Hostess: Betrayal without remedy.

[techs]

http://finance.yahoo.com/news/hostess-maneuver-deprived-pension-051400720.html

Hostess Maneuver Deprived Pension

Hostess Brands Inc. said it used wages that were supposed to help fund employee pensions for the company's operations as it sank toward bankruptcy.

After the company said in August 2011 that it would stop making pension contributions, the foregone wages weren't put toward the pension. Nor were they restored.

Gregory Rayburn, Hostess's chief executive officer, said in an interview it is "terrible" that employee wages earmarked for the pension were steered elsewhere by the company.

"It's what lawyers call betrayal without remedy," said James P. Baker, a partner at Baker & McKenzie LLP who specializes in employee benefits and isn't involved in the Hostess case. "It's sad, but that stuff does happen, unfortunately."

The decision to cease pension contributions angered many employees. After the bankruptcy filing, Hostess tangled with the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco and Grain Millers International Union to renegotiate labor contracts.

While the Teamsters union agreed in September to a compromise, resistance from the bakers union was fierce.

Halted pension contributions were a major factor in the bakers union's refusal to make a deal with the company. After a U.S. bankruptcy judge granted Hostess's request to impose a new contract, the union's employees went on strike. Hostess then moved to liquidate the company.

"The company's cessation of making pension contributions was a critical component of the bakers' decision" to walk off the job, said Jeffrey Freund of Bredhoff & Kaiser PLLC, a lawyer for the union.

"If they had continued to fund the pension, I think we'd still be working there today," said Craig Davis, a 44-year-old forklift operator who loaded trucks with Twinkies, cupcakes and sweet rolls at an Emporia, Kan., bakery, for nearly 22 years.




I'm not surprised it took so long for this to come out. The right wing media saturated us with their mythical idea that the unions killed the company when in fact it was management. The the executives were getting big bonuses and raises using money that was supposed to go towards workers pensions.

 

[Pantoot]

http://finance.yahoo.com/news/hostess-maneuver-deprived-pension-051400720.html

The the executives were getting big bonuses and raises using money that was supposed to go towards workers pensions.

I didn't see that part in the article, did you get it from somewhere else?

 

[DaveSimmons]

Wow, it's a step beyond having an under-funded pension to actually stealing pension contributions taken out of paychecks, while paying bonuses to the executives.

This sort of theft should result the executives being forced to return their stolen bonuses, preferably followed by prison terms. Being a "job creator" does not entitle you to steal retirement contributions.

"Bankrupt Hostess to Give Execs Bonuses"
http://news.yahoo.com/bankrupt-hostess-execs-bonuses-094718695--abc-news-topstories.html

 

[CADsortaGUY]

I didn't see that part in the article, did you get it from somewhere else?

He's one of those people that thinks that even though the company was teetering they should continue to pay into people's pensions. Seems to me that a more realistic person would prefer to have a job with no employer contribution than no job at all. But hey.... where is the sense in that?

 

[Drako]

I didn't see that part in the article, did you get it from somewhere else?

No, she just made that part up.

I'm not sure how a company is supposed to survive when they are posting $300 million in loses for the last couple of years.

 

[chucky2]

Why would a union who has members at a company who is going bankrupt/about to go bankrupt turn around and want that company to pay its money into union members pension funds??? Why can't the union folks take their money, and put it into their own 401(k)? What is so difficult about that?

 

[Jaskalas]

I didn't see that part in the article, did you get it from somewhere else?

Gregory Rayburn, Hostess's chief executive officer, said in an interview it is "terrible" that employee wages earmarked for the pension were steered elsewhere by the company.

^ This?

 

[werepossum]

I didn't see that part in the article, did you get it from somewhere else?

If one is insane, evidently "for the company's operations" looks surprisingly like "the executives were getting big bonuses and raises using money that was supposed to go towards workers pensions."

Hostess was no longer a viable company, ergo it could no longer afford to fund retirement pensions. For the Bakers Union, the answer was simply to pitch a tantrum and demand that money be found. Sometimes the company is bluffing and the tantrum works. Sometimes the company is not bluffing and the tantrum costs you and all your coworkers your jobs.

