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Executive burnishes region’s golden arches

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People – October 2005

Executive burnishes region’s golden arches
By Joe Rauch

Bob Jackson stays on the move, whether in his job as senior vice president and general manager of one of McDonald’s largest operating regions or in his favorite sideline: running marathons. Jackson, 45, spends three to four nights a week traveling throughout the fast-food king’s Raleigh Region, which stretches from Kentucky to Georgia and from Tennessee east to the Atlantic Ocean.

The Cary resident oversees 665 restaurants — 71 owned by Oak Brook, Ill.-based McDonald’s, the rest by franchisees — with more than 32,000 employees. “I could be scouting real-estate locations for a new restaurant one day and talking to our marketing cooperatives in our individual television markets the next.”

Quite a change for a guy who quit his first job because of its travel demands. That was when he was an accountant at Ernst & Whinney in Chicago. The Gary, Ind., native started there after getting a bachelor’s in accounting in 1982 from St. Joseph’s College in Rensselaer, Ind. “My wife and I were expecting our first child, and I was living out of a suitcase. I needed something that provided a better work/life balance.” The couple’s three daughters are now 20, 18 and 14.

He started at McDonald’s in 1984, working as an accountant at headquarters. He was controller of the Tampa, Fla., Region from 1986 to 1988. Jackson then moved to McDonald’s operations management-training program, where he liked having a direct effect on results he had been tracking at the corporate level. In 1998, Jackson became market-optimization director for McDonald’s Southeast Division, which includes the Raleigh Region. Three years later, he became vice president/general manager of the Raleigh Region.

Since 2003, the Raleigh Region — one of eight in the U.S. — has ranked among the top three in sales and customers. Sales last year were nearly $1.2 billion, a 12.2% increase over 2003. McDonald’s estimates that each restaurant in the region served nearly 500,000 customers in the last 12 months, averaging almost 1,300 a day. Overall, the region had a 7.5% increase in customers — best of all McDonald’s regions. The high volume of business stems primarily from population growth in the Sun Belt and its busy interstate highways.

Jackson’s other travels occur at more precise distances — 26.2 miles. He finished his first marathon at 27 and tries to compete in two a year. His most consistent training partner has been his wife, Margaret, who ran cross-country at St. Joseph’s.

Jackson’s goal for this year is to qualify for his first Boston Marathon. “I’ll get there. I just have to put in the miles.”

Entrepreneur strikes oil in restaurants

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People – October 2005

Entrepreneur strikes oil in restaurants
By Dail Willis

When it comes to being an environmentalist, Brian Winslett walks the walk. Well, not exactly. “I mostly try to ride a bicycle,” says the 29-year-old general director and part owner of Asheville-based Blue Ridge Biofuels Cooperative. When he has to drive, he uses the nonpolluting biodiesel fuel that his company makes from used cooking oil.

In July, Blue Ridge opened the only commercial biodiesel pump in western North Carolina in Asheville. Customers bought about 1,000 gallons each week in the first six weeks. Winslett’s goal is to produce 500,000 gallons a year by the end of 2006. North Carolina is fifth among the 50 states in use of biodiesel, using 5 million gallons in 2004.

Winslett isn’t sure what led him to environmentalism. Born in Austell, Ga., he remembers fishing the Wakulla and Hiawassee rivers with his dad, who worked as a carpenter, floor installer and remodeler, and hearing his father grouse about litter.

He started college at Georgia Tech, dropped out, took a few years off and then enrolled at UNC Asheville. He graduated in 2003 with a bachelor’s in chemistry and environmental science. After college, he worked for an Asheville physician developing a fuel cell. Winslett also was active in the Asheville Biodiesel Cooperative, a group of friends making five-gallon batches of fuel. But when 300 people signed up for a biodiesel e-mail list during the annual Southern Energy & Environment Expo in August 2004, he took notice.

By October, he had a grant and enough investors to quit working on the fuel cell and start building a biodiesel plant in a 5,000-square-foot building in Asheville. Blue Ridge has five employees, 100 member-owners and a nine-person board. He won’t disclose his stake, saying only that he is the second-largest investor.

The cooperative sells biodiesel for about $3.15 a gallon, compared with about $2.99 — and rising, as of September — for regular diesel. Customers include Warren Wilson College and UNC Asheville.

Blue Ridge Biofuels gets used cooking oil — most of it free — from 25 restaurants and filters out particles and water. The oil is then heated, and lye and alcohol are added. Every gallon of filtered vegetable oil yields a gallon of biodiesel, and nontoxic glycerin is the only significant byproduct. No engine retrofitting required — not even for Winslett’s 1981 Volkswagen truck. “Forty miles to the gallon.”

Stockyard

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Stockyard

Robert Crabb Jr. is the new owner of the stock market — livestock, that is — that sets the Dow for cows across North Carolina.

When radios had tubes and sat on oilcloth-clad kitchen tables, a man could count on certain things. One was that somewhere on the dial, just before daylight, would be a farm show featuring Reno and Smiley, the Briarhoppers or some other act, their corn-pone humor and ringing five-string banjos helping to bring up the sun. And that between tunes, a solemn announcer would read yesterday’s prices from the Siler City livestock market.

That didn’t change when the farm shows and their country cutups jumped from radio to television. Even today — with cattle wearing bar codes and farmers picking up their checks minutes after the sale, thanks to computerized weigh-ins and payouts — the prices paid at Carolina Stockyards, the largest stockyard in the state, still set the market price statewide.

One difference is a new owner. Robert Crabb Jr. and a group of investors bought the stockyard last year from Howard and Harry Horney, the brothers who had owned it since 1950. “One thing led to the other,” says Crabb, 36, who grew up on a farm near Milton, a crossroads in Caswell County near the Virginia line. He began raising beef cattle in junior high school and had worked part time since 1991 as a livestock grader for the N.C. Department of Agriculture.

