Hostess CEO Cuts Worker Pay, But Leaves Own Salary Untouched

[The Straight Story]

After failed Twinkies-maker Hostess filed for bankruptcy in November, acting chief executive Gregory Rayburn imposed an 8 percent across-the-board pay cut on the company’s workers. Despite those cuts, Rayburn, who took the company over after its second bankruptcy filing in March, will not be subject to the pay cut because he is not technically a company employee, the Huffington Post’s Bonnie Kavoussi reports:

Though he imposed an 8 percent pay cut for all Hostess workers, Gregory Rayburn’s monthly $125,000 pay — or $1.5 million a year — will remain unchanged, a company spokesman told The Huffington Post on Monday. Rayburn is not on the Hostess payroll and therefore isn’t subject to the imposed pay cut, the spokesman explained.

Earlier this year, Hostess’ former CEO received a pay increase from $750,000 to nearly $2.5 million even as the company was struggling. The pay package was later reduced to $1.5 million, and Rayburn reduced the salaries of four other senior executives who received bonuses to just $1 until the company emerges from bankruptcy, according to a company spokesperson. Four other executives who received raises, the spokesperson said, had their salaries reduced to pre-raise levels.

Still, the company asked a judge to approve $1.75 million in bonuses for 19 executives after it filed for bankruptcy in November. The judge approved the bonuses this week, making Hostess the latest company to dole out big pay packages to executives even as their firms were failing.

http://thinkprogress.org/economy/2012/12/04/1278131/hostess-ceo-cuts-worker-pay-but-leaves-own-salary-untouched/

[midnight]

1. Taking a pay increase while company is floundering doesn't make good business sense....

[The Straight Story]

3. The view at the top is, if you pay more, people are more productive

Unless those people are blue collar, then paying less is good for the company...

[LisaLynne]

2. They like to justify the huge salaries of executives on the idea that they are making the ...

company succeed. So, when a company is failing, how exactly does it make sense that these guys deserve MORE money? And THAT much more?

Because they know it's not about helping the company, but getting rich white guys into positions where they can absorb the money back into the rich elite class.

[Turbineguy]

4. Ah yes, but you see, there is a rationale behind this.

Allow me to explain. The "ordinary" Workers are notorious supporters of the concept of keeping the company in business and profitable. Managemenent is not. Therefore management has to work extra hard to overcome the Workers and destroy the company. Don't you think they should be well-paid for that? Of course you do. Hard work deserves a big paycheck. And Workers who do not tow the party line deserve to get their pay cut.

I hope that's clear now.

[rock]

5. Or a slightly more accurrate way of stating it is

Rayburn is a Hostess asshole and therefore isn’t subject to the imposed pay cut.

[Bake]

6. Actually, there is a "rationale" of sorts for the exec pay.

The company is failing, soon to be liquidated. If you want to keep the current managers in their jobs until the end, as opposed to them jumping ship now, you have to pay them more money to entice them to stay.

That's the rationale. My response would be that hey, since they did such a bang-up job of running the company into the ground, why encourage them to stay now?

Bake