Hostess wants judge to OK million+ for exec bonuses

[ZombieApocolypse]

Hostess to seek approval for executive bonuses - CNBC

 

[melensdad]

So what?

Last time I checked, (and I think it is still true) Hostess was a PRIVATELY OWNED company. The executives put up the cash to buy the company, they risked their homes and personal funds to buy the company in hopes of turning it around (its had 5 prior sets of failed managers) so now that the company is collapsing, as long as the debtors are paid off then why should the executives, the same ones who risked their private fortunes, not get back some of what they invested?

 

[Leo]

I think it is an interesting comment on our society reflecting our views of responsiblity. I have read 100's of comments in the newspapers and internet and heard dozens of comments on talk radio. The battle cry has generally been, "those darn greedy union people are killing a great American company" Never mind that the peoples wages are right at the federal poverty level, or slightly above. Never mind that the employees has made several wage concessions in the past to "help the company through hard times" never mind the the executives continued to add to their personal profits at the expense of the company. These same executives that are making poor business decisions and running the company into the ground. I am as pro-business as they come, but I believe in checking out the whole situation before assigning blame. I am convinced that the unions are not to blame for the Hostess failure, and that the rank and file made personal sacrifices to try to save the company while the leaders were greedily tapping every last drop of blood out of the carcass.

Lee Iococca, who walked out of FORD with a million dollar a year retirement made an interesting comment about this new breed of business executives. He called the taking of 100's of millions out of struggling companies scandalous. He noted that even the middle level "punks" were getting a couple million at a time. No business model can support that foolishness.

We are all on a wodden boat in the middle of the ocean and the wind is cold. The captain says "lets burn the boat so the business travelers can be warm". No body says anything and as the passengers are drowning, the captain blames the crew for being union, and all people in the life rafts applaud this "wise" captain.

 

[steveh_131]

Sounds like the Union and the executives are fighting over the corpse of Hostess.

 

[Audie Murphy]

So if I invest in a company that goes belly up,I should get my money back? That would be great but in the real world, it was an investment and investments can be lost.

 

[Audie Murphy]

So what?

Last time I checked, (and I think it is still true) Hostess was a PRIVATELY OWNED company. The executives put up the cash to buy the company, they risked their homes and personal funds to buy the company in hopes of turning it around (its had 5 prior sets of failed managers) so now that the company is collapsing, as long as the debtors are paid off then why should the executives, the same ones who risked their private fortunes, not get back some of what they invested?

So if I invest in a company that goes belly up,I should get my money back? That would be great but in the real world, it was an investment and investments can be lost.

 

[melensdad]

So if I invest in a company that goes belly up,I should get my money back? That would be great but in the real world, it was an investment and investments can be lost.

If there are any assets left after the company is dissolved, why should the investors not get back those assets? They own the assets. Why should they not be able to recover some of what they invested?

. . . The battle cry has generally been, "those darn greedy union people are killing a great American company" Never mind that the peoples wages are right at the federal poverty level, or slightly above. Never mind that the employees has made several wage concessions in the past to "help the company through hard times" never mind the the executives continued to add to their personal profits at the expense of the company. These same executives that are making poor business decisions and running the company into the ground. . .

Interesting comments.

In the fresh baked snack market ALL of the bakery companies seem to be floundering and near default. But its all the fault of management and the unions extracting too much pay.

Here are some interesting observations from a former distributor who sold his business and retired in his late 40's (me).

The business model of Hostess is to blame. The unions have prevented management from doing what is necessary to survive. The management has, in the past, been too gutless to FORCE the company into bankruptcy so it could "restructure" under a new business model.

Hostess has 18,500 employees. The business model requires dozens of expensive bakeries, thousands of route delivery trucks and scores of transfer terminals to move their product from regional bakeries to gas station and supermarket shelves in a matter of just HOURS from the time they leave the bakery. Fresh product distribution is VERY EXPENSIVE and VERY INEFFICIENT and VERY LABOR INTENSIVE and VERY CAPITAL INTENSIVE.

IF I had purchased the company I would have taken it directly into Chapter 11 Reorganization Bankruptcy. I would have sold all of the small regional bakeries and all the route trucks and all the semi-trucks. I would have laid off 70% of the workforce. At the same time I would have built 4 new bakeries, one to service the northeast, one the south and midwest. One to service the mountain and plains states, and one to service the west coast. Each bakery would have a massive freezer.

The business model would be changed. Snacks would be cooked, then FROZEN, the shipped via common carrier to independently owned grocery and convenience warehouses. Their sales and distribution staffs would handle the products in their systems just the same as they currently handle other "thaw and sell" items. Independent sales brokerages would arrange sales to the warehouses, national/regional sales events, etc.

So 18,500 workers would be gone and replaced by 3500 workers. The price of a "fruit pie" would drop from $1.09 each to about $0.49 each. But I would be the greedy corporate raider.

On the other hand, if I try to keep a failed business model up and running then I'm a greedy bastard for asking for concessions from unions because the consumers are not willing to pay $1.09 for a "fruit pie."