If your company is in bankruptcy, perhaps assuming that the evil executives are sitting on pots of money they are hoarding is no longer a reasonable assumption.

 

[TechBoyJK]

This just in, Unions are dumb. Details at 11.

 

[CycloWizard]

It's stunning how similar are the shenanigans of the public and private sectors.

 

[werepossum]

Wow, it's a step beyond having an under-funded pension to actually stealing pension contributions taken out of paychecks, while paying bonuses to the executives.

This sort of theft should result the executives being forced to return their stolen bonuses, preferably followed by prison terms. Being a "job creator" does not entitle you to steal retirement contributions.

"Bankrupt Hostess to Give Execs Bonuses"
http://news.yahoo.com/bankrupt-hostess-execs-bonuses-094718695--abc-news-topstories.html

Um, "stealing pension contributions taken out of paychecks" would not be "what lawyers call betrayal without remedy". There are very specific remedies for that, including repayment and prison. This article is about the company no longer being able to pay their voluntary payments into the employees' pension accounts.

Your article does bring up one good point though - why is the bankruptcy judge awarding bonuses to executives who failed to save the company? If the judge's opinion is that the management team was doing a good job but the unions killed the company, I can kind of see that, but I wonder if this is simply business as usual. Perhaps a better solution might be to allow the creditors to vote (in proportion to debt owed) on whether the executives deserve a bonus while liquidating the company. It's entirely possible that the judge and the creditors might disagree on whether this is the best management team to recoup as much of their losses as possible.

 

[FaaR]

This just in, Unions are dumb. Details at 11.

Yeah, to think that the company board doesn't always have Joe Schmoe's best interests at heart all the time is really, really dumb...

 

[waggy]

Your article does bring up one good point though - why is the bankruptcy judge awarding bonuses to executives who failed to save the company?

because of you start denying it then business's that are on the brink of bankruptcy won't find a CEO.

I have no issue with the bonuses. I am against messing with peoples pensions. the sad part is many places do it now. that should be very against the law.

 

[dank69]

He's one of those people that thinks that even though the company was teetering they should continue to pay into people's pensions. Seems to me that a more realistic person would prefer to have a job with no employer contribution than no job at all. But hey.... where is the sense in that?

Just because you don't mind taking it up the ass from your employer doesn't mean everyone else should accept it as sensible.

 

[CADsortaGUY]

Just because you don't mind taking it up the ass from your employer doesn't mean everyone else should accept it as sensible.

I will choose a different employer if I feel I'm not being treated fairly. Also, I'd rather have a job than no job because a group of selfish "bakers" threw a tantrum.

 

[1prophet]

If one is insane, evidently "for the company's operations" looks surprisingly like "the executives were getting big bonuses and raises using money that was supposed to go towards workers pensions."

Hostess was no longer a viable company, ergo it could no longer afford to fund retirement pensions. For the Bakers Union, the answer was simply to pitch a tantrum and demand that money be found. Sometimes the company is bluffing and the tantrum works. Sometimes the company is not bluffing and the tantrum costs you and all your coworkers your jobs.

If your company is in bankruptcy, perhaps assuming that the evil executives are sitting on pots of money they are hoarding is no longer a reasonable assumption.

A company not being able to fund their side of a pension or 401k is one thing, taking the employees wage contribution to the pension plan is quite another,

Gregory Rayburn, Hostess's chief executive officer, said in an interview it is "terrible" that employee wages earmarked for the pension were steered elsewhere by the company.

that is why the Bakers union was so pissed off while those Democrat lackeys the Teamsters who made no contribution didn't mind compromising.

Teamster-represented employees at Hostess didn't contribute a portion of their wages toward pensions, a union spokesman said. But among workers in the bakers union, it was "standard practice," said Mr. Rayburn, Hostess's CEO

 

[MagnusTheBrewer]

All of you idiots who think the unions were responsible for Hostess shutting down might want to look at the History of Interstate Bakeries. Read about CEO Charles Sullivan and his CFO. This was simply the result of continued mismanagement from the top down dating back to 1999. The company was robbed blind at the very top. Here are some of the management team perks just 6 months prior to filing chapter 11.