“We decided we’d open a livestock market in Eastern North Carolina but ran into a lot of opposition. I asked the Horneys their advice. They said the best advice they had was to buy this one.” The stockyard opened in 1948, two years before the Horneys bought it. They moved it to the outskirts of Siler City in 1972.

Last year, the stockyard sold about $40 million of livestock, slicing off commissions that averaged about 2.7%. It has 14 full-time employees, though as many as 35 work on Mondays and Fridays, sale days when the market is a blur of motion, a smorgasbord of smells, a clatter of sounds.

The gate opens at 7 a.m. Buyers and sellers flow in, driving pickups with tall livestock racks or pulling closed trailers or piloting rumbling tractor-trailer rigs. Some come early because they think prices will be better when the buyers are fresher. Or maybe they don’t mind waiting in line when they can pass the time talking. Small farmers spend most of their time alone. “They like to socialize when they get a chance,” Crabb says. “A lot of the others have cattle as a second income. They have a job down at the garage or drive a truck or whatever.”

In holding pens with boards worn smooth by millions of restless rumps — the market sold 86,673 head of cattle last year, along with 4,700 goats, a few horses and a lone llama — cows and calves low plaintively. “Hey, ya! Hey, ya!” men yell as they prod them from pen to pen into the sales ring. An auctioneer — Crabb has three — begins. “Who’ll gimme … ” On a busy Friday, 1,500 head pass through the ring. On its perimeter, buyers compete with each other with studied casualness. A nod, a blink, a twitched finger. A cow is sold.

On a good day, the folding seats around the ring are nearly full of men in gimme caps with logos of tractor manufacturers. Fathers bring their children. Crabb estimates 85% of sales are calves, bound for Midwest feedlots, where they’ll be fattened for slaughter. Dads don’t always tell their kids everything.

At the market’s Carolina Restaurant, burgers and home-cut fries are popular. The smells of onions and hot dogs mingle with those of the barnyard. Crabb has plans for this place. Carolina Stockyards has started selling stock trailers and other farm equipment. He expects to add more items, such as fencing. “We figure if a farmer has got the check in hand from his sale, if we’ve got what he needs, he’ll buy it.”

“Hey, ya!” Another cow enters the ring in a halting trot and wanders around, looking puzzled. The auctioneer begins, and in seconds its sale is recorded. The Department of Agriculture reports on 11 livestock sales a week, the two here — the only reporting site with twice-weekly sales — and nine elsewhere. “The prices here are sort of a guideline,” Crabb says. Many farmers will sell their stock or hold it accordingly.

Like the prices and volumes on Wall Street, sales from this stock market will show up in the Agriculture Department’s report. Somewhere, sometime before sunrise, some farmers might hear about it on the radio.

Snookered

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Snookered

How small farmers and big-city lawyers dug up a way to hoist Navy brass with their own petard.
By Edward Martin

Kiran Mehta casts about, scanning the folks filling rows of brown plastic seats and squeezing in folding chairs along the walls. Outside the Washington County Agricultural Center, pickup trucks are still easing into parking spaces on Plymouth’s Water Street. More than 100 people, many of them men with weathered faces wearing overalls or khaki work pants, will pack this place tonight. With their starched white shirts, dark suits and ties, Mehta and his companions stand out like neon in a church.

Bill Sexton, a cotton farmer who is chairman of the county commissioners, sits at a table up front. In the crowd is Doris Morris, wife of a commercial fisherman and president of her church circle. Ronnie Askew farms 600 acres with his 80-year-old mother. Gerda Rhodes, the local livestock extension agent, lives with her family in her homeplace, built in 1927 near the Washington-Beaufort county line.

Forty years ago, just down the road, Sexton’s dad told his own father he would convert swamp to cropland. He got a one-word reply: “Crazy.” Sexton wonders how his granddaddy would describe tonight’s meeting. Mehta, same age as Sexton but Bombay-born and Harvard-educated, is wondering, too. A Biblical passage comes to mind. Nathanael, from the city of Cana, scoffed when told a man from a nearby village claimed to be the Messiah: What good could come out of Nazareth? Mehta laughs to himself. “What good could come out of Charlotte?”

On this November night nearly two years ago, working people of two of the state’s poorest counties meet three big-city lawyers from Kennedy Covington Lobdell & Hickman LLP, a Charlotte-based firm with more than 165 lawyers in five offices in the Carolinas. Clients include Bank of America, Wachovia and Microsoft. Business, the bigger the better, is its bread and butter. Mehta, Raymond Owens Jr. and Christopher Lam get up to make their pitch.

We propose to represent Washington and adjoining Beaufort County to block the Navy from taking your farms and businesses for a jet-fighter landing field. We’ll represent the counties — Washington alone would lose 22,000 taxable acres, worth $300,000, 3% of its annual budget — but everybody will benefit. We’ll stick with you, to the U.S. Supreme Court if necessary. And we’ll do this pro bono. “Suddenly we had fancy lawyers, dressed to the nines, articulate and well-educated, offering to work for free,” Washington County Manager David Peoples recalls. “A lot of people were asking, ‘Are we about to get snookered?’”

They had been warned. A rear admiral, reaching into bottomless pockets, had set the rules of engagement. “My lawyers are already working on this issue,” Atlantic Fleet commander Robert Natter had told a news conference that summer. “Those who want to throw money at lawyers to oppose us had better start throwing more money.”

Kennedy Covington lawyers, allied with a team from the nonprofit Charlottesville, Va.-based Southern Environmental Law Center, have matched the Navy salvo for salvo in a battle fought with words, wits and reams of documents, including an epic 200,000-page paper chase. The case resides in the 4th U.S. Circuit Court of Appeals in Richmond, where a three-judge panel is deciding whether to bar the Navy permanently from buying land for the airfield.

