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Summary:

Considering all the layoffs Lee Enterprises (NYSE: LEE) has had this past year — over 50 at its St. Louis Post Dispatch in two rounds of cu…

Considering all the layoffs Lee Enterprises (NYSE: LEE) has had this past year — over 50 at its St. Louis Post Dispatch in two rounds of cuts — and its stock price worth less significantly than a $1 for the past few weeks, it’s no surprise that CEO Mary Junck and four other executives will have their wages frozen this year. That piece of information was contained in a proxy statement on Lee’s investor page here.

Still, while Junck didn’t get a bonus last year, she did receive a 3-percent pay raise in October 2007 for a 2008 salary of $850,000. And since targets calling for a 0.9 percent revenue gain were not met, Junck was ineligible for a bonus last year. Four other executives, including the CFO, two VPs of publishing and the VP of human services, were awarded bonuses. All the execs, including Junck, did comparatively well when it came to stock options, though the CEO did considerably less well compared to 2007. Including her salary, Junck received a total of $2.5 million last year, which was down 32.4 percent from 2007’s total of $3.7 million.

– Reverse stock split detailed: Although it received necessary waivers that will allow it to avoid default for the time being, Lee Enterprises is still trying to work its way out of a financial hole. The proxy statement offered some details about its next steps. For one thing, the Davenport, Iowa, publisher’s board will vote on whether to do a reverse stock split, which would involve Common Stock and Class B Common Stock. The company argues that this move will “help improve the perception of our Common Stock and Class B Common Stock” and will appeal to a “broader range of investors.” As the company said last week, the hope is that the maneuver would raise the share price, since it would convert as many as 10 shares. If its board approves the split, the share price could rise between $1.85 and $3.70, depending on what ratio directors choose.

  1. Laid-off Lee employee Tuesday, January 27, 2009

    >The company argues that this move will “help improve the perception of our Common Stock and Class B Common Stock” and will appeal to a “broader range of investors.” As the company said last week, the hope is that the maneuver would raise the share price, since it would convert as many as 10 shares. If its board approves the split, the share price could rise between $1.85 and $3.70, depending on what ratio directors choose.

    Er, what? You're still a billion dollars in the hole, and still in danger of not making your spring payment on the Pulitzer debt. How is a reverse-split gimmick possibly going to "improve the perception of our Common Stock"?

    How does Mary Junck get to keep her job when the stock value has declined by 99% on her watch?

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  2. to the laid off lee employee – it may seem like a silly financial trick, but the reality is that it works. There's been lots of studies done on both stock splits and reverse stock splits, and even though it's not rational, it works. Not everything in finance is rational. As far as how Mary Junck keeps her job, I don't know the details of what she has personally done, but there are a lot of good executives trying to stem the losses of the newspaper industry. The whole industry is dying, so even the best executives can't stop it, they can just slow it down or try to move their business into online. You can't judge executives by their company performance alone; you have to look at how peers in similar situations are doing. IN the same, there are bad CEOs who just rode the wave of a growing industry (such as newspaper CEO/bureaucrats who did nothing but sit back while the newspapers collected huge premiums on their advertising when they were local monopolies back in the "good ol' days."

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  3. hey "jb",

    then why not do a REAL reverse split (like 1 for 50) and move the share price to where some REAL funds MIGHT consider taking a position?

    1 for 10 is just asking for (another) 'market spanking'.

    100% gimmick

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  4. lee stockholder Tuesday, January 27, 2009

    lee was doing very well until mary junck led it into competition with the big girls, buying pulitzer with the multi-millions it can't pay back

    now stockholders will lose shares that junck turned into junk while collecting her millions for leading lee out of the still-profitable local monopolies

    maybe that's a fair measure of the CEO's performance?

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  5. Maybe the reverse stock split gambit will work to get the price up, but it won't change the capitalization of the company, which remains the same. So I don't see how the NYSE will be persuaded to keep the stock on the big board. And since when does something become more attractive when its price goes up, which is Junck's reasoning (?) for the reverse split?

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  6. "jb", I think your glasses are a little too rosy. The industry is in trouble, the economy is in trouble, Lee doesn't pay a dividend, and they're going for a reverse stock split? At 10 to 1, a current price of say .32 cents theoretically should make a share worth $3.20.

    Then what? The industry hasn't changed. The economy hasn't changed. Still no dividend. Know what'll change? The stock price. It'll head down, fast. No way it'll stay at the new price or go up. The market forces working on the current stock will still be there and the price will drop.

    What would change? How about some people that own huge blocks of stock, like executives, dump their shares, planning to at least get a couple of dollars, instead of a few cents, per share.

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  7. another laid off employee Thursday, January 29, 2009

    Interesting the CEOs get a wage freeze while employees are being forced to take a week off without pay. Junck buries the company in debt with the Pulitzer buy and we are to sympathize with her taking home only $2.5 million last year, down from 2007’s total of $3.7 million. Give me a break. I would like to know how much stock the CEOs owned in 2006/2007 as compared to today and when they dumped their shares.

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