Hostess Execs Looted The Company Before Bankruptcy
Via Gawker, Hostess execs shoveled themselves some nice piles of cash before filing for bankruptcy. Annie Rose Strasser writes at ThinkProgress:
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.
I had read the bankruptcy judge had drastically cut the exec's pay for at least 2012 - one site saying salaries of $1. But now I can't find any of that information? Was it all internet gossip?
The Former Banker at November 18, 2012 11:19 PM
I'd read something about a judge taking away their pay or drastically cutting it too, but I don't remember where.
BunnyGirl at November 18, 2012 11:58 PM
Hostess was bound to fail anyways. Why were they using so many workers when they could have automated the process? Two....nobody buys that shit anymore nowadays it's more about "health" stuff (that is still unhealthy).
But CEOs are starting to piss me off. What happened to shame? I'd be ashamed to take that much money when my company was all but dead.
Purplepen at November 19, 2012 12:49 AM
That's shareholder money that's going to the execs. Why did the BoD approve the raises? All the BoD members are the CEO's family?
Engineer at November 19, 2012 3:34 AM
Remember the company was privately owned. The executives were also the owners.
ParatrooperJJ at November 19, 2012 6:23 AM
The rationale usually works like this: the executives had to be given huge pay raises to ensure they remained in order to guide the company through bankruptcy. Without the pay increases, the majority of executives would have fled the company likes rats abandoning a sinking ship, and the company would be even worse off for it. I couldn't say if it was actually true, because it seems just as likely they were lining their own pockets while they had a chance.
Assholio at November 19, 2012 6:28 AM
Umm. . .does anyone else think this looks a lot like stealing?
And that maybe instead of being allowed to go their next high level job with it's lifestyle perks and enormously high salary, they should instead go to jail?
Or at bare minimum be forced to give the money back and have it distributed among the thousands of people who are about to lose their job?
Anybody?
flighy at November 19, 2012 7:36 AM
Are the union bosses upset that company management (owners) got some riches before the company closed down ... or that they (the union bosses) didn't.
Conan the Grammarian at November 19, 2012 9:17 AM
Forget the thieves in the company's management and forget the thieves in the union.
What I want to know is why isn't the government going after those twinkie hoarders now trying to sell their stockpiles on craig's list and ebay for outrageous prices!
Thieves, I tell you, they are all thieves!
Charles at November 19, 2012 10:30 AM
Purplepen: "But CEOs are starting to piss me off. What happened to shame? I'd be ashamed to take that much money when my company was all but dead."
I agree! Declining market, slow economy, poor judgment may all contribute to a company's failure. But often I thing the biggest problem is ethical/moral.
Ken R at November 19, 2012 11:10 AM
flighty: "Umm. . .does anyone else think this looks a lot like stealing?"
Yes. The executives may have been shareholders, but they weren't all or even most of the shareholders.
It would seem to me that the money should be paid to:
1- any employees who were not paid for any work that they did;
2- any vendors/creditors who provided goods or services for which they were not paid (when a company goes bankrupt it often takes down other businesses to whom money was owed);
3- and then, if any is left, which there wouldn't be or it wouldn't be bankrupt, prorated to shareholders.
Ken R at November 19, 2012 11:50 AM
But did you see the ridiculous rules the union had imposed? Bread loaders can't load cakes onto trucks, and vice versa. Being a worker on the assembly line actually takes less education and experience than being an executive, not matter how much people hate executives. The execs had far more responsibility, too.
http://augustametros.blogspot.com/2012/11/more-idiotic-stories-about-bakers-union.html
And if Gawker's so fired up, why don't they organize and join the Newspaper Guild? Nick Denton would fire anyone who dared try this.
KateC at November 19, 2012 12:11 PM
It's also interesting that when the Teamsters settled with the company in September the workers got cuts in pay and in company contributions to insurance. But the unions got a 25% share of the company's stock plus a $100 Million claim in bankruptcy. If the unions are able to collect any of that after the company sells off its assets, does anyone think the workers losing their jobs will see any of the money?
Corporations, governments, unions (just another kind of corporation)... birds of a feather.
Ken R at November 19, 2012 1:14 PM
"$6.7 million for crashing his company, walking off with $260 million" - Did he get 6.7 million or 260 million? How could he walk off with 260 million when he got just 6.7?
Redrajesh at November 19, 2012 7:04 PM
I care a great deal less about a privately held company "looting" itself than I do about companies like Solendra, who stiff their creditors, while you and I (taxpayers) fund a golden parachute for their executives, and politcally connected investors.
Isab at November 20, 2012 7:59 AM
On the Snopes article http://www.snopes.com/politics/business/hostess.asp it reports that the top execs got $1 in compensation.
The Former Banker at November 20, 2012 11:21 AM
If you don't like the way a company's being managed, you should go work somewhere else, and/or you should not buy the stock.
Listen... Guys... Capitalism doesn't make us all into generous, loving people, OK? It just allows us to protect ourselves from those who will never try.
Crid [CridComment at gmail] at November 21, 2012 12:14 PM
Why are you bitching about a company that is operating under the law according to its own charter?
People who apparently have never cracked a book complain about the behavior of corporations. They want the company to play by their rules, not according to the contract with shareholders or the instructions of the company's board of directors.
This is nothing but another shallow display of envy.
What other people are paid is not your damned business unless you pay them.
Radwaste at November 22, 2012 12:48 AM
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