So far, they have prevailed in a showdown that could be the biggest pro bono case in state history. The law firm has invested more than 3,000 hours of legal work — estimated value, in excess of $1 million. And somebody did get “snookered.” Among its meanings: deceive or cheat, which is what residents feared the lawyers might do — and were certain the Navy was doing — to them. Another is, to thwart.

Held in sway is more than the 30,000 acres the Navy covets. It’s also a way of life. It can be glimpsed south of Plymouth along the straight, two-lane stretch of Highways 45 and 99. Thunderheads swell on the horizon, and the thermometer stands at 92. Gerald Allen, 62, walks in from his soybean fields after checking on his help, a full-time hand and a part-timer. He farms 2,300 acres, much of which he and his uncle began clearing in 1967 when he returned from the Air Force.

“I graduated from high school, served in the military, then came home and went to work — the American dream.” This year, he says, the tassels of his corn nearly reach the sky. “It was dry until about the first of June, then we started getting rain, just in time for it to pollinate.” The black dirt he tills is special. Some farms here — the Navy would take 75 — date to Colonial times, but many were wrestled from mire and mud by the men and women who live on them. In the 1950s and ’60s, a lumber company clear-cut thousands of acres of cypress swamp, leaving a jumble of stumps, bushes and water moccasins. Then it went out of business.

Neighbors formed a drainage district, a cooperative matrix of ditches and canals to drain the land and, when farmers reversed the flow, irrigate it. “We did it,” Allen says, “the hard way” — grubbing out roots, stumps and debris by hand. Five miles east, the U.S. Fish and Wildlife Service in 1963 established Pungo National Wildlife Refuge, a 12,000-acre sanctuary where migrating swans, ducks and other waterfowl winter. In 1990, it was merged with an adjoining refuge to form the 110,000-acre Pocosin Lakes National Wildlife Refuge. “We’ve got bear, red wolves, an abundance of deer, cougar — all sorts of wildlife,” Peoples says.

Three years ago, the Navy released an environmental-impact study listing this part of Washington and Beaufort counties as one of two preferred sites for a $186 million runway and buffer zone. The airstrip would be used to practice about 30,000 simulated aircraft-carrier landings a year — most at night. Pilots would land for a split second, then roar skyward, every 15 minutes or less, hour after hour. The planes would be F/A-18 Super Hornets, the Navy’s latest fighter, louder than the now-retired Concorde jetliner, which is banned from most airports around the world because of its roar.

Neighbors would get the noise but not the economic benefit most military bases bring. “We’re probably talking about a dozen or two low-skilled jobs such as mowing grass and maintenance,” Peoples says. The economic impact of Oceana naval air station on Virginia Beach, where most of the 100-plus planes would still be based, is estimated at $2 billion a year. About two dozen fighters, the Navy says, might be moved to the Marine Corps air base at Cherry Point, about 60 miles southeast of Plymouth.

A Navy representative soon knocked on Allen’s door. “He offered to buy my land, then rent it back to me. But by then they’d told so many lies, I didn’t know what they were going to do.” The Navy was offering $1,800 to about $2,000 an acre. Farmers say it would cost at least $3,000 an acre to replace — maybe much more if there were sudden demand for 30,000 acres. Allen contacted a lawyer. “He wanted $185 an hour and a percentage of everything over $2,000. Finally, he said, ‘I’d love to represent you, but the way it works, we’d take just about everything over $2,000 that we got for you.’”

Not only landowners despaired. Washington County’s per capita income in 2003 was nearly $7,000 less than the state average of $27,785. In addition to lost county revenue — federal property is not taxed — the region could lose one of its few nonfarm sources of income: ecotourism. “From mid-September until mid-March, we get bird- watchers and environmentalists,” Peoples says. “These people want quiet, serenity and beauty. We’ve been trying to build ecotourism for years.” About 34,000 visited the wildlife refuge last year.

The two counties decided to fight. Their timing was good. Owens, shopping for a pro bono case, had approached an official at the Southern Environmental Law Center’s Carolinas office. He pointed Owens east. Washington and Beaufort counties were seeking bids for legal services. “We had a group that was going to charge us $200 an hour,” Sexton says, “and we were trying to figure where we were going to get the money to pay them.”

Short of money, residents had plenty of passion. They had set up a tent city to protest the outlying landing field — “No OLF” signs sprouted in yards across the region — and buttonholed state officials, demanding help. On the night of the big meeting, however, they weren’t sure the Charlotte lawyers shared that passion. “We didn’t know if their hearts were really in it,” Morris says. The trio sensed their misgivings. Dress wasn’t the only thing that seemed out of place here.

Kennedy Covington does environmental work, but usually for developers. In 2002, the firm represented Crescent Resources, Duke Energy’s real-estate arm, in a fight over developing the shoreline of Lake James, one of western North Carolina’s most pristine reservoirs. That’s how the firm hooked up with the Southern Environmental Law Center. “We were on opposite sides, but it ended up in a great settlement for everybody,” says Trip Van Noppen, director of its Carolinas office. “We could vigorously oppose each other but still have a courteous and friendly relationship.”

Nice guys maybe, but even their résumés raised eyebrows. Mehta, who is now 48, clerked for a federal judge in Maryland after finishing Harvard Law. He chairs the firm’s real-estate, construction, land-use and environmental litigation practice. A Wake Forest native with undergraduate and law degrees from Carolina, Owens, 52, chairs the commercial-litigation practice. Among his specialties: shareholder and partnership disputes. Lam, 29, grew up in golf country near Southern Pines. Duke undergrad, UNC Law, he’s in the commercial-litigation group.

But all three had ties to Eastern North Carolina. The audience seemed to soften as Mehta explained that his wife was from Ahoskie, a town in Hertford, one county north of Washington. On his father’s side, Owens’ family was from Tyrrell County, which joins Washington to the east. Lam’s Moore County is a contradiction in itself, golf courses and horse farms tucked among deep pockets of poverty. By the end of the evening, the suspicion was fading. And how the lawyers viewed the case was changing.

