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Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay
By Annie-Rose Strasser on Nov 16, 2012 at 3:50 pm
Today, Hostess Brands inc. — the company famed for its sickly sweet desert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.
But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.
At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:
BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.
Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while scorning employee contracts during a bankruptcy reflects a lack of good managerial judgement.
It also follows a trend of rising CEO pay in times of economic difficulty. At the manufacturing company Caterpillar, for example, they froze workers’ pay while boosting their CEO’s pay to $17 million. And at Citigroup, CEO Vikram Pandit received $6.7 million for crashing his company, walking off with $260 million after the business lost 88 percent of its value.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
Some creditors question Hostess pay raises approved in late July.
Brian Driscoll, CEO, around $750,000 to $2,550,000. Gary Wandschneider, EVP, $500,000 to $900,000. John Stewart, EVP, $400,000 to $700,000. David Loeser, EVP, $375,000 to $656,256. Kent Magill, EVP, $375,000 to $656,256. Richard Seban, EVP, $375,000 to $656,256. John Akeson, SVP, $300,000 to $480,000. Steven Birgfeld, SVP, $240,000 to $360,000. Martha Ross, SVP, $240,000 to $360,000. Rob Kissick, SVP, $182,000 to $273,008.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Hostess Continues Pattern Of Misinformation
By Bakery, Confectionery, Tobacco Workers and Grain Millers International Union
Published: Tuesday, Nov. 13, 2012 - 2:12 pm
KENSINGTON, Md., Nov. 13, 2012 -- /PRNewswire-USNewswire/ -- In a desperate attempt to break the solidarity and resolve of striking BCTGM members across the country, Hostess Brands is falsely claiming that its decision to close three of its bakeries -- St. Louis, Cincinnati and Seattle -- is the result of the nationwide strike against the company by BCTGM members.
In fact, according to the company's 1113 filing with the bankruptcy court earlier this year as well as its last/best/final and non-negotiable proposal to its BCTGM-represented workers, the company was planning to close at least nine bakeries as part of its reorganization plan, although the company refused to disclose which bakeries it intended to close. This is in addition to the three bakeries that were to be closed as a result of the company's planned sale of its Merita division.
Moreover, St. Louis Mayor Francis Slay was quoted in a November 13 KMOX-CBS St. Louis article stating, "I was told months ago they were planning on closing the site in St. Louis… And there was no indication at that time it had anything to do with the strike the workers were waging."
BCTGM International Union President Frank Hurt stated, "The recent claim by Hostess CEO Greg Rayburn that our strike is the reason for the closure of the three bakeries is simply not true. That statement is a continuation of a disturbing pattern by the company of issuing public statements that are erroneous at best and disingenuous at worst.
"Our members rejected the company's outrageous proposal by 92 percent in September. Rejection came from every corner of the country. They were being asked to vote on a proposal with massive concessions, knowing that their plant could very well be one of those to be closed.
"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars."
Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.
BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.
Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.
A total of 24 Hostess production facilities are on strike or honoring the strike with picket lines established by striking Hostess workers at other BCTGM-represented facilities. Additionally, BCTGM members at one transport facility also are on strike. Company claims that union members are crossing picket lines and maintaining production at striking plants are vastly untrue.
The BCTGM represents more than 80,000 workers in the baking, food processing, grain milling and tobacco industries in the United States and Canada.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
Yes you may be right about a depression. What scares me is there won't be a World War two to pull us out. Maybe some thing with Iran.But it won't be big enough.
So that being said it mosy likely be a fight to the finish right here.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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quote:Originally posted by glassman: this is just the beginning of the slide into the greater depression.
People said it was going to happen but nobody really wants to take it seriously it seems.
actually cashcow, i told you right here several years ago that we would ALREADY be in one without the bailouts. as to balming this on Obma? you can keep trying to make that lie work but most of us know that the real reason is because the world economy has been broken by the very people that run it, not the poor workers....
there is a private equity group stuck right up the azz of this Hostess fiasco. has been for years. this how they operate.
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/Bret Hartman/Files Related ContentEnlarge PhotoTrucks are parked at the closed …
Enlarge PhotoThe sign on the roof of the closed … WHITE PLAINS, New York (Reuters) - Hostess Brands Inc agreed in court on Monday to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.
Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) agreed to mediation at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who advised against a more expensive, public hearing regarding the company's liquidation.
"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.
The 82-year-old Hostess was seeking permission to liquidate its business, claiming that its operations have been crippled by a bakers strike and that winding down is the best way to preserve its dwindling cash.
Hostess suspended operations at all of its 33 plants across the United States last week as it moved to start selling assets.
Heather Lennox, a lawyer for Hostess, said it would be hard for the company to recover from the damage it sustained due to the strike even if an agreement was forthcoming. Yet following the hearing, Hostess Chief Executive Officer Gregory Rayburn told reporters that there was always a chance Hostess could be saved.
"I think we have to see what unfolds. My impression is that the judge wants to understand the parties' positions and some of their logic, but it doesn't change our financial position," Rayburn said.
"I'm happy to have the help," he added, referring to Drain's urging of discussions following a breakdown of communication between Hostess and the union. "Maybe the judge will help. But can I handicap how it's going to go? No way."
Hostess faces several objections to its liquidation plan.
The U.S. Trustee, an agent of the U.S. Department of Justice who oversees bankruptcy cases, said in court documents it is opposed to the wind-down plan because Hostess plans improper bonuses to company insiders.
Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation.
(Reporting by Nick Brown; Additional reporting by Tom Hals in Wilmington, Delaware; Writing by Martinne Geller and Brad Dorfman; Editing by Leslie Gevirtz, Bob Burgdorfer and Ciro Scotti)
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
Hostess To Pay $1.75 Million In Executive Bonuses After Blaming Unions For Bankruptcy
By Travis Waldron on Nov 19, 2012 at 1:55 pm
Hostess Brands, the maker of sweet snacks like Twinkies that filed for Chapter 11 bankruptcy protection last week, will ask a bankruptcy judge today to approve a plan that will allow it to pay $1.75 million in bonuses to 19 of its executives. Hostess’ decision to file for bankruptcy came amid disputes with its union workers, who threatened a strike that Hostess said imperiled the company’s finances. The unions are now protesting Hostess’ request for the bonuses, though they are unlikely to prevail, CNN Money reports:
Hostess Brands will ask a bankruptcy judge on Monday for approval to shut down the company and pay $1.75 million in executive bonuses.
Unions representing workers at the maker of Twinkies, Wonder Bread and Drake’s snacks are arguing against the bonuses. [...]
Under the plan, bonuses ranging from $7,400 to $130,500 will be paid to 19 executives. The company argues the bonuses are below market rates for such payments.
Even as it blamed unions for the bankruptcy and the 18,500 job losses that will ensue, Hostess already gave its executives pay raises earlier this year. The salary of the company’s chief executive tripled from $750,000 to roughly $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000. Those raises came just months after Hostess originally filed for bankruptcy earlier this year.
Hostess is hardly the only company that has compensated its executives during bankruptcy or times of financial instability. Failed financial firm MF Global gave CEO Jon Corzine an $8 million pay package after it filed for bankruptcy, and Citigroup CEO Vikram Pandit received a $6.7 million pay package when he resigned, despite Citi’s 88 percent profit loss during his final quarter. And Hostess isn’t alone in giving executives massive raises while asking for concessions from union workers either: construction giant Caterpillar rewarded its CEO with a 60 percent pay raise, paying him $17 million, even as it forced a pay and pension freeze on its union workforce
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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