You would, too, if you’d just been granted a half-million
dollar bonus from a company that just three months ago was bankrupt.
This woman is Mary Junck, and she’s CEO of Lee Enterprises,
the newspaper conglomerate that owns, among other things, the Wisconsin State
Journal. Lee went on a buying binge a
few years ago, overpaying for a bunch of daily newspapers scattered around the
country. As a result, Lee racked up a
billion dollars in debt (which their cash flow obviously couldn’t serve) and
declared bankruptcy.
Why would such a company then turn around and give its CEO a
half-million dollar bonus? (Not to
mention the 250-thousand-dollar bonus to the company’s CFO, Carl Schmidt.)
Because these two captains of industry….err,
media….re-negotiated the company’s debt.
That’s the way it works on Wall Street…err, I mean in
media….today. It’s not whether your
company is fiscally sound; it’s whether you can repackage the crappy debt you
put out there, and find some investment banker outfit that will take your paper
and charge your company dearly for doing so.
You just keep rolling the unsustainable debt, and collecting
huge bonuses.
To make your cash flow support your debt, you slash
payroll. Ironically, as Ms. Junck was
collecting her half-million-dollar bonus, Lee Enterprises was busy laying off a
bunch of staff at its newspaper in Helena, Montana – the Helena Independent
Record. (By the way….how’d that paywall
work out for you at the Independent Record?
Not so good? Oh, that’s too bad.)
The company’s stock, which was almost de-listed a year ago
because it had fallen below a dollar a share, is trading at about $1.21
today. In 2004, Lee stock was trading at
48 dollars a share.
So, to summarize: Lee Enterprises stock has fallen totally
into the toilet; the company has just emerged from bankruptcy; it has a billion
dollars in re-financed and unsustainable debt; and it continues to cut staff in
an effort to pay back the sharks they owe.
I’d say it’s about time to give the financial whiz kids who
run this company a huge bonus, wouldn’t you?