As he walked out into the damp evening along the Roanoke River, Lam suddenly realized what they had taken on. “It was more than birds and airplanes. It was people’s homes and livelihoods.”

In their offices and around a heavily burled conference table 47 floors above downtown Charlotte, the three lawyers set out to map their attack. Nobody underestimated how difficult it might be. Not only were they pitted against an opponent willing to paint opposition as unpatriotic, akin to aiding and abetting terrorists, they were wading into a political quagmire.

“It’s a high-profile case and devilishly complicated,” says David Blackwell, publisher of North Carolina Lawyers Weekly, a Raleigh trade paper. “The population base is so sparse in that area. That’s one reason the Navy’s trying to condemn the property.” Fewer than 14,000 people live in Washington County. Beaufort County is bigger, but it’s population is still less than 47,000. That’s not a lot of votes.

Kennedy Covington’s team and its counterpart at the law center — Van Noppen and lead attorney Derb Carter — didn’t doubt residents had sussed out the Navy’s motive. “All they’re doing is getting the noise out of Virginia Beach,” says Allen, one of the farmers. “The squeaky wheel gets the grease, if you raise enough Cain and have enough political pull.”

They believe John Warner, the Virginia Republican who chairs the Senate Armed Services Committee, and others succumbed to pressure by residents and developers complaining about the noise at Oceana and nearby Fentress Airfield, present site of the practice landings. Some think most North Carolina leaders, including Gov. Mike Easley, abandoned them, the politicians fearful the federal commission studying base closings might view any protest as anti-military sentiment.

Others see a more convoluted scenario. The Navy initially offered to lease much of the land, then last fall began demanding owners sell it outright. When the base-closings commission unexpectedly questioned Oceana’s future this summer, it fueled rumors that the Navy had all along intended to move the air station to North Carolina. Oceana covers only 8,000 acres, barely a quarter the size of the proposed OLF site.

Ted Brown, civilian spokesman for the Atlantic Fleet in Norfolk, wouldn’t comment on whether the Navy plans to move the air station — a new, noisier fighter is due to join the Navy arsenal in 2010 — but he says it is re-examining five other sites in Eastern North Carolina, including some near existing bases in Carteret and Craven counties, for the practice field. However, he says, the Navy will carry on its court fight for the Washington/Beaufort site.

Judges don’t rule on speculation about political mot- ives. So when the lawyers file suit in January 2004 in Eastern District U.S. Court in Raleigh, they go straight for the throat: The Navy didn’t follow orders, violating the National Environmental Policy Act, which requires objective environmental-impact studies. “The Navy,” Mehta says, “simply didn’t seem to consider its own studies.”

The lawyers unearth a consultant’s report warning that a crash from striking a swan, goose or other bird is nearly certain, the only question “how severe it will be when it occurs.” In 1996, a military jet hit a bird over Roper, crashing after the pilot ejected. Jeffery Short, a now-retired Air Force officer who drew up BASH — a military program for preventing bird-aircraft strike hazards — had concluded that, in 25 years of studying them, “I can’t recall a worse place to situate an airfield for jet training.”

While others speculate that the Navy is ignoring its own studies due to political pressure, the lawyers search for evidence to prove it. Judge Terrence Boyle gives them the chance. He issues a temporary injunction in April 2004, halting activity on the airfield. The Navy appeals, triggering more legal jockeying. Two months later, Boyle orders the Navy to turn over its records pertaining to the OLF back to 2000. So begins the legal process called discovery.

The Navy’s response is to try to bury the opposition in paper. In this case it’s some 200,000 pages of documents that Navy lawyers have dumped into DVDs. Thousands of passages are redacted — blacked out — ostensibly for security and privacy reasons. There is no index. “They resisted turning the stuff over, and then when the judge made them, they did it by the wheelbarrow,” Van Noppen re-calls. “It was in no sequence, no rhyme or reasons or things you could piece together. It was just one enormous jumble.”

Lam and Owens were in court when the Navy responded. “They said, ‘Look, we’ve got six people working on this full time, and we’re going to produce the largest administrative record ever,” Lam recalls. Owens says he just grinned. “We knew that was coming. We knew we had our firm and the law center, but we knew we had to have more.”

Later that month, around midnight in her Chapel Hill apartment, UNC law student Amelia Burnet stows her books and slips a disk into her laptop computer. She’s now 27, a native of mountainous Buncombe County who wants to practice environmental law “to bring about change or stewardship in those areas.” OLF lawyers — including some from the environmental law center, where she had interned — had visited the law school and, over sandwiches and potato chips, outlined a plan. Signing up 15 to 20 volunteers, they handed out scores of disks, each containing about 320 Navy documents. Don’t make final judgments, they told them. Just flag all redacted passages and anything that strikes you as suspicious. Let us decide.

Hour after hour, Burnet scrolls page after page. An odd name appears: Robusto, John A. Robusto. It catches her eye. He has sent an e-mail mentioning “reverse engineering.” She routinely flags it — just in case — and continues. In other apartments, other students are slogging through similar documents. Another Navy expert mentions having “an uneasy feeling about our criteria and process.” Yet another officer grouses that stationing some of the jets at Oceana and some at Cherry Point is a silly political maneuver, negotiated between Warner and North Carolina’s Sen. Elizabeth Dole, that offers “zero operational benefit.” Despite Navy assurances in court that jets would not have serious bird problems, another expert suggests that swans or other waterfowl would be dealt with by “lethal and nonlethal” means. Students flag the passages and scroll on.

A few days later, sitting at the dining table of his Charlotte home, Lam pops one of the CDs into his laptop computer. Text unfolds. Dates fall in line: Alan Zusman, a member of the Navy’s team compiling the environmental-impact statement, complains to a colleague: “Don’t know about you but I have a very uneasy feeling about our criteria and process.” Robusto, another team member, complains that Natter, the cocky fleet commander, has agreed with politicians to move the landing strip. “Now we have to reverse engineer the whole process to justify the outcome.”

