and desperation from those looking to maintain their special interest carveout, the timehonored notion of fair and open competition has won the day.””

FROM PAGE 1

— Doug Maibach, chairman of Barton Malow, which employs 1,300 workers in Southeast Michigan

wages for state projects, it doesn’t require the workers to belong to a union. Protecting Michigan Taxpayers, the ballot committee led by the Associated Builders and Contractors, maintain prevailing wage is designed to benefit union shops over nonunion. “For the first time in over 50 years, the heavy hand of government favoritism will no longer overcharge Michigan taxpayers to build their schools and public buildings,” Jeff Wiggins, president of the Protecting Michigan Taxpayers ballot committee, told Bridge Magazine after the repeal. “Despite the lies, deception and desperation from those looking to maintain their special interest carveout, the time-honored notion of fair and open competition has won the day.” But Charles Ballard, an economist for Michigan State University, is skeptical of that claim. “This will probably lead to lower wages for some in the sector and maybe some higher profits for some construction companies,” Ballard said. “But I have reservations whether that lower wage will be passed through to the public because that depends on a whole host of factors, including competitiveness, which is very high right now. We already have a shortage of construction workers in Michigan, and I don’t see how lowering worker wages will help.” Michigan needs more than 9,000 new construction workers annually over the projected supply of workers, according to the state’s Michigan Construction by the Numbers report last fall. A January study by the Midwest Economic Policy Institute found that a 2015 repeal of a “common construction wage” in Indiana cut con-

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— Jeff Wiggins, president of the Protecting Michigan Taxpayers ballot committee

and who helped draft the Right to Work legislation, said competition should rise by prevailing-wage repeal but not right away. “This may upset the entire economic apple cart and create more competition between companies,” Mamat said. “Right to Work will take an entire generation before Michigan is recognized as a free-trade player. And with competition for workers where it’s at, it’s not like wages are going to backslide, because they won’t be able to keep their workforce. So it should save taxpayer money through competition, not wages.” But Mamat does question the timing of the repeal. “Michigan’s economy is overheated, and nonunion shops are paying more than they normally would,” Mamat said. “This won’t change that. And plenty of projects used nonunion shops, and it’s not like those projects were picketed (by union members). I’ve never seen a prevailing wage job picketed, so why are they upset to begin with? Projects will go to who has the track record of good work. So, yes, this is probably more political than practical.” Maibach said the motivation is completely political. “With Republicans in charge of state government, they are eager to weaken their political opponents that often get union support and that’s the bigger motivation than what the economic effects there may or may not be,” Maibach said. “I happen to be a conservative that employs a lot of union members, and I see the benefits of the union wage even if they don’t.” Dustin Walsh: 313-446-6042 Twitter: @dustinpwalsh

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Ann Arbor AI firm Clinc opens London office www.crainsdetroit.com Editor-in-Chief Keith E. Crain President KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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By Tom Henderson

thenderson@crain.com

Clinc Inc., the fast-growing Ann Arbor company that makes artificial intelligence software that financial institutions use to interact with customers, has opened an office in the heart of financial district in London, one of the world’s leading banking centers. At the same time, at a conference in Amsterdam, Clinc announced a partnership with the giant Turkish bank Isbank to roll out its AI platfom to the bank’s 5.5 million mobile users and plans to later this year integrate Clinc software into Isbank’s call center. “We’re thrilled to bring the best conversational AI on the planet to one of the biggest banks in the world,” Jason Mars, Clinc’s CEO, said in a press release. This continues a heady year and a half for the company, which was founded in 2015 by Mars and his

Need to know

JJFast-growing company opens London office JJSigns deal with giant Turkish bank IsBank to use its systems JJCompany has seen rapid growth, expects more this year

wife, Lingjia Tang, the COO. Both are assistant professors at the University of Michigan and run their own research group there, the Clarity-Lab, clarity being short for cross-layer architectures and run times in 10 years. The group designs the scalable architecture needed to support future artificial intelligence applications. In February 2017, Clinc raised a venture-capital round of $6.3 million, bringing its total of capital raised to $7.5 million. This past February, the company announced it grew its revenue in 2017 to more than $4.5 million, up 1,500 percent from its first full year of business in 2016. In December, before final 2017 numbers were in, Mars told Crain’s he predicts revenue to grow at least tenfold this year. Also in February, he hired tech veteran Helen Yu as chief growth officer. Yu has more than 20 years of experience, including executive positions at Hyperion, Oracle and Adobe. Most recently, she was group vice president at marketing software maker Marketo, which was sold for $1.8 billion. Clinc recently moved into larger

Jason Mars, a University of Michigan professor, is president and CEO of Clinc Inc., which has opened an office in London.

quarters in Ann Arbor, taking over the entire second floor and more than 5,000 square feet at 208 E. Huron St., in what is the Cahoots tech incubator and shared workspace, which opened last year. Clinc has 56 full-time employees, up from 21 in March 2017. The London office opened with one employee with more planned soon.

