Even as Pitney Bowes Inc. initiated its second major layoff program in the past three years under CEO Murray Martin, former employees hope to hold the company accountable for what they claim was an inexcusable strategy ”“ investing in its own stock.
Murray and Pitney Bowes were sued in mid-December by two retirees seeking class-action status for their complaint, which alleges Pitney Bowes mismanaged its finances by repurchasing its own stock. Between 2006 and 2009, the period covered by the lawsuit, Pitney Bowes shares are down by more than half. That depleted the company”™s retirement reserves by millions of dollars, the plaintiffs claim, and they say Pitney Bowes is required to make up those losses under the Employee Retirement Income Security Act.
Plaintiffs Henry Rade and Nancy MacDougall have also sued former CEO Michael Critelli, but did not name the retirement plan itself as a defendant, saying they are undertaking the lawsuit on its behalf.
At deadline, a Pitney Bowes spokeswoman could not be reached for comment.
In a curious legal sideshow, Pitney Bowes”™ employee benefits plan has sued a former employee in California, who after electing to receive a single, $12,300 lump sum payment in lieu of ongoing $44 monthly payments, instead has been receiving monthly checks for $12,300 from Pitney Bowes.
Pitney Bowes said it paid out more than $1.2 million before discovering the error ”“ nearly triple the amount the worker made in his entire Pitney Bowes career. If that was not enough, after Pitney Bowes sued earlier this year, the worker filed for Chapter 7 bankruptcy protection from creditors.
The two parties recently reached a settlement agreement, without specifying the terms.
For the vast majority of Pitney Bowes workers, the holiday season has become no joking matter as the company readies another round of pink slip mailings.
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As reported Nov. 16 by the Fairfield County Business Journal, after eliminating more than 3,000 jobs the past two years Pitney Bowes has initiated another major restructuring. Earlier this month, Pitney Bowes finally revealed the human cost of the job action ”“ up to 10 percent of its work force, or 3,500 jobs.
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Under Martin, who became CEO in May 2007 replacing Critelli, the company has struggled to keep sales up the past few years as postal reform enacted in the United States has contributed to some customers delaying purchases and as corporate mail volumes have dropped overall.
While the most visible and painful move by Pitney Bowes will be an “agile work force strategy to be closer to customers and rationalize facilities needs,” in its words, the program will also involve improving its information technology and procurement processes, and increasing its reliance on outsourced business processes.
In a conference call with investment analysts this month to discuss the restructuring program, Martin noted the U.S. Postal Service recently indicated mail volume declines are slowing, while in the same breath saying Pitney Bowes is a sufficiently diversified company that its results should not be seen as in lockstep with that of the post office.
“They expect to see the rate of decline to drop significantly from where it was in the double digit level, back more toward where it was historically, but they aren”™t anticipating a positive in 2010; they would expect in late 2010 that we would head toward some recovery,” Martin said. “We actually expand our goods and services regardless of mail volume, and that tends to offset much of the decline.”
In the third quarter, Pitney Bowes profits increased 5 percent to $103 million from a year earlier, despite revenue dropping 12 percent to under $1.4 billion.
In 2010, Pitney Bowes expects revenue to be flat or to increase up to 3 percent.