Lam bolts upright and yells, then grabs and hugs his wife. “We danced around the downstairs a time or two.” Later, in their Charlotte offices, he, Mehta and Owens begin piecing together a timeline showing the Navy ignored National Environmental Policy Act requirements for impact studies. In February, Boyle issues a permanent injunction barring the Navy from proceeding with the OLF.

“Maybe without the e-mails, we could have won,” Owens says. “But what they did — the epiphany — was to confirm what everybody intuitively thought: The process was politically driven.”

The fight is far from over. Any day, the 4th U.S. Circuit Court of Appeals in Richmond, Va., could reverse Boyle’s ruling. Even if not, Mehta says, the Navy could respond with a new round of environmental-impact studies that the courts might accept. The struggle might start all over again. Appeals by either side could carry the case to the Supreme Court.

Meanwhile, the law firm is getting something for the nothing it’s being paid: The publicity has been priceless. In June, Kennedy Covington received the North Carolina Bar Association’s 2005 Pro Bono Services Award for large firms. The Mecklenburg County Bar named Lam its first Young Lawyer of the Year.

Then there are the people Down East. They have sent the lawyers hand-knitted afghans and letters of gratitude, invited them to pig pickings and, after Jerry Beasley rolled back some of the combines and tractors in his big farm shop down near the Beaufort County line, a seafood feast.

This time, the lawyers wore jeans and sneakers. “They even brought their families,” says Sexton, the cotton farmer. “They’re just good ol’ boys around here now.”

She’s first of her kind, not of her kin, to lead bankers

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People – September 2005

She’s first of her kind, not of her kin, to lead bankers
By Joe Rauch

The label is inevitable, but Hope Connell doesn’t like it much: first woman to chair the 108-year-old North Carolina Bankers Association, the trade group that represents the 142 banks, savings and trust institutions with headquarters in the state. What matters, she says, is that she won’t be the last one to hold the one-year job.

“It shows how attitudes in the banking industry are beginning to change. I think there are a dozen women in this state who would do an exceptional job in this post. I was just the one who happened to be picked.”

That groundbreaking choice was logical. Hope Holding Connell, 42, was born into one of North Carolina’s most prominent banking families. Grandfather Robert P. Holding started as an assistant cashier at Bank of Smithfield and became president and chairman. Today, the company is First Citizens BancShares, the fourth-largest banking conglomerate in the state and the parent of Raleigh-based First Citizens Bank.

First Citizens Bank has more than 340 branches in North Carolina, Virginia and West Virginia and $11.9 billion in assets. The parent company is publicly traded but is controlled by the family, with Holdings in three of the top four executive posts.

After graduating in 1985 from UNC Chapel Hill with degrees in English and economics, she joined First Citizens Bank’s management-training program. She got her MBA from Carolina in 1990 and has been executive vice president, supervising business banking, since 2000.

She is also active in civic and volunteer work, including stints on the steering committees of the 2001 and 2007 U.S. Women’s Open golf tournaments in Southern Pines — a dream assignment for Connell, who first played golf as a child. “I just fell in love with it.” She lost interest for a while but regained it after a few months at the bank. “I realized that either I could go play, and have to play well, against the guys or I could stay in the office answering the phones.”

Connell has worked with the bankers association since 2000, when she joined its executive committee. “The NCBA is a pooling of the state’s best and brightest minds to work with the General Assembly to ensure we’re going in the right direction with the banking industry and state regulation. I’ll just be steering a much larger ship that’s already on a solid course.”

She is the third generation of the Holding family to lead it, following her grandfather and her uncle, R.P. Holding Jr. Unlike that “first woman” tag, the idea of a dynasty doesn’t bother her. “I’d be flattered to think anyone would consider me carrying on some sort of family legacy and continuing the traditions and values previous generations have passed down to me. But it’s not something I lie awake at night and worry myself about.”

She reaches peak of the Sierra Club

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People – September 2005

She reaches peak of the Sierra Club
By Cindy J. Elmore

Asked to name environmentally friendly businesses, the new president of the 750,000-member Sierra Club rattles off a litany. General Electric. Bank of America. Lloyd’s of London. Missing from Lisa Renstrom’s list, however, are the two Acapulco hotels she ran from 1983 to 1993. “I would have had to have been really blazing new trails to be running my hotel with environmental practices in Mexico in the 1980s.”

Renstrom, 45, says her environmental awareness came after she moved to Charlotte 12 years ago. As executive director of the now-inactive Voices & Choices of the Central Carolinas, she tried to foster environmentally friendly development and preservation of open spaces. Elected to the Sierra Club board of directors in 2001, she was re-elected last year and chosen as the club’s 51st president in May.

She grew up on a farm near Omaha, Neb. Her father, Carl Renstrom, owned Tip-Top Products, a hair-care company that employed about 2,000 before he sold it to Faberge in the 1960s. A year after getting a bachelor’s in business from the University of Nebraska in 1982, she moved to Mexico to manage two hotels owned by her family. One had been the site of Elizabeth Taylor’s marriage to Mike Todd, and Brigitte Bardot honeymooned there.

But the hotels, once haunts of the jet set, were struggling, mired in a land dispute with former managers. They filed civil litigation, then tried to pressure Renstrom by instigating a criminal case against her. Charged with fraud, she spent six months in a Mexican prison, without being tried or convicted, before being released when the evidence was shown to be false.

Her daughter, now 19 and a student at Tulane University in New Orleans, was an infant. The jail allowed conjugal visits and family picnics, but her confinement was nonetheless life-changing. “You face a finality of what’s important and what’s not important.” The family sold the hotels in 1992 and 1993, and she left Mexico so her daughter could attend U.S. schools. By then she was engaged to Bob Perkowitz, now her second husband, who was recruited to run a Joanna Western Mills plant in Charlotte.

