Huuuuge payday for LendingTree's Lebda: $100M+ in 2 years

Plus: New plans for Jewish senior living; economic effects of canceling school; Sonic's EchoPark makes money

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Good morning! Today is Monday, April 29, 2019. Here are today’s big stories in Charlotte-area business news:

When banks compete, Lebda wins

LendingTree CEO Doug Lebda had another big year in 2018. His total compensation topped an eye-popping $42M, according to securities documents filed Friday. That’s after the $60M he made in 2017, the year LendingTree’s board signed him to a lucrative long-term contract.

So that’s more than $100M in two years. That is an insane amount of money.

Lebda’s 2018 pay was more than that of the CEOs of some of America’s largest companies, including Bank of America, Walmart, Apple and General Motors. LendingTree is much smaller, with just $1B in annual revenue, compared with those giants with revenues of more than $100B.

Possibly not as mind-blowing as it seems: Now, it’s important to note that while Lebda’s pay is a big number – and quite possibly the biggest two-year haul in the history of executive compensation in the Carolinas – it doesn’t necessarily mean he will actually be able to bank that much. Most of the money is tied up in stock options and restricted stock, and those don’t vest unless the company’s stock hits certain targets.

Sources: News reports, securities filings

According to Lebda’s employment agreement, a lot of his shares won’t vest until the stock hits 110% of the issue price. I mean yeah, what company is going to have stock more than double in price in less than two years?

Oh wait … LendingTree.

Big stock gains: Under Lebda’s leadership in the last few years, LendingTree’s stock has been turbocharged. It’s up 166% in the last two years. The company, based in Ballantyne, is an online marketplace where consumers can hunt for the best deals on mortgages, credit cards, insurance and other financial products. It’s been on an acquisition spree lately.

The stock surge makes it indeed quite possible that Lebda will in fact reap the full amount of his restricted stock and stock options.

Rubbing elbows with Charlotte’s rich and famous: Property tax records show that three years ago, Lebda bought land on the golf course of the Quail Hollow Club and built a 15,000-square-foot house that’s now valued at $4M. His neighbors are a murderers’ row of Charlotte wealth and power, including Ed Crutchfield, Robert Pittenger, Felix Sabates, Peter Pappas and John Fox. (Visitors to this week’s Wells Fargo Championship might catch a glimpse of the Lebda estate near the 15th hole’s tee box.)

People love to hate on rich CEOs, but Lebda’s rise is a pretty good American entrepreneurial story. When he applied to buy a condo in Pittsburgh in 1995, he found the process to be a hassle and thought the internet could make it easier. At first, he started the company out of his house and had “Suite 100” printed on business cards to lend legitimacy to the enterprise. LendingTree opened for business in 1998, moved two years later to Ballantyne, and started growing – but it almost didn’t survive when the dot-com bubble burst.

On paper, Lebda holds more than 2.2M shares of LendingTree stock, worth $878M today. Again, he can’t cash all that out. Securities documents say he’s eligible to exercise options on 564,000 shares in the next 60 days. Those are worth more than $220M.

Non-Lebda pay: Most everybody else at LendingTree seems to be making out OK, too. The median compensation company-wide was $109,000 in 2018, securities documents say.

N.C. in national spotlight

One national piece getting a lot of buzz over the weekend is an article in the New York Times on gentrification. The NYT analyzed data to examine the trend of whites moving into predominantly African-American neighborhoods close to downtowns, and it used Raleigh as an example.

Since 2000, according to an analysis of demographic and housing data, the arrival of white residents is now changing nonwhite communities in cities of all sizes, affecting about one in six predominantly African-American census tracts. The pattern, though still modest in scope, is playing out with remarkable consistency across the country — in ways that jolt the mortgage market, the architecture, the value of land itself.

In city after city, a map of racial change shows predominantly minority neighborhoods near downtown growing whiter, while suburban neighborhoods that were once largely white are experiencing an increased share of black, Hispanic and Asian-American residents.

No surprise there — we see that in Charlotte in close-in neighborhoods such as NoDa, Cherry and Wesley Heights, among others — but some of the data and anecdotes are interesting.

Full story here.

Food city: If you want something a little lighter, NPR’s Marketplace Morning Report looked at how Charlotte is trying to rebrand itself as a culinary hotspot:

It’s part of the city’s rebranding strategy, to make a name for its culinary scene. The so-called “Queen City” is home to Bank of America and other large financial firms. In the past few decades, banking has driven construction and an influx of new residents, including for the first time, really, immigrants. The town has gradually become a lot more hip and diverse. And now, it's officially rebranding, with food front and center.

Full story, in print or audio, available here.

The economics of canceling classes

Expect traffic to be lighter around town on Wednesday, when public schools in Charlotte-Mecklenburg are closed for the day. This time, it’s not an ice patch in Huntersville that is leading to the closing of school for 147,000 students. Rather, it’s because CMS says it can’t staff classrooms since so many teachers are planning to go to Raleigh for a political rally. Educators across the state are hoping to push legislators to raise teacher pay and budget more for school staffing. About 1/4 of the state’s school districts are canceling school.