In 2016, Crain’s named Mars as one of 50 names to know in IT in Michigan. Last year, he was ranked second on Bank Innovation’s list of 10 most innovative CEOs in banking. This September, Mars will be one of two featured speakers at the big TechCrunch Disrupt conference in San Francisco, where Clinc opened an office last year.

CLINC INC.

“We’re thrilled to bring the best conversational AI on the planet to one of the biggest banks in the world.” Jason Mars, Clinc’s CEO

Venture Investors raising $100 million fund By Tom Henderson thenderson@crain.com

Venture Investors LLC, a venture capital firm based in Madison, Wis., with a strong presence in Michigan, filed a document with the U.S. Securities and Exchange Commission that it plans to raise a new fund of $100 million. The fund is called Venture Investors Health 6 LP. Founded in 1997, Venture Investors focuses on health care spinoffs from Midwest universities. It has more than $200 million in assets under management and 41 portfolio companies. Ann Arbor-based companies, several with ties to the University of Michigan, with investments from Venture Investors include SkySpecs

Inc., which makes software to control drones; Tissue Regeneration Systems Inc., which does skeletal reconstruction and bone-regeneration; Delphinus Medical Jim Adox: Is managing partner Te c h n o l o g i e s Inc., which uses for fund. ultrasound to detect breast cancer; NeuMoDx Molecular Inc., a molecular-diagnostics company; HistoSonics Inc., which uses sound waves to attack tumors; and BlueWillow Biologics, which is developing intranasal vaccines. Venture Investors has begun meet-

ing with potential investors about participating in the new fund. “Jim Adox is one of the most experienced venture capitalists in Michigan, and it is a big deal not only that he and Venture Investors are raising a new fund, but that he is the managing partner of the fund, working out of Ann Arbor. For Michigan to continue to ascend as a state for highgrowth companies, we’ll need to have more $100 million funds that can invest throughout a company's life cycle, and Venture Investors has shown that they're good at that,” said Chris Rizik, CEO and fund manager of Ann Arbor-based Renaissance Venture Capital Fund, an affiliate of the Business Leaders for Michigan that announced in May that it raised

a new fund of $81 million. “One of the first investments I was ever a part of, 20 years ago, was Tomotherapy, and our co-investor was Venture Investors. Tomotherapy went on to become a public company, and we got to know the entire team at Venture Investors,” Rizik said. “They’re a great group and extremely important for the Midwest. And, since Jim joined them several years ago, they’ve shown a strong commitment to Michigan.” Adox runs the Ann Arbor office and is a past chairman of the Ann Arbor-based Michigan Venture Capital Association. He declined comment for fear of violating SEC rules against publicly promoting a fund while raising money.

C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 1 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Alamo Drafthouse theater planned for Midtown

Forbes: Lions’ Stafford 10th top-paid athlete

JUNE 1-7 | For more, visit crainsdetroit.com

etroit’s next movie theater could be an Alamo Drafthouse Cinemas LLC in Midtown. The Austin, Texas-based cinema chain plans to open a nine-screen theater on a vacant site at 90-114 Stimson St. near Martin Luther King Jr. Boulevard and Woodward Avenue that the Detroit Water and Sewerage Department owns. Founded in 1997, the company is known for showing sometimes unique first-run movies, providing craft beer and food service to seats and holding film-related and other events. Alamo Drafthouse also has a video store, offering free movie rentals. Last Wednesday afternoon, the Board of Water Commissioners approved the sale of the three parcels that make up the property to Detroit Rising Development LLC, run by Jonathan Hartzell, James Therkalsen and Dominic Walbridge. City Council needs to approve a development agreement. If that happens, construction on the 44,000-square-foot building could begin by year end, with the theater opening in the first quarter of 2020. Hartzell told Crain’s he saw a movie in an Alamo Drafthouse while traveling and thought the theater would be a good fit for Detroit. “I called their development number and got a call back the next day,” he said, adding the company already had been looking in downtown with Dan Gilbert’s Bedrock LLC. “They couldn’t get a deal done.” Hartzell expects the project to cost “north of $13 million” and be able to seat about 900 patrons. Alamo Drafthouse is the second recently announced movie theater in the city, following February’s news that Troy-based Emagine Entertainment Inc. and Detroit-raised rapper Sean “Big Sean” Anderson plan to build a 10- to 12-screen theater in or around downtown. The pair is expected to reveal a site in the third quarter and open the Detroit Emagine theater in early 2020.