Her environmental activism was more of a process than an epiphany. “Everyone is an environmentalist at heart.” During her year at the helm of the 113-year-old club, she will work to get community leaders engaged on environmental issues. An increased environmental awareness is essential, she says, to reducing dependence on foreign oil.

Many of the solutions to today’s problems can be found in technology and design, changing manufacturing processes and package design so that they waste fewer resources and spew fewer pollutants. “Companies are run by people with families. Yes, their job is to deliver a profit, but between business and government and people, we can solve these issues.”

Kannapolis biopolis will be on the Dole

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Tar Heel Tattler – September 2005

Kannapolis biopolis will be on the Dole
By Dail Willis

When it comes to Dole Food Co. owner David Murdock, Kannapolis has long been of many minds — some of them angry ones. That could change if the California financier’s plan to turn the town into what he calls a biopolis comes to fruition.

Molly Broad, president of the University of North Carolina, says Murdock wants to establish three biotechnology research centers on the site of two shuttered Pillowtex mills he owns. That, she says, would make the city “a viable player in the biotechnology economy.”

Well, Murdock has been hailed as a hero before in Kannapolis. In 1982, he bought what was then Cannon Mills and spent $200 million to modernize the company and make it profitable. He promised in 1985 he wouldn’t sell Cannon if workers rejected unionization, and they did. A few months later, he sold out to Eden-based Fieldcrest Mills.

As part of the sale, he closed Cannon’s pension plan, pocketing about $39 million in excess cash, and moved the rest of the fund’s assets into insurance annuities. When the insurance company collapsed, workers suffered a 30% cut in benefits while a buyer was sought. In 1990, Murdock paid $1 million to settle a lawsuit over the pension fund. He later agreed to send about $800,000 in personal checks to 9,000 Cannon retirees to make up for the pension cuts.

Dallas-based Pillowtex bought Fieldcrest Cannon in 1997 and moved its headquarters to Kannapolis. As the company’s problems became public, many hoped Murdock would buy it, but he didn’t. When Pillowtex shut down in 2003, more than 4,800 lost jobs.

Murdock resurfaced late last year when he bought the two plants. Rumors about biotechnology have swirled around the city since, intensifying after Murdock said in August that he would build a $54 million Dole plant in Gaston County to process vegetables and fruit. But Broad’s letter was the first public sign of Murdock’s plans for Kannapolis. City Council member Richard Anderson, a former mayor and Cannon Mills employee, likes what he has heard but remains cautious. “What Mr. Murdock says he will do and what he does sometimes is not exactly the same thing.”

Heels should put Bobcats on better footing with fans

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Sports – September 2005

Heels should put Bobcats on better footing with fans
By Chris Roush

The excuses must stop. The Charlotte Bobcats had the second-worst attendance in the National Basketball Association last season. The team and its apologists blame it on the city’s former franchise, on a poorly designed television package, on playing in an old building. They probably even blame it on Rio or the rain.

They need to face facts: This season, the team’s second, will say a lot about the NBA’s future in the Queen City. Elements necessary for success are in place. The franchise will play in a new arena, with two hugely popular rookies from UNC Chapel Hill’s national championship team as key players. If those factors don’t translate into a lot more fans in the stands, it would be hard not to conclude that Charlotte just isn’t NBA material anymore.

That conclusion would have seemed ridiculous in 1989 when a second-year NBA team with the fifth pick selected a Tar Heel in an effort to connect with its fan base. The team was the Charlotte Hornets; the player was UNC All-American J.R. Reid. In 31/2 mostly lackluster seasons, Reid never averaged more than 11 points per game, and the Hornets never made the playoffs. They finally traded him.

Back then, Charlotte was so crazy for pro basketball that Reid’s disappointing play didn’t matter at the gate. The Hornets sold out every home game from 1988 to 1995 — and might have even if they had drafted J.R. Ewing. As it turned out, the team built a playoff contender around its next three first-round picks: Kendall Gill, Larry Johnson and Alonzo Mourning.

The Bobcats have high hopes for their top two rookies, point guard Raymond Felton, the fifth pick in this year’s draft, and forward Sean May, the 13th selection. While team officials admit the presence of the two Tar Heels will help sell tickets to the large UNC fan base in Charlotte, they also have gone to great lengths to maintain that Felton and May were the best players available when they were picked. But then, that’s what the Hornets said when they drafted Reid.

The Bobcats can’t afford Reid-like performances from Felton and May. Zeal for pro basketball isn’t what it used to be in the Queen City and the Carolinas. Part of the blame lies with the hangover from the Hornets, who moved to New Orleans in 2002 after the team’s romance with Charlotte soured and fans turned their backs on owner George Shinn.

It was bad enough that he couldn’t resign the team’s best players. He also couldn’t stay off Court TV, which broadcast his civil trial after a woman he had sex with sued him. (The verdict went in his favor.) Then he and a partner tried to bully the city into replacing an arena built in 1988. Several players ran afoul of the law. But that happened years ago. It’s time for fans to get over it and for team management to stop using it as an excuse when interest in the Bobcats wanes.

After all, Bobcats management deserves much of the blame for the first-year failures. Through a series of errors, the team squandered a chance to build a fan base. The mistakes included what fans perceived as high ticket prices, an ill-fated attempt to add a surcharge on tickets and, maybe most damaging of all, airing most games on C-SET, a sports and entertainment channel created by team owner Bob Johnson. It was available only as part of a pricey digital cable-television package purchased by only about 40% of Time Warner Cable’s Charlotte division customers. “There just wasn’t the critical mass that we needed to make it work,” team President Ed Tapscott says.

