Hostess wants judge to OK million+ for exec bonuses

[Expat]

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.

Exactly right as usual. Most companies staff the Board of Directors with executives of other companies, who staff their Board with the same execs. It is a very incestuous situation. That is part of the reason that executive pay has sky rocketed out of all proportion.

 

[hooky]

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.

When I hit jigsaw via salesforce I get the same info, without the ticker symbol. Your link appears to say they were traded on pink sheets.

Hostess Brands, Inc.

Headquarters
6031 Connection Dr [map]
Irving, TX, 75039-2607, United States
Hostess Brands is Closed
+1.972.532.4500
Industries Manufacturing:Food & Dairy Product Manufacturing and Packaging, Grocery and Food Wholesalers,
Employees 25,000
Revenue 2800000000
Ownership Publicly Traded - OTC PK : Hostess Brands, Inc.
Last Updates 2012-11-19
We are sorry to announce that Hostess Brands, Inc. has been forced by a Bakers Union strike to shut down all operations and sell all company assets.


388 Jigsaw Contacts See All
Sales 58
Marketing 13
Finance & Administration 116
Human Resources 20
Support 0
Engineering & Research 25
Operations 25
IT & IS 8
Other 123
C-Level 24
VP-Level 31
Director-Level 50
Manager-Level 154
Staff-Level 96

 

[yotewacker]

I personally believe the union was at fault.

The union would not allow Hostess to ship Twinkies and Wonder bread on the same truck. so the company had to purchase double everything for shipping to the same locations. Many more stupid stuff the unions done to make things unprofitable.

I do agree the unions should not have to take a pay cut. But unions have to much bull S*&^ that does nothing but drain any companies profit. This crap of a plumber can't change a light bulb because its the electricians job is crap also. This type of activity does nothing but slow jobs and eliminate profit.The unions should try to make the company as much profit as possible, then as for raises.

 

[Ridgeman4]

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?

+1

Whether anyone agrees with the decisions of the executives or not is not the point. They own and run the company and should be allowed to do as they please within the constraints of the law. No employee (whether in a union or not) should have the right to tell the business owner or executive what they can or can not do. If someone deosnt like the way the company is ran then they should go start their own company and run it the way they want.

 

[level.eleven]

The investors didn't "risk their homes". They are large equity and hedge firms on Wall Street that bought debt for pennies on the dollar looking for a flip. Whittle it down, raid pensions...who cares. PBGC will pick up the slack.

http://www.bloomberg.com/news/2012-...yers-with-underfunded-corporate-pensions.html

Now, taxpayers may be on the hook if PBGC needs a bailout. Like it was said, this has been going of for decades.

 

[CarmelHP]

+1

Whether anyone agrees with the decisions of the executives or not is not the point. They own and run the company and should be allowed to do as they please within the constraints of the law. No employee (whether in a union or not) should have the right to tell the business owner or executive what they can or can not do. If someone deosnt like the way the company is ran then they should go start their own company and run it the way they want.

They are not necessarily the owners, unless majority stockholders. I thought that point had been made. A union has that right if it has negotiated the right.

 

[Ridgeman4]

They are not necessarily the owners, unless majority stockholders. I thought that point had been made. A union has that right if it has negotiated the right.

The point has been made further up in the thread. The problem was that I started to type this and then got side tracked. So, by the time that I finished my comments and posted them... the others had already been made but I had not read them. I was working off the belief that Hostess was private. If they are in fact publicly trade and owned by stockholders then my opinions dont exactly fit in this situation and I will admit that.

 

[hooky]

When they came out of bankruptcy in 2009, they were acquired by Ripplewood LLC. All trading of the IBCIQ Stock ceased in '09. They are a privately held company.

Time line: A look at Hostess Brands’ ownership history - The Washington Post

 

[TopDog]

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?







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?

Very good points. The cost of making the product may have dropped but the cost to the end customer would probably not drop, that is not the America way. Give them less and charge more for it is how most business works. There are exceptions and those exceptions (Pizza Hut for example) when they drop the price experience tremendous increase in demand thus raising profit. If all business in America were smart instead of greedy they would prosper instead of the norm, head towards financial ruin. Just my

 

[Mad Macs]

I personally believe the union was at fault.

You keep believing that.........

 

[IndyDave1776]

I am satisfied that the most critical element is that the management and union leadership are both made up of mercenaries, neither of which have any true investment in the company or its employees, and consequently both are in a mindset of living for today and treating last quarter as ancient history and next quarter as the distant future. Neither cares about the long-term well-being of the company, and by extension the long-term well-being of the employees (i.e., having a job in the future).

I would argue that the ultimate solution is to correct the regulatory burdens and other .gov interference that make it unnecessarily difficult for small business to be competitive when by all rights it should have a leg up under the supervision of actual owners who have a vested interest in long-term performance rather than being left in the hands of mercenaries who are there to pillage, load their golden parachutes, and jump before the company slams into the ground.

