Hartford Business Journal

20 Hartford Business Journal • August 3, 2015 www.HartfordBusiness.com EDITORIAL Violence undermines Hartford's revitalization prospects T he city of Hartford has had many positive milestones to cheer about over the last 12 months. Trinity College announced plans to open a new campus downtown. The first batch of new center-city apartments hit the market and have begun to fill up with ten- ants, adding to Hartford's burgeoning vibrancy. Ground has broken on a minor league ballpark that will bring professional baseball back to the Capital City. Plans to bring a pro soccer team to Hartford have been announced. That's all good news, but the city's ability to maintain the positive momentum is in seri- ous jeopardy with the recent outbreak of gun violence in Hartford's neighborhoods. Last week marked a much more somber milestone when the city recorded its 19th homicide of 2015, equal to the number of murders that took place in all of 2014. Hartford's murder tally is now outpacing all other major New England cities. This trend is troubling not only for the tragic loss of life but because such violent crime adds to the per- ception that Hartford is unsafe. Such negative stereotypes have been steeled in the hearts and minds of many Connecticut residents over the years, leading many to dismiss the city as a great place to live or visit. The timing couldn't be worse either. With hundreds of new apartment units coming online right now and over the next few years, Hartford needs to maintain a positive image so that more people will be willing to live and play downtown. Unfortunately, as Hartford Business Journal reported in May, one of the main questions prospective tenants are ask- ing landlords is whether or not the city is safe. Despite the recent spike in murders, the answer to that question, for the most part, is yes. Overall crime in Hartford is down this year, and downtown remains largely siloed from the gun violence that has plagued certain city neighborhoods. Still, perception is often real - ity, and with Hartford's homicide rate dominating local media coverage, it can be very diffi- cult to convince someone on the fence about moving to Hartford to pull the trigger right now. In this week's issue, HBJ News Editor Gregory Seay writes about the various ameni- ties current downtown residents and landlords would like the city to add. Demand for a grocery store and bakery are high on people's wish list as are more diverse restaurants and cultural activities. But the one amenity that stands out above all others is personal safety. If people don't think they will be safe living in Hartford, they won't make the move; the recent spike in homicides could create a chilling effect. What can be done to solve the problem? There is no easy answer. We applaud the state for allocating more resources to the city, including state police detectives and parole and correction officers. It's a good move by Mayor Pedro Segarra to reallocate more resources to the Shooting Task Force, which was credited years ago with helping curb gun violence but has been recently stripped of some of its funding. More force alone, however, won't solve the problem. Community groups and indi- vidual residents within Hartford's neighborhoods must also be proactive in stemming the violence. They need to work closely with police to track down and arrest unsavory characters who pollute the social fabric of the Capital City. The prevention of further loss of human life, as well as the fortunes of the Capital City, depend on it. n RULE OF LAW Excessive CEO compensation complaints misguided By John Horak T he anti-business oratory of certain inter- est groups ascended to an Olympian level during the 2015 legislative session. Connecticut media were flooded with well- worn shibboleths about greedy corporations, the corporate patriotic duty to pay taxes, and the most reverberating of all — excessive CEO compensation. For example, in the June 9th Hart- ford Courant, House Ma jor it y lea der Joseph Aresimowicz left his imprint on the compensation issue noting that "[m]aking upper-income wage- earners pay their fair share is great in my book … I guess the difference between a weekend on the yacht and a regular trip to the grocery store — they can take a weekend off from the yacht." Slogans of this type generally lack enough bandwidth to deserve a substantive edito- rial response. However, the quip about excess compensation is different from diatribes about "greedy corporations" because it has a sting which, at a minimum, fulfills the intended pur- poses of those from whose lips it is uttered: Casting successful CEOs as latter day Ebene- zer Scrooges out to pillage working people. People feel this sting (which I fully under- stand) because some CEO's compensation numbers are on the scale of lottery winnings and are not easy to conceptualize in the con- text of a paycheck for services rendered. How- ever, if we analyze the compensation com- plaint, it becomes clear that it has no value other than as another rhetorical ruse used to advance an anti-business agenda. While several Connecticut CEOs have been named in the crossfire, let me make my case by using General Electric CEO Jeffrey Immelt as an example. He is a good choice not only because of his reported 2014 compensation of $37 million (a whopping amount of money), but because of his recent comments that it may be time to move GE out of Connecticut because of its cooling business climate. First, consistency in the application of principles is a testament to the integrity of those who champion them. Accordingly, if the principle being espoused is that certain people make too much money, then for con- sistency's sake why are the complaints lev- eled only against business executives — as opposed, for example, to people in the sports and entertainment world? In 2014 Yankees pitching ace CC Sabathia earned $24 million and Kim Kardashian earned $28 million. I do not begrudge Sabathia or Kar- dashian for their earnings or question the value others see in what they do, but I do believe that Immelt's higher compensation is justified by his responsibility for an organization with opera- tions in 170 countries and 300,000 employees, and which is involved in technology and manu- facturing businesses as varied as appliances, lighting, aviation, energy management, health care, power generation and transportation. Second, the compensation complaints are deliberately misleading to the extent they involve (as they typically do) gross pre-tax income numbers, not net after tax numbers (tax payments are added back to public coffers). Immelt's tax returns are not public information, but it is easy to estimate a combined state and federal tax rate of 45 percent, which means that his take-home pay in 2014 was approximately $20 million. This is still enough to buy a good sized yacht, but the point is that an intellectually honest discussion of the issue would acknowl- edge the $17 million that went back to the gov- ernment (which is also enough for a yacht). Third, in any excess compensation discus- sion people should be given credit for their charitable contributions. Immelt's tax returns are private, but a quick Internet search led me to the Robin Hood Foundation, a large anti- poverty charity in New York of which Immelt is a director. The foundation's homepage states that the members of the board of directors con- tributed a total of $73.4 million to the founda- tion in 2013. If we make a reasoned assump- tion that each of the 25 directors gave equally, Immelt's 2013 contribution was $ 2.9 million (also enough to buy a yacht). Fourth, if anyone has a gripe about Immelt's pay it is not taxpayers (the higher the com- pensation the greater the tax revenue), but GE shareholders. Each dollar Immelt is paid is one dollar fewer available for distribution to share- holders as dividends. Shareholders vote to elect the board of directors of GE, which then sets Immelt's compensation, so they are not without a venue to voice complaints if they have concerns. Finally, I wish that I made as much money as Immelt. I would pay my taxes, be enormously generous with charities, and replace my 21-foot aluminum fishing boat with something more comfortable. I am too old to get there, but the advice I would give young people with high aspirations would be to follow Immelt's road- map: Study hard in high school to get into a good college; study even harder in college to get into a good business school (he went to Harvard); study hard in business school to get a good job, and work hard at that job to excel. Connecticut would be better off if more CEOs had reason to believe that this was a desirable place to live and locate their headquarters. If nothing else, there are many nice marinas along the coast where they can moor their yachts. n John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. The views expressed are his own. HARTFORDBUSINESS.COM POLL Has Obamacare improved health care in CT? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Who will be Hartford's next mayor? 30.9% Pedro Segarra 63.6% Luke Bronin 5.5% Other candidate OPINION & COMMENTARY ▶ ▶ The one amenity that stands out above all others is personal safety. If people don't think they will be safe living in Hartford, they won't make the move. John Horak Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493.

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