So answer me this: how does an investor win (win = operate a business profitably) without being called a total douchebag?

 

[hacksawfg]

Where does it say it's getting their investment back. The article refers to the money as "incentive pay". Sorry, but if you can't manage your union workforce and stay in business you can wait until you finish the liquidation before paying yourself with what's left.

The truth lies somewhere in the middle, it's the fault of management and the union the company went under.

 

[RobbyMaQ]

A friend of mine (local here) works for an outfit where hostess was their #1 client. They are now closing their doors end of day tomorrow. This affects alot more jobs than just the hostess employees.
I imagine the company he worked for is likely one of several which will be getting bankruptcy notices, and pennies on the dollar (if any) of what's owed to them.
Sad times

 

[level.eleven]

Here is view from labor.

1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will. Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.

Lets not forget that their pensions were stolen, quite literally, as well.

Hostess Employee Tells All About CEO Gutting Pensions, Pay Scales | Crooks and Liars

As equity funds have taken more and more control of companies, they have also robbed more and more employees of a living wage, their pensions, and more. One need only point to how bankruptcy laws were rewritten to understand how Hostess investors managed to make a killing and protect their investment at the expense of their employees, who paid for it with their hard-earned dollars.

This isn't capitalism, folks. Equity firms loading companies with debt and cashing out.

 

[Expat]

As a stockholder in some companies I wonder about executives getting big bonuses for running a company into the ground...

 

[level.eleven]

Where does it say it's getting their investment back. The article refers to the money as "incentive pay". Sorry, but if you can't manage your union workforce and stay in business you can wait until you finish the liquidation before paying yourself with what's left.

The truth lies somewhere in the middle, it's the fault of management and the union the company went under.

The hedge funds never intended for Hostess to succeed, it was meant to be harvested. The Bain model if you will. Reference KB Toys.

 

[edporch]

Though the company went belly up, it's still a private company and the owners can do what they want with their own property once they've settled with their creditors.

 

[steveh_131]

Though the company went belly up, it's still a private company and the owners can do what they want with their own property once they've settled with their creditors.

It sounds like the issue is that they haven't settled with their creditors. The pensioners, for example.

 

[level.eleven]

It sounds like the issue is that they haven't settled with their creditors. The pensioners, for example.

The pensions were stolen. They are gone. Poof. A judge has already laughed the workers out of court for wanting their pensions to which they paid. Harvesting 101 dictates you go after those pensions. It has been that way for several decades. Borrow pension, executive pay up, consultant fees up, file bankruptcy. Harvesting 101. You got Bained!

In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be 'borrowed' by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn't repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.

 

[HoughMade]

All I'm going say about that is this:

I really hate the term "bonus" when it isn't really a bonus. When I think of a "bonus" I think of money given to someone that was not owed as a debt due to work, but is additional compensation that the employer chooses to pay at will, without an obligation to do so. Closer to a gift than a wage.

In my situation, a portion of my compensation is dependent upon my performance as compared to certain standards. Another portion is based upon the profitability of the firm. If I hit my marks as set forth in our compensation arrangement, I get my money regardless of the overall profitability of the firm. I earned that money. It may be called a "bonus", but it's not a gift and is a debt owed as part of my employment agreement. The compensation based upon profitability is called a "bonus" too, but that isn't a gift either as it is based upon my ownership interest and the risk that goes along with it. It's no more a "gift" than a dividend on stock is.

I imagine that this is not a "gift" type bonus, but one that is tied to certain individual performance goals and is part of the employment agreements. If the judge approves it, pay it.

 

[avboiler11]

If the company you are on the management team of enters 1113 proceedings, then files for Chapter 7, did you REALLY do your job as a manager?

Do you REALLY deserve a six or seven figure bonus?

Regardless one's opinion on unions, I think reasonable people can agree that failure (with liquidation being the epitome of failing in business) should not be rewarded.

 

[Expat]

Though the company went belly up, it's still a private company and the owners can do what they want with their own property once they've settled with their creditors.

Hostess Brands, Inc. Company Directory of Business Contacts from Jigsaw

This says it is a publicly traded company. Is that incorrect? The executives are not the owners. The stockholders are the owners.

 

[CarmelHP]

Hostess Brands, Inc. Company Directory of Business Contacts from Jigsaw

This says it is a publicly traded company. Is that incorrect? The executives are not the owners. The stockholders are the owners.

This is what many fail to realize. The stockholders, the owners, are spread out and relatively powerless. The directors are able to rape and loot the company for their own gain and have little incentive not to do so.

 

[CarmelHP]

The pensions were stolen. They are gone. Poof. A judge has already laughed the workers out of court for wanting their pensions to which they paid. Harvesting 101 dictates you go after those pensions. It has been that way for several decades. Borrow pension, executive pay up, consultant fees up, file bankruptcy. Harvesting 101. You got Bained!

In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be 'borrowed' by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn't repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.

This has been going on for at least 30 years. Every proposal to require fully funded pensions as contributions are made and custody in a third party trustee have been torpedoed by gangsters in $2000 suits. Shameful.