BUSINESS NEWS J A $65 million, 127,000-square-foot sports medicine facility and office building serving the Detroit Red Wings, Detroit Tigers and the public will be built in the District Detroit development area, executives of Detroit Medical Center, Olympia Development of Michigan and Ilitch Holdings Inc. announced last week. J Detroit-based Marketing Associates LLC revamped its brand and consolidated divisions under the name OneMagnify to reflect growth and development it has experienced over the past decade. J Bloomfield Hills-based Peas and Carrots Hospitality LLC plans to reopen Como’s pizzeria and bar in Ferndale under its old name. The restaurant closed in September due to repeated food safety violations. J Mark Hollis, the Michigan State University athletic director who retired suddenly in January in the wake of the Larry Nassar sexual abuse scandal, is working as a sports and entertainment consultant to Detroit

HOK

A rendering of the planned $533 million criminal justice complex at I-75 and East Warren Avenue that would replace Wayne County’s existing complex in downtown Detroit. Wayne County approved the plans on Thursday.

Detroit digits A numbers-focused look at last week’s headlines:

3.8 percent

The tuition increase Oakland University approved for the 2018-19 school year.

$97.8M

The amount the U.S. Department of Transportation awarded Macomb County to help rebuild a 10-mile section of crumbling Mound Road.

10th

Detroit Lions quarterback Matthew Stafford’s rank on Forbes’ list of the highest-paid athletes in the world, at $59.5 million in salary and endorsements over the past year.

business mogul Dan Gilbert’s companies. J Marriott International plans to introduce its Delta Hotels brand to the metro area, transforming the Radisson Hotel Detroit Metro Airport into Delta Hotels Detroit Metro Airport. The hotel is about two miles from Detroit Metropolitan Wayne County Airport. J The Crowne Plaza hotel in Farmington Hills is open after a multi-million-dollar renovation to transform it into a business lodging and meeting center. J Novi-based Lineage Logistics LLC, a warehousing and logistics firm, bought a Wisconsin storage company and four leased warehouses in the Southeast U.S. J Canopy, a tech solutions supplier for the health care industry, won the top prize of $25,000 in Ann Arbor Spark’s Entrepreneur Boot Camp. J Detroit Soccer District, a grassroots sports facility west of Detroit's Midtown, opened its outdoor field and plans to start offering regular programming on Monday. J Detroit-based Fontinalis Partners led a Series A investment round of $18 million in Verity Studios AG, a supplier of indoor drone technology based in Zurich, Switzerland. J Global consulting firm Accenture plc is doubling down on its presence in Southeast Michigan by opening a new innovation center in Livonia and

planning to hire 200 more workers in Detroit in the next 2 1/2 years. The company plans to move its local headquarters from Southfield to 1001 Woodward Ave. in downtown Detroit this fall. J Caesars Windsor hotel and casino reopened last week. It shut down in April due to a 2,300-staff strike. Unionized employees approved a three-year contract last week and were expected to return to work.

etroit Lions quarterback Matthew Stafford is the 10th highest-paid athlete in the world, thanks to a blockbuster contract extension signed last year, according to the latest annual rankings from Forbes. Other Detroit pro athletes on the list of the world’s 100 highest-paid athletes include Blake Griffin, Miguel Cabrera and Andre Drummond. Boxer Floyd Mayweather, 41, a Grand Rapids native, topped the list at $285 million after getting paid $275 million to fight Conor McGregor in August. Stafford, 30, ranked 10th at $59.5 million in salary and endorsements over the past year, the financial news site reported. For his exemplary play, the Lions rewarded Stafford with a five-year, $135 million contract in August. That included a $50 million signing bonus, of which $34 million was paid when the deal was finalized and $16 million at the start of 2018, according to Forbes.