What Tapscott is saying is that the broadcasts, essential in marketing a first-year team of unknowns and castoffs, reached far too few fans. Johnson, founder of the Black Entertainment Television network, pulled the plug on C-SET this summer. Plans are for regular cable to carry the games, though details have yet to be nailed down.

Assuming that happens, the team will be more visible. It definitely will have a more recognizable roster: Felton, May and Emeka Okafor, last season’s NBA rookie of the year, will be key players. Maybe most important, the Bobcats will move from the Hornets’ old home, the Charlotte Coliseum, into a new $265 million downtown arena, which the city agreed to build as part of the deal to land the team.

Not only should moving into a new home symbolically exorcise the last of the Bobcats’ demons, the novelty of a new arena should virtually guarantee a double-digit percentage gain in attendance. The Houston Rockets increased attendance by more than 13% a game after the Toyota Center opened in 2003. Two seasons earlier, the Dallas Mavericks boosted attendance by more than 18% in a new arena. The Bobcats’ downtown arena is smaller — 18,500 seats compared with the Coliseum’s 24,000 — but has more high-dollar luxury boxes and corporate seats. The team sold about 9,000 season tickets its first season but has been mum on how sales have gone for 2005-06. Nor has it revealed numbers for sales of luxury boxes and corporate seats. But even the arena has a downside: Many in Charlotte still resent that the city built it after nearly 60% of the voters rejected it in a referendum.

The team’s well-known draft picks could help shake North Carolina basketball fans out of their preoccupation with the college game, says Max Muhleman, a Charlotte sports-marketing consultant. “They are high-character kids who have not been in trouble. Right or wrong, I think that is a factor in the success of an NBA team in North Carolina.”

Chris Weiller, the Bobcats’ executive vice president and chief marketing officer, says the former Tar Heels’ on-court performance will determine how they are used to market the team. But he has made several other recent marketing changes. Last year’s advertising often focused on the opponents. For the upcoming season, ads will feature the Bobcats and the arena. “We now have a persona as a hardworking team that is never going to quit, and also we can pull out all the stops and market very aggressively our new home. Last year, we had to tiptoe around it a bit because we were still in the old arena.”

When management drew up its initial marketing plan nearly three years ago, it focused on the draft picks, Weiller says. “It’s always been about building from the ground up.” Now that the team has corrected some of its early mistakes, it still has to prove that its strategy of building through the draft will result in more fans in seats. And there’s one mistake the team might not be able to correct while it’s in Charlotte: starting an NBA team in a city that may no longer deserve one.

Fare shares

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Fare shares

CEOs keep pulling down princely pay packages, but one is just taking stock, betting a
fortune on its performance.
By Frank Maley

Duke Energy Corp. was about to wrap up one of its worst years. When the bean counters closed the books on 2003, the Charlotte-based utility had to record a billion-dollar loss. Less than three months before the year ended, however, the board made a bid to turn things around by bringing back a former employee who already had played a key role in the company’s development.

The unusual pay package it gave him would make Paul Anderson one of the most overpaid CEOs of 2003 — according to Business North Carolina’s annual ranking of CEO pay at the state’s 75 largest public companies — and the most underpaid in 2004. The ranking is compiled by the Charlotte office of human-resources consultants Findley Davies.

Duke had a good idea what it was getting in Anderson. As chief executive of Houston-based PanEnergy Corp. in the mid-’90s, he helped engineer the deal that transformed Duke Power Co. from an old-school electric utility into a major player in natural gas. After Duke bought PanEnergy in 1997, he stayed on for a year as the merged company’s president and chief operating officer before leaving to become CEO of BHP, a struggling Australian mining conglomerate.

Under CEO Rick Priory, Duke expand-ed to places such as Indonesia and France. But by 2003, the growth started by the PanEnergy deal had soured, and the board was looking for answers. Meanwhile, Anderson had returned BHP to profitability, merging it in 2001 with London-based Billiton to create BHP Billiton, which reported revenue of nearly $14 billion his last year there. He made nearly $5 million that year and retired in 2002 with a $5.1 million severance package. On Australian radio in July 2003, he said CEO pay was out of control. “I don’t think CEOs should be paid as much as they are, but I don’t know how you back off of that and still maintain a good management team.”

At Duke, he would have a chance to set a better example. He agreed to run the company for about three years without the security blankets of salary or bonus. He did, however, receive a package of stock grants and options in 2003 to keep his interests aligned with those of shareholders. By Business North Carolina’s calculation, it was worth almost $19 million, making his compensation second-highest among CEOs of the state’s 75 largest public companies.

In 2004, he got nothing — at least nothing this magazine counts in determining CEO pay. Soon after returning to Duke, he began selling poorly performing assets and refocusing on what it did best: generating electricity and processing and transmitting natural gas. Revenue grew just 2% in 2004, but he cut operating expenses more than $3 billion. The company ended the year $1.5 billion in the black. A $2.5 billion swing from red ink to profitability. For free. That made him the year’s best CEO bargain.

Runner-up to Anderson, the man on the list paid the least, was Bank of America’s Ken Lewis, the one paid the most. Nobody came within $7 million of his $28.6 million package. His compensation grew more than most — 17.6%, compared with the median of 14.0% and a median of 11.5% for CEOs who were also on last year’s list — but his company’s total return, measured from the first day of the fiscal year to the last, outstripped the median 23.6% to 18.1% (18.3% for returning CEOs). BofA earned nearly $495 for every dollar it paid him in 2004.

By that measure, Lewis had earned the title of best CEO bargain last year and the year before. Laura Hanf, a senior consultant at Findley Davies, says that while Duke’s turnaround was impressive, Lewis may be more valuable because he and his team have performed well for several years. “They’ve created such a brand for themselves and have created the critical mass to continue being a superstar in the future.”