It would also help tremendously to have union leaders that understood that the long term good of the workers comes from have a job which is difficult with a defunct employer. I recall an old (very old) friend who was an engineer at Ford sharing with me that whenever they found a better means of production, the union immediately demanded a raise making the cost of producing a given part the same as it had been. I have also heard of plenty of other abuses. I also have it on good authority that (at least pre-reorganization) that it was more expensive for GM to fire a bad employee than it was to keep him through paying out his pension through death. Under these conditions, competing in the marketplace simply is not possible.

In the end, human nature is to take advantage of others when possible. This tension has always existed between unions and labor, and was bad enough when it was between the people actually involved in the situation. After importing mercenaries with no vested interest in the situation, you end up with what we have here. In a company run by the people who own it and a union with decisions made by people who don't get paid if the workers don't (no, I don't mean people who are insulated by representing the workers in numerous different companies and are not going to be hurting so bad if a few of them fail) we would not have so many problems like this. Unfortunately, this is now standard and I don't see it changing.

 

[Bunnykid68]

You keep believing that.........

You at least have to admit that it was stupid, silly, outrageous to have to ship Twinkies and wonder Bread on separate Teamster trucks to the same location don't you?

 

[TopDog]

Executives getting a bonus for running a company into the ground is absurd. I know different agreements, different companies. But bottom line, you are a exec for a company and it fails, gov bail out, bankruptcy, whatever. Your company goes down the tubes so does your bonus. Now lets hear the rational that you have to put the iron clad bonus in place or you wont get quality people. Screw that, we have seen the quality of people the iron clad bonus system brings in. Its nothing more than a union type ploy by executives.

 

[PistolBob]

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.

The average union wage at Hostess was $55K per year. Hardly poverty level. The Bakers Union screwed it up for everyone, and keep in mind the Teamsters and 9 other unions approved the new contract.

You need to do some study of Hostess, there is so much blame to go around it's not even funny. Union bosses, corporate bosses, stupid contract rules...all choked this American standard to death.

 

[level.eleven]

You at least have to admit that it was stupid, silly, outrageous to have to ship Twinkies and wonder Bread on separate Teamster trucks to the same location don't you?

I've not read about this. My initial thought is that bread needs near daily delivery whereas snack cakes have a multi-year shelf life. Heck Family Guy did an entire episode about finding a Twinkie factory after a nuclear event.

You can ship a palette of Twinkies, not so much bread. Of course that would run up against JIT inventory...perhaps I am over-thinking this.

 

[level.eleven]

The average union wage at Hostess was $55K per year. Hardly poverty level. The Bakers Union screwed it up for everyone, and keep in mind the Teamsters and 9 other unions approved the new contract.

You need to do some study of Hostess, there is so much blame to go around it's not even funny. Union bosses, corporate bosses, stupid contract rules...all choked this American standard to death.

How many pay cuts does a worker have to take before it isn't his fault? How many executive compensation packages? How is it labor's fault for taking a 50% whack while executive pay increases 300%?

 

[Leo]

Bob, I only have the testimony of the workers. How does entry level of $10.00 per hour and top rate of $16.12 add up to $55,000 per year Average?

How is stealing a contributed pension ok? Yet the theives who did this are not only escaping criminal charges, but getting bonus? Not all criminals are rap listening gang bangers with a stolen glock. We can at least shoot back at them.

My Pension was stolen by stroke of a judges pen, and my personal savings was stolen by merrill lynch aided by the government, turning $270,000. into $40,000 while the people involved with this great management style was rewarded with huge bonuses. I did the right things, and exercised a strong work ethic for over 35 years. What kind of societal norm considers that no big deal?

 

[Bunnykid68]

I've not read about this. My initial thought is that bread needs near daily delivery whereas snack cakes have a multi-year shelf life. Heck Family Guy did an entire episode about finding a Twinkie factory after a nuclear event.

You can ship a palette of Twinkies, not so much bread. Of course that would run up against JIT inventory...perhaps I am over-thinking this.

They have a shelf life of a week or two at best, at least according to the best buy dates.

 

[Bunnykid68]

Bob, I only have the testimony of the workers. How does entry level of $10.00 per hour and top rate of $16.12 add up to $55,000 per year Average?

How is stealing a contributed pension ok? Yet the theives who did this are not only escaping criminal charges, but getting bonus? Not all criminals are rap listening gang bangers with a stolen glock. We can at least shoot back at them.

My Pension was stolen by stroke of a judges pen, and my personal savings was stolen by merrill lynch aided by the government, turning $270,000. into $40,000 while the people involved with this great management style was rewarded with huge bonuses. I did the right things, and exercised a strong work ethic for over 35 years. What kind of societal norm considers that no big deal?

Your Social Security has already been stolen and your grandchildren will be paying for it

 

[level.eleven]

They have a shelf life of a week or two at best, at least according to the best buy dates.

Well, scratch everything I said.

Why did they do it? Were the bakery drivers there first vs. someone else? If the union was standing in the way of route closures because it protected a few jobs, that certainly isn't good. If workers were being squeezed to run longer routes and take a heavy compensation cut, that isn't good as well.