He also earned an estimated $2 million in endorsements from Nike Inc., PepsiCo Inc., Fanatics Inc., Blue Cross/Blue Shield of Michigan, Ford Motor Co., Panini and Saint Joseph Mercy Health System, per Forbes. Last season, Stafford was paid a $16.5 million base salary on his expiring three-year, $53 million contract. Griffin, 29, ranked 30th on the Forbes list at $35.5 million because of his five-year, $171 million contract extension signed with the L.A. Clippers in July. The Pistons traded for him in January, and assumed his contract obligations. He also earned $6 million from endorsements from the likes of Nike’s Jordan Brand, Red Bull, IWC and Panini, per Forbes. Griffin’s 24-year-old teammate Andre Drummond ranked 74th with $24.9 million, including $1 million in endorsement money. Cabrera ranked 54th at $29.2 million, of which Forbes estimated $500,000 came from endorsements.

OTHER NEWS J Wayne County’s bond rating received a two-notch boost from S&P Global Inc., which said the county is reaching a “more normal” operating environment. It gave the county a BBB+ rating, up from BBB-. J Detroit artist Troy Ramos earned a $5,000 grant from ArtPrize to place his “Sound Space” installation in the annual Grand Rapids public art competition and show in the fall. J The University of Michigan’s autonomous vehicle testing center Mcity launched its driverless shuttles last week after unexpected construction delayed their start by several months. J Three cooling towers and three bathrooms at Wayne State University in Detroit’s Midtown tested positive last week for legionella, the bacteria that causes Legionnaires’ disease, after an employee was diagnosed with the illness in late May. J The Center for Nonprofit Support, a first-of-its-kind nonprofit support and innovation center in development in Detroit, anticipates a soft launch in mid-September with funding from the Ralph C. Wilson Jr. Foundation. J The city of Detroit is seeking designers to turn empty spaces into temporary community gathering centers as it looks to help owners of empty buildings transition their ground floors into tenant-ready spaces. J A $1.5 million grant from the Ralph C. Wilson Jr. Foundation is covering the cost of 100 local technology apprenticeships from training program Apprenti over the next three years. J Downtown Detroit Partnership announced its 2018 Summer in the Parks schedule of activities for six public spaces around downtown. Highlights include sand and lounge chairs in Campus Martius, Movie Night in the D and a free concert series at Beacon Park.

LARRY PEPLIN

Polka Restaurant celebrated its opening in Troy with a kielbasa-style ribbon cutting Wednesday with Oakland County Executive L. Brooks Patterson doing the honors. The 8,000-square-foot, 250-seat restaurant opened early this year after a $1.5 million build-out at 2908 E. Maple Road.

United Shore partners with Grand Circus for tech talent U nited Shore is teaming with Grand Circus to offer graduates of the Detroit-based tech school guaranteed interviews, following several other local companies looking to build pipelines to talent. The Troy-based mortgage company will provide first-round interviews to all individuals who successfully complete the C# .NET coding bootcamp, which begins July 16 and runs full time for 12 weeks. The class size is around 22 students. “It’s not a guaranteed job, but it’s a guaranteed interview,” United Shore spokesman Brad Pettiford said. He said the company, which is set to begin moving employees from Troy to its new Pontiac headquarters this month, is growing quickly and in need of qualified new hires. Its IT team consists of more than 400 people and there are plans to grow to more than 500 by the end of the year. As part of the deal, United Shore is contributing up to $10,000 for Grand

Circus’ marketing and brand building, Jennifer Cline, senior marketing manager for the school, said in an email. Individuals hired by United Shore would also be enrolled in the U.S. Department of Labor’s apprenticeship program through its partnership with Grand Circus. “This allows us to expose more individuals to the opportunities the tech industry has to offer,” Cline said. “The partnership is win-win for reasons beyond the financial commitment.” Grand Circus has relationships with more than 250 companies, according to Cline. Its Meridian Bootcamp launched last year, with more than 80 percent of the class hired by the Detroit-based health care company right after graduating. In a different type of partnership, the tech school is collaborating with Quicken Loans Inc. to introduce the basics of coding to Detroit public and charter school students. The cost of the C# .NET coding boot camp at Grand Circus is $9,750.

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