Kids, of course, are happy to be out of school for the day instead of prepping for end-of-grade tests. But what’s the economic cost?

It’s hard to get Charlotte-specific on the effect of one day. But a couple years ago, the Center for American Progress in Washington examined the effect of school closings on the economy. It found that the average school district closes for 29 days during the school year that are ordinary workdays — forcing parents into a bind, particularly hourly workers:

While the misalignment between school and work schedules affects all working parents, this issue disproportionately affects lower-income families. Lower-income workers are more likely to have unpredictable or inflexible work schedules, which makes it difficult for them to arrange child care immediately when needed. These parents are also less likely to have paid time off. Just 53 percent of hourly workers have paid vacation days, compared with 71 percent of salaried workers.

Lack of paid leave hits many people of color particularly acutely, since they are far more likely to hold hourly shift jobs that are less flexible. Many workers of color also earn less than their peers, which means that they are less financially able to cover any sudden cost of additional child care.

The think tank estimated that between making it harder for parents to stay employed and the missed work of parents who are employed, the yearly mismatch between workdays and scheduled school closings amounted to $55B in lost productivity annually.

CMS has already had no classes on about 20 regular workdays this school year (mostly winter break and spring break), plus four “early-release” days. Students won’t have to make up Wednesday’s missed classes, CMS said this month.

Reader response

Ledger readers respond to recent articles:

On Monday’s examination of which Charlotte figures are donating to Democratic presidential candidates and to President Trump’s re-election campaign:
  • “I love the ‘who donated to who’ piece. Very telling and helpful.”

  • “Please keep posting this list. Thank you.”

  • “Doctors, business owners and corporate lawyers contributing to socialists — does not compute.”

On Wednesday’s article offering advice to parents on college admissions:
  • “Really good college admissions article. And an excellent ruse for getting free consulting!”

  • “Great information here! Thanks for sharing!”

On Wednesday’s piece about efforts to rename the Monroe Road corridor “MoRA”:
  • “You’re late to the game on MoRA. They’ve been using that since at least 2015.”

On Friday’s fact-check of Morris-Jenkins’ claim that you should wait to start your air conditioner until you can have it serviced:
  • “Love it! Those people are so weird. I’ve had them in our house to look at work. They are double what the average HVAC group offers. Crazy.”

Have an opinion? Share it here.

In brief:

  • Van Landingham Estate to add townhouses, retail and office? Charlotte Agenda has some new details on the historic Plaza-Midwood site.

  • Jewish senior living: The Foundation of Shalom Park and Temple Israel have submitted paperwork to the city detailing plans to build a 150-unit senior living center on 11 acres at Providence Road and Jefferson Drive. Local Jewish organizations “recognize the tremendous potential for a Jewish senior living community to enhance Jewish life in Charlotte,” according to a letter last month from the Foundation’s executive director. City approval is required.

  • Airbnb competitor: Marriott plans to start a home-rental division, the first hotel chain to do so, the WSJ says (paywall).

  • Interesting read: “Is the future of cities in the suburbs?Quote: “Kotkin advised Charlotte to look away from the darlings of urbanism, like Portland and New York City, and instead emulate the more laissez faire development policies embraced by cities like Houston.” (UNC Charlotte Urban Institute)

Taking stock

Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:

Sonic’s new EchoPark turns a profit; stock surges

Last week was a big one for Bruton Smith and his two companies, Sonic Automotive and Speedway Motorsports. As we wrote on Friday, Smith and his sons made a buyout offer for Speedway Motorsports at $18/share, which sent the stock surging by more than 30% to … a little more than $18/share. (Pro tip: If you see Speedway Motorsports stock start pushing up higher than its current level, that could indicate that independent shareholders think the offer is insufficient.)

But the other big Bruton news of the week was encouraging earnings at Sonic Automotive — and the news that Sonic’s new used-car concept, called EchoPark, posted its first profit since Sonic announced it in 2014. EchoPark, which specializes in “nearly new” cars that are between one and four years old, allows you to save time by handling a lot of the shopping and paperwork online before setting foot at the dealership: “The only thing you need to do when you arrive at EchoPark is test drive the car, get your trade-in validated with the information you provided ahead of time and sign the paperwork.”

EchoPark is still too small to threaten user-car king CarMax, but Sonic plans to add locations — though the company seems in no rush. Right now, there are only nine EchoParks: four in Colorado, four in Texas and one in Charlotte on Independence Boulevard near Wendover Road, almost next to the Walmart. That one opened last year.

On a conference call last week, Sonic president Jeff Dyke said: “In Charlotte, that store was profitable in its first full month and it did over 400 cars in March and made nearly $300,000.”

The positive news sent Sonic’s stock surging 32% last week. It’s up 50% on the year.

Got a news tip? Think we missed something? Drop me a line at editor@cltledger.comand let me know.

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The Charlotte Ledger is an e-newsletter and web site publishing timely, informative, and interesting local business news and analysis Mondays, Wednesdays, and Fridays, except holidays and as noted. We strive for fairness and accuracy and will correct all known errors. The content reflects the independent editorial judgment of The Charlotte Ledger. Any advertising, paid marketing, or sponsored content will be clearly labeled.

The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.