Hostess CEO's Yearly Salary Tripled from $750K to $2.5 Mil, As It Blames Labor For Bankruptcy

[amborin]

Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay

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.

snip

http://thinkprogress.org/economy/2012/11/16/1203151/why-unions-dont-shoulder-the-blame-for-hostesss-downfall/


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updated to add: no different at American Airlines, United Airlines, Northwest, etc......

AA is close to settling with its beleagured front line workers. Bankruptcy was just the CEOs's way to break their union agreement with the pilots, flight attendants, mechanics, etc:

"....Mr. Horton put American’s parent, AMR, into Chapter 11 bankruptcy protection in November 2011.....


".....But there potentially is another reason — one that would be a perverse incentive — that Mr. Horton may be shunning a deal with US Airways before emerging from bankruptcy: a giant payday.

Mr. Horton and his management team stand to receive somewhere between $300 million and $600 million if he can make it through bankruptcy court without merging first with a rival like US Airways.

In an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11, with the C.E.O. often getting 1 percent.

This happens, oddly enough, despite some of the same management wiping out shareholders (including themselves) by filing for Chapter 11 in the first place. AMR is expected to be valued at as much as $6 billion if it exits bankruptcy independently, analysts estimate.

Over the last several decades in the airline business, this is where C.E.O.’s have gotten rich.

Take a look at United’s bankruptcy back in 2005: Glenn Tilton, who was then the airline’s chief executive sought 15 percent of the company’s equity for management from creditors; after pushback from creditors, management lowered its request to 11 percent. After some back and forth, management was awarded 8 percent of the company. Mr. Tilton received a pay package worth nearly $40 million in new shares and other compensation in the company’s first year after emerging from bankruptcy.

A similar story played out when Northwest went through Chapter 11. Its former chief, Doug Steenland, received a package worth some $26.6 million in new shares when the company emerged from bankruptcy in 2007. "

snip

http://dealbook.nytimes.com/2012/07/09/american-and-us-airways-dance-around-a-merger/

[Archae]

1. This is exactly what I talked about.

I knew that Hostess' management was letting quality of their products go to hell.

All the while that big CEO got a 300% raise, while the workers who had no sayso in this got screwed.

[backscatter712]

2. B-b-but!!! It's those eeeeeeeeeevil unions!

How dare they demand they get paid enough to actually live off of, and have things like a pension and health care! Why paying workers a fair wage drives us into bankruptcy!

How is the company going to afford to pay me enough to buy another castle if I have to pay fair wages?

[hifiguy]

3. The parasite class strikes again.

Torches and pitchforks, tumbrels and scaffolds, are the only thing that might get through the heads of these swine.

[Cobalt Violet]

4. Sounds like Hostess got harvested.

[PD Turk]

5. That's exactly what happened

They corporate raided the company to death. Those workers knew they were going to shut it down anyway so they chose to go out on their feet instead of crawling on their bellies.

[frylock]

6. good on em!

at least they have their dignity.

[PD Turk]

7. Exactly

Hopefully the fight for economic justice will take an upswing. It might get ugly but if labor keeps calling their hand maybe things will change for the better.

[dixiegrrrrl]

13. It got "Romney'd"

[BeyondGeography]

8. Argh

[L0oniX]

9. Very Bain-ish. The smell of Rmoney activity.

[Initech]

10. The CEOs cut and run while we suffer. Same shit different day.

[uponit7771]

11. +1!

[WillyT]

12. Huge K & R !!!