Some major companies in Louisville are being led by out of state CEOs.

And the Derby City is not alone as other mid-sized cities are struggling to recruit leaders who want to put down their roots in their hometowns.

That was the conclusion from an examination by Louisville Business First senior reporter Joel Stennett, who spoke with me last week about his enterprising piece.

More in tonight's Business segment.

Joel Stennett, who is a senior reporter for the Louisville Business First publication.

Thank you so much for a few minutes of your time.

Thanks for having me, Renee.

I do want to talk to you about a piece that you penned a few weeks ago that talked about Louisville's largest companies.

Have CEOs that live elsewhere.

They don't live in the Derby City many times.

They don't even live in the state of Kentucky.

And this is creating a leadership vacuum, as was described in the Derby City and today's global business environment.

Why does this matter and what companies are we talking about?

Who are CEOs who live elsewhere?

Yeah, for Louisville, it's some of our largest and really most exciting companies you think of and companies that you think of when you think of Louisville.

We're talking about Humana, whose executive team lives mostly in Washington, D.C.

We're talking about Yum!

Brands, whose CEO and executives mostly live in the Dallas area.

We're talking even smaller companies like Waystar and Confluent Health.

The reason this matters is just that oftentimes wherever CEOs or executives live kind of creates the center of gravity in a company.

So that can cause talent to want to move closer to where the CEO is.

But it also creates vacuums in leadership at home.

For example, leaders are nonprofit boards, having leaders to be able to join their board.

It also creates an economic vacuum.

Usually, CEOs are the largest earners inside of a company.

And so that kind of disposable income, to be able to have it here in Derby City is really important.

Did your work uncover why CEOs are deciding to live outside of the city and state in which they're they're leading?

Well, part of this is a larger trend.

There is a Boston College and Arizona State study that found that even before the pandemic, about 80% of public companies had their CEO living somewhere else than their headquarters.

So it's not just a little problem.

And of course, that number has increased post-pandemic as companies have gotten more comfortable with remote work.

But this really kind of started even before then for Louisville.

I mean, Humana's executives have lived outside of Louisville for several years, and there's several reasons why executives might choose not to live here.

I think the number one reason is probably when the reason that I've heard most when I was doing this story was a state income tax.

Kentucky state income tax right now is at 4%.

It goes down to 3.5% next year.

But you look at states like Texas, where young executives live and they have a 0% state income tax.

In Nashville, Tennessee, where I used to be a reporter.

They also have a 0% income tax.

And you see, while I was there, there were hundreds of companies executives that were moving from states like California.

And it always came down to when I asked them why they came, it was because of state income tax, because even 3% is a lot when you're earning as much money as a CEO does.

But there's also other other obstacles, a little has overcome, you know, the ease of air travel and then just certain amenities that other cities larger than Louisville have, such as professional sports teams and some luxury shopping.

Yeah, interesting.

I want to go back to those latter points there, Joel, and talk about the air travel and the fact that Louisville may not have as many or accessible daily flights to really important business hubs in the nation.

So that really is a factor.

We've heard it anecdotally for a while, but is that really a big driver for why these CEOs live out of outside of Louisville?

I think for some companies and executives, it is if you look at em, Dallas is one of the largest airports in the country and Yum!

Has restaurants literally all over the world.

And so when you're trying to get out to Asia or to Europe and you have to have a connecting flight since Mohammed Ali International Airport doesn't have any direct commercial international flights that adds adds to your travel time.

So our airport has grown a lot in recent years.

It's definitely not, you know, entirely because of that.

But executives are living here.

But I think it is a factor for some companies.

Yeah.

You mentioned, too, about the state income tax that even though Kentucky has made strides with recent laws to gradually lower the state income tax with the with the optimism to get to a flat 0% over time, that's still not good enough that we're working our way down, but just not quite there yet.

It's I don't think for some of the top executives it is.

I think eventually it will be, especially we get to the flat zero.

But, you know, if you're making millions and millions of dollars, like a lot of these CEOs are, I mean, some I'm trying to think off top of my head what young CEO earned last year.

But it was, you know, was north of $20 million.

3% of that is a lot or 3.5% or 4%.

And if you can save that that amount of cash, most executives are going to take that chance if they have the opportunity.

And Joel, you just said a number that many of us can't really imagine our put our hands our head around $20 million executive level salary for a CEO is that the average?

Well, usually the you know, not speaking about specific company, but usually most CEOs that I see on SCC, all these public companies, when I look at S.E.C.

filings, the CEOs usually get a base salary of somewhere around $1,000,000 or so.

So where they really get a lot of executive compensation is is in stock options and perks and benefits and things like that and bonuses.

That's really, really see their their average salary raise.

So yeah, some of these larger companies like Humana or Yum or Papa John's, their CEOs are making multi million dollars a year.

Yeah.

Well, I want to also go back to a point you made about the community impacts of CEOs that don't live in Louisville, where they're running these large companies.

The philanthropic endeavors, how are they have hampered or even just community engagement efforts that we know really do drive a level of philanthropy and community engagement and charity in a city if the leaders are there to kind of push that along, as some of the sources I spoke to for the story even spoke about, when they talk to nonprofits now, they're not able to get the executive level leadership to join their board like they used to be able to.

Some some people told me that's not really a legal problem or a new problem.

It's kind of something that's been going on for a while now just because of the demands that executives of these large companies have on their time already.

And so a lot of times we'll try to send someone from a maybe middle management to go join a board and move and do it themselves.

But yeah, I mean, corporate giving and individual giving to these nonprofits definitely takes a hit when the CEO is not in town.

But, you know, you look at some of these other companies like Humana, I mean, they're still they just had their their day of service here in Louisville.

They started last year.

You know, they still have a Humana Foundation, which does give a lot of money to nonprofits and organizations here in Louisville.

One of the people we did speak to for the story was John Schnatter, the former founder and CEO of Papa John's, and he talked a lot about him.

And David Jones, the founder and former CEO of Humana, you know, maybe 20 or 30 years ago when things needed to get done, like, say, the Floyds for Parks or say, Papa John's Cardinal Stadium or now Stadium.

You know, they were able to to single handedly get a lot of these projects done because they were here.

They're based here.

And those kind of projects don't really have the type of leadership right here now in Louisville that lives here, at least to be able to get some of those projects done, in his opinion, which is partly leading to that leadership void.

Yeah.

Well, Joe Stennett, thank you for your work.

It's a fascinating piece and I encourage people to read it.

Louisville business first online and we can keep track of all your great work for the community there.

So we just appreciate you sharing some of it with us today.

Thanks, Renee.