Fitz: Like
a lot of companies, Lee Enterprises has an employee stock purchase plan
(ESPP) that allowed paycheck deductions to buy shares (NYSE: LEE).
Yesterday, though, Lee refunded the amounts employees contributed
during this ESPP year.
Lee’s board of directors suspended the plan because the low share price meant there simply wasn’t enough stock to go around.
Dan
Hayes, Lee’s vice president of corporate communications, explains that
each year the board sets aside a certain amount of shares for the ESPP.
LEE began to sink in the last plan year, so the stock had to be
rationed, and payroll deductions returned to employees. For the current
plan, the board allocated way more shares -- but the stock fell faster,
and it was looking like even more deductions would have to be returned.
“It’s unfair to the employees to keep holding money out of the paycheck, only to give it back,” Hayes said.
Exactly -- that’s what the IRS is for.
LEE’s share price has languished below $1 a share for weeks now, and the stock has been threatened with de-listing from the Big Board, where it has traded for three decades. Lee is asking shareholders at its annual meeting next month to approve a reverse stock split of
between 5 and 10 into 1, which would increase the share price, but not
affect its market capitalization which in recent sessions has been
below the NYSE minimum.
In early trading Wednesday, LEE shares were going for 29 cents, up 1 cent on the open.
I feel for LEE.
In November 2008, I wrote an article for industry professionals on the impending impact of the financial crisis on ESPPs.
Lee Enterprises is not alone in this struggle to handle and ESPP after a precipitous drop in stock price.
I would be happy to provide this article at no charge to anyone
interested in the solutions that can be put in place to avoid this type
of problem in the future.
All the best,
Dan Walter
President and CEO
Performensation Consulting
dwalter@performensation.com
www.performensation.com