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Money
Hostess Blames Bankruptcy on Unions, Company Executives Pocket Huge Bonuses
Hostess Brands announced last week that it would go out of business and blamed the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, who recently threatened a strike.
This storyline was parroted by conservative anti-union media outlets. The Wall Street Journal wrote: “The union that brought the 85-year-old baker of Twinkies and Wonder Bread to its knees.” RedState.com used the headline: “The Demise of Twinkies? Yes, It’s True. Parasitic Unions Kill Their Hosts (or, in this case, Hostess).”
However, Hostess [and the conservative media] failed to mention that the 85-year-old company gave its executives pay raises earlier this year when it declared bankruptcy for the second time.
ThinkProgress.org reports that the salary of the company’s former chief executive tripled from $750,000 to about $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000.
On Monday, a bankruptcy judge “asked whether he should preside over mediation” between the two parties. Hostess and the union have agreed to mediation, which would avoid the bankruptcy.
Bargaining talks will begin today, but if they fail, then the liquidation of the company will go forward on Wednesday.
Hostess had planned to request that the judge approve a plan to shut down the company and pay $1.75 million in bonuses [$7,400 to $130,500 each] to the executives who already received pay raises earlier this year. The union opposes those bonuses.
Hostess previously declared bankruptcy back in 2004 and was taken over by the venture capitalist company Ripplewood Holdings in 2009 for $130 million, reports Salon.com
Eileen Appelbaum, a senior economist at the Center for Economic and Policy Research, told Salon.com: “It’s been a disaster. Ripplewood did not know what it was doing. They did not introduce any successful new products. Sure, they had high sales revenue but it had been declining since 2004.”
UPDATE:
Lance Igon, Communications Counsel to Hostess Brands, told Opposing Views via email today:
"The salary increase you referred to did not apply to current CEO Greg Rayburn. The increases were awarded to the executive team, including a former CEO, in July 2011 --- seven months before Mr. Rayburn joined the company and six months before the company filed for Chapter 11."
"Upon learning of the salary increases a few weeks after he replaced the former CEO, [current CEO] Mr. Rayburn asked four remaining senior executives to work for $1 until the end of 2012 or until the Company exited Chapter 11, whichever came first. The salaries of four junior executives were reset to their pre-increase levels."
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Comments
First we blame the greedy
First we blame the greedy Unions, then we find out the exec of the company get the bonus. Do you believe there next job will be a corrupt banker or crooked politician?
They also raised those
They also raised those bonuses after declaring bankruptcy, right? I thought I read that in the WSJ. Seems like they knew the ship was sinking so they grabbed all the silver and gold before jumping in the life rafts. But I still don't know why the union kept pushing the strike as unfair as that may be. Now nobody has a job. Doesn't seem very smart... I'm still confused on what the union was thinking...
The Union was thinking to
The Union was thinking to become a bigger player. The bargaining committee sends sporadic updates to the rank and file members, but not specifics in negotiations, like exactly what and how much the company and they are willing to bend. The Union asks for authority to call a strike (they can't just do it on their own) from the membership with promises of better pay, benefits or working conditions, with a "trust us, we know what's good for you" line, but the workers (who don't sit on the bargaining committee) have no real say in the negotiations. So all those workers who are out of a job can blame the Union, and they probably will.
I was a Union member for many, many years, and I think Unions are a good thing until they start to work in the interests of the Union instead of the workers.
Ah. So. Let's break this down
Ah. So. Let's break this down like I'm 5. The workers in the union really don't have any say in the negotiations, and the union does what's best for itself and kinda threw the workers under the bus this time? So what does the union gain exactly in this method, and what do you think the workers should have done? Who's awesome? You're Awesome!
You really are 5, apparently,
You really are 5, apparently, and that seems to be what happened here. The members are NOT involved in the negotiations, and the union did throw the workers under the bus,this time. The Union gained nothing here, but if their strategy had worked, it would have made the Union look that much more powerful. They just continued to make unreasonable demands, refusing to negotiate when the other (bigger, more powerful Union) told them what they were doing. The Bakers Union just wanted a bigger piece of the power pie, damn the workers, and that is just what happened. The Union lost, and so did the workers they promised to take care of. The only thing the workers could have done was cross the lines and abandon the Union, but they didn't know what was coming, because the Union doesn't keep the members informed during negotiations.
Who's an idiot? You're an idiot.
So the company paid, let's
So the company paid, let's say $5,000,000 to the ten execs. If that amount was split up among the 18,000 workers, it would amount to $0.136 per hour for each of them or $277 per year. Is that worth throwing your job away?
It's really too bad that math
It's really too bad that math and logic is an anathema to the left with the possible exception of the people who recorded a 140% turnout of the registered voters on the voting machines and still certified the election. Oh, but that might make my point.
This is exactly how Bain
This is exactly how Bain Capital operates. How lucky weare that we dodged that bullet in the White House.
Are you talking about the
Are you talking about the Union or Hostess? The only one I see here screwing the workers is the union.
Instead we got idiots who
Instead we got idiots who spend like drunken sailors without realizing the consquences.
jmcv02
Blame to go all around shaped
Blame to go all around shaped by our own biases. Are high fat and processed baked goods the type of foods people are buying today? When the company started, they put many smaller local companies out of business.
Question Authority, Anarchy & Assumptions
@Cityboy Your partly right,
@Cityboy Your partly right, the new SOP for corporations is to run the company into the ground & blame the "greedy" unions.
As you say pull all the cash out they can before it goes under, then go through the courts for a year, and have a new 'owner' after a year with ALL debt obligations gone. All pension plans are turned over to the Federal PBGC, any medical debt is wiped clean, & same with any lawsuits. Or any other financial obligations.
They get a clean slate to start mis-managing again!
(Now look at the corporations that run our politicians/country behind the scenes and see if you can find any similarities.)
Why give huge bonuses to the
Why give huge bonuses to the executives that led the company to bankruptcy once this year already, while the company was still on thin ice and while they were demanding the union accept pay cuts for the workers?
Because that was the plan from the beginning - extract all the money they could from the company and liquidate it. The few richest people involved get richer, and the people who actually work for a living get to lose their jobs.
As usual the uninformed
As usual the uninformed always spread lies. Those executives are the reason the company didn't go bankrupt sooner. The company is willing to actually increase pay 10% over a 5 year period and that includes the 8% reduction that first year, to get some finances in order. They are also willing to give the workers a 25% equity in the Hostess company and have two union representatives join the 8 member company board. There was also other concessions that weren't disclosed. If you wanna blame anybody blame the marketing and product development team, because hostess has been losing market share for years for lack of new products.
jmcv02
Of course, the hundreds of
Of course, the hundreds of millions in pension liabilities couldn't have anything to do with it.
FYI, the management in the last year either reverted to previous salary, or took a token $1/year.
As to the failure, when the TEAMSTERS tell your union your demands are unreasonable, it might make sense to listen.
But go ahead and blame the management who tried to work, not the union scum who stonewalled until all their fellow workers were out of a job. Because 100% of nothing is worth more than 92% of something.
I guess the question is
I guess the question is whether the bonuses are so that executives who took cuts or $1/year pay to turn things around get some sort of severance, or whether a bust out was the plan all along.