Comparing CEO pay with net income is just one measure of performance, and it’s not perfect. It favors CEOs who run mam-moth companies, says Tony Plath, associate professor of finance at UNC Charlotte. “There are a lot of little companies out there that do a hell of a lot better at providing shareholder value. But because they’re small, the magnitude of the numbers doesn’t add up as much.”

Few CEOs, especially at big companies, are worth their fat pay packages, he says. “These guys make way too much money. Rather than outsourcing labor, I’d like to see us outsource CEOs. I could find some guy in Bombay who could work for one-tenth of what Ken Lewis is making or what any of these big CEOs are making.”

Anderson doesn’t exactly qualify as a charity case. He got $365,296 in what the company calls “other annual compensation.” BNC doesn’t count that when calculating CEO compensation because it typically includes reimbursements and noncash benefits. For Anderson, it included $159,363 for his move to Charlotte and use of a company jet for personal travel, which cost Duke $134,507. His stock grant of 2003 paid off handsomely, too. When Anderson took over, some thought he might cut Duke’s $1.10 annual dividend. But he already held Duke stock, and his pay plan was designed to keep him thinking like a long-term investor. With no salary or bonus, if he cut the dividend, he’d cut his chief source of compensation that year and diminish the stock’s value. In 2004, he raked in $709,500 in dividend-equivalent payments on his 2003 stock award, even though he won’t actually get that stock until his employment at Duke ends.

He won’t have long to wait. Earlier this year, Duke agreed to buy Cincinnati-based Cinergy for $9 billion. The deal should close in mid-2006, with Cinergy CEO Jim Rogers becoming Duke’s CEO. Anderson plans to stay on as chairman for a year after that. Meanwhile, he could make more than in 2004. In June, Duke raised its dividend.

Below is a partial breakdown of how companies are providing more analysis of executive pay.

Pay vs. Performance
2005
rank
2004
rank
CEO
Company
Exchange-ticker
Headquarters
Base
salary
(000s)

Change
Bonus
(000s)
Change
Long-term
incentive
payouts
(000s)
All other
comp.
(000s)
Total
comp.

(000s)
1
1
Kenneth D. Lewis
Bank of America
(N-BAC)
Charlotte

$1,500.0

0.0%
$5,712.5
6.3%
$0.0
$195.1
$28,586.5
2
3
G. Kennedy Thompson
Wachovia

(N-WB)

Charlotte

1,000.0
0.0
7,000.0
33.3
0.0
96.6
20,632.4
3
17
David C. Swanson
R. H. Donnelley

(N-RHD)

Cary

575.0
8.9
631.1
(59.8)
221.1
31.2
8,857.7
4
4
Robert L. Tillman
Lowe’s

(N-LOW)

Mooresville

1,000.0
0.0
2,813.5
(6.2)
0.0
214.5
8,471.6
5
4
Mackey J. McDonald
VF

(N-VFC)

Greensboro

990.0
0.0
1,985.0

91.0

198.9
12.5
7,010.5
6
13
Thomas P. Mac Mahon
Laboratory Corp. of America

(N-LH)

Burlington

885.4
4.7
1,586.7
22.2
0.0
0.0
6,971.1
7
6
Daniel R. DiMicco
Nucor

(N-NUE)

Charlotte

690.0
3.0
1,992.4
366.5

1,443.5
0.0
6,195.7
8
8
John A. Allison IV
BB&T

(N-BBT)

Winston-Salem

900.0
1.4
911.3
nm
1,250.0
101.6
5,899.9
9
5
Robert B. McGehee
Progress Energy

(N-PGN)

Raleigh

915.8

na
830.0
na 490.3 158.1 4,962.6
10
19
Marshall O. Larsen
Goodrich

(N-GR)

Charlotte

825.0


11.1
1,625.0
174.4 101.4 42.5 4,824.8

*nm = not meaningful
*na = not available or not applicable

To see the entire chart, click here to purchase a copy of the September 2005 issue.

 

Downtown Charlotte seeks cruise control

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Tar Heel Tattler – September 2005

Downtown Charlotte seeks cruise control
By Edward Martin

Not many years ago, Charlotte boosters moaned that after 6 p.m. you could shoot a cannon down the city’s main drag and barely risk winging so much as a pigeon. Now they complain that the cruisers who flock downtown on weekend nights are for the birds. Cruisers say it’s their color that’s ruffling feathers.

Problems boiled up after the July 4 celebration downtown, when about 2,000 rowdies tossed fireworks at police, harassed motorists leaving parking decks, fired shots and fought police and each other. Cops arrested 17 before things settled down. Some weekend crowds since have rivaled the holiday crowd in size. Police spokesman Keith Bridges estimated there were more than 40,000 people on foot and in cars downtown one Saturday night.

“We love having people coming in, going to restaurants, bars, theaters and the amenities,” says Moira Quinn, spokeswoman for Charlotte Center City Partners, a downtown booster group. “But these kids don’t have a destination. They’re hanging out on the streets and sidewalks without performing any commerce.”

She denies race is a factor. However, on one July weekend night, police issued 148 citations for drunkenness, improper turns and other offenses. Virtually all, Bridges says, were given to blacks and Latinos. Virtually all of the cruisers were blacks and Latinos, too.

The problem is not new, only the location. A few years ago, Sunday-afternoon cruisers clogged Charlotte’s Freedom Park in a mostly white neighborhood. After a police crackdown, they moved to two predominantly black neighborhoods. Their appearance downtown has again raised concern.

Some blacks contend Bank of America and other businesses have tried before to clear them from their doorsteps. They point to a transit center — where the July 4 disturbance began — built on city land two blocks from the downtown square with $9.3 million from the bank. Buses had stopped near the entrance to its corporate headquarters.

Center City officials say cruising can be controlled. The number of police downtown on weekend nights has been doubled to about 100, and traffic lights have been programmed to speed cars through. As for race? “There are lots of reasons cruising in the inner city is bad,” Quinn says, “but it doesn’t matter if you’re black, green or purple.”