On Thursday, the company suspended dividends paid to stockholders. That doesn't affect most employees substantially -- except for top executives.
But this latest cutback will: On Friday, a message went out to all employees: the company is chopping contributions to employee 401(k) accounts.
The relevant portion of the "Dear Lee employee" note from Mary Junck, Lee president and CEO, (who earned $3,791,280 this year, according to Reuters) said:
Until economic conditions improve, the company’s profit-sharing contribution to most employee 401(k) retirement accounts is being suspended beginning in December. Also, the company’s match to employee contributions is being reduced. For most employees, the reduction is half of the current levels.Along with the dividend suspension, the company has cut staff, and frozen executive pay, suspended corporate executive bonuses and stock grant programs -- all part of a renegotiation of credit terms with lenders. The elimination of stock dividends is expected to save Lee $34 million annually, which it can apply to the $1.1 billion it still owes for the Pulitzer acquisition. Analysts already have predicted that it may take years for Lee to improve its debt leverage ratio enough to resume dividends. LEE stock dropped 79 cents Friday, down 24%, in response to the dividend suspension, to $2.50. Its 52-week high is $16.81, although four years ago it was trading near $50 a share.