LAPORTE, Ind., June 18, 2008 (PRIME NEWSWIRE) -- Timothy J. Stabosz, a nearly 7 year holder of common stock in Oakbrook Terrace, IL based General Employment Enterprises (AMEX:JOB), today announced the filing of Form 13D with the SEC, as a result of his crossing over the 5% ownership threshold. In the filing, Stabosz, who is JOB's largest individual outside shareholder, notes the purpose for his recent purchases, and explains the imperatives the board of directors needs to take, in order to restore its credibility, and evidence that it takes its fiduciary responsibility seriously. The entire filing can be read on the SEC's Edgar website, at the following links:
http://www.sec.gov/Archives/edgar/data/40570/000116289308000003/job13d.txt
http://www.sec.gov/Archives/edgar/data/40570/000116289308000003/job1.txt
In summarizing the filing, Stabosz stated, "I now own 5.4% of General Employment because I believe, with recent declines, JOB stock is significantly undervalued in the marketplace, selling for a discount to its cash per share. I also feel a personal responsibility to not just myself, but also to the other long-suffering public shareholders, to draw attention to the issues that seriously compromise the market's faith in JOB as an investment vehicle. First and foremost is executive pay: The CEO's $543,000 annual salary package is simply unconscionable for an $18 million in revenues company, a company whose revenues have declined roughly 50% on this CEO's watch, and which has suffered a net loss, in the aggregate, over the 7 years of his tenure. Said salary consumes 3% of the company's annual revenues, which, astonishingly, is equal to the entire net profit margin of the typical larger staffing firms in a good year (i.e. Manpower, Kelly, Spherion, etc.).
"Furthermore, the CEO's severance package is so onerous upon the company that, by any fair measure, it represents a de facto 'lifetime' employment agreement. Unfortunately, in guaranteeing the CEO 3 years of salary, it effectively allows the CEO to hold the company 'hostage' over potential buyouts, or the potential hiring of a replacement CEO (regardless of whether said replacement might be able to perform better, and/or cost less). This dysfunctional relationship between the CEO and company is largely a result of the fact that the same family has been running General Employment since 1964, and, despite the fact that the company went public 40 years ago in 1967, there remains a gross, pervasive, and unseemly sense of complacency and 'entitlement' with the current CEO.
"The existence of the poison pill completes this indignity (and further makes one wonder who the company is truly being operated for) by 'scaring away' most interested parties, who might have otherwise had the 'audacity' to pursue 'the CEO's company,' pay a premium for the stock, take a serious 'bath' and pay out the golden parachutes, and send current management on its merry way (cutting out, quite probably, $1-2 million of annualized SG&A in the process). As the CEO quite evidently does not want to lose his $543,000 a year 'annuity,' offering the company for sale at a reasonable price appears to be effectively 'off the table,' regardless of the fact that the company's two largest outside shareholders have publicly, and independently, stated, in 13D filings, that this is EXACTLY what the company needs to do.
"A CEO and board that operated in good faith would understand that you need to pay for performance, and that an appropriate base CEO salary for a company of this size is somewhere in the range of $125,000-175,000, with anything above being incentive-based. Furthermore, the severance package needs to be dramatically scaled down, and the employment agreement needs to have a definitive expiration date. The poison pill needs to be eliminated, and a serious financial analysis needs to be done on whether or not the best return for shareholders can be achieved by remaining as a going concern (dubious), or putting the company up for sale (likely).
"I intend to continue to work hard to draw attention to these issues, because it is time that General Employment actually be run for its public shareholders, instead of for the benefit of primarily one individual," Stabosz stated. "In the meantime, for shareholders who feel the same way, writing a letter to the board of directors, contacting individual members of the board, contacting the company's investor relations office, attending the annual shareholders' meeting, and/or posting the need for change at General Employment on public message boards are just some of the means by which outside shareholders can 'take back' their company, and get the current CEO and board to realize that it is long since time for them to fulfill their responsibilities to ALL shareholders of General Employment," Stabosz concluded.