Brian Driscoll, CEO, from around $750,000 to $2,550,000

Gary Wandscheider, EVP, $500,000 to $900,000

John Stewart, EVP, $400,000 to $700,000

David Loeser, EVP, $375,000 to $656,256

Kent Magill, EVP, $375,000 to $656,256

Richard Seban, EVP, $375,00o to $656,256

John Akeson, SVP, $300,000 to $480,000

Steven Birgfeld, SVP, $240,000 to $360,000

Martha Ross, SVP, $240,000 to $360,000

Rob Kissick, SVP, $182,000 t0 $273,008

These were simply the latest but, by no means, the greatest thieves. I repeat, read about Charles Sullivan and learn how Hostess shutting it's doors in 2012 was the direct result of his raping the company in 1999 followed by a host of management scavengers.

 

[DaveSimmons]

This looks like theft of wages to me:

---
"For example, John Jordan, a union official and former Hostess employee, said workers at a Hostess factory in Biddeford, Maine, agreed to plow 28 cents of their 30-cents-an-hour wage increase in November 2010 into the pension plan.

Hostess was supposed to take the additional 28 cents an hour and contribute it to the workers' pension plan. "
---

Instead, executives voted themselves pay raises:
http://online.wsj.com/article/SB10001424052702304072004577323993512506050.html

Some creditors question Hostess pay raises approved in late July.

Brian Driscoll, CEO, around $750,000 to $2,550,000
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008

 

[Sonikku]

No, she just made that part up.

I'm not sure how a company is supposed to survive when they are posting $300 million in loses for the last couple of years.

Sony does it just fine. $5 billion in the last year alone!

 

[waggy]

i wouldn't worry about sony. they have there fingers into many many pies. you really can't compare them to something like hostess.

 

[werepossum]

because of you start denying it then business's that are on the brink of bankruptcy won't find a CEO.

I have no issue with the bonuses. I am against messing with peoples pensions. the sad part is many places do it now. that should be very against the law.

But this is AFTER they failed to save the company. I can see bonuses if they are saving the company, I just can't see rewarding failure. If we're looking for executives to turn around a business, I'd rather take only those willing to gamble on their own abilities rather than those who insist on receiving bonuses regardless of success.

A company not being able to fund their side of a pension or 401k is one thing, taking the employees wage contribution to the pension plan is quite another,

that is why the Bakers union was so pissed off while those Democrat lackeys the Teamsters who made no contribution didn't mind compromising.

I do not believe that happened, because spending employee payroll deductions on other items is very, very actionable. It is the very antithesis of "betrayal without remedy" as people regularly go to federal prison for this. I think we're seeing some intense and politically motivated spinning of what Hostess legally did with the money it would otherwise have been adding to the employees' contributions. No federal bankruptcy judge is going to give bonuses to executives who took federal payroll deductions (which the employees' contributions are) and did not deposit them, but rather spent them on other things.

 

[DaveSimmons]

I do not believe that happened, because spending employee payroll deductions on other items is very, very actionable. It is the very antithesis of "betrayal without remedy" as people regularly go to federal prison for this. I think we're seeing some intense and politically motivated spinning of what Hostess legally did with the money it would otherwise have been adding to the employees' contributions. No federal bankruptcy judge is going to give bonuses to executives who took federal payroll deductions (which the employees' contributions are) and did not deposit them, but rather spent them on other things.

They did steal wages, just not via a payroll deduction. If you read the articles, in wage negotiations the company agreed to an hourly wage increase in the form of a company pension contribution.

They then spent the money on operations and executive salaries instead of making the agreed-on pension contributions.

That's a different situation from the usual under-funded pensions that many companies have -- this is agreeing to a 28-cent an hour wage increase and then pocketing it.

 

[waggy]

But this is AFTER they failed to save the company. I can see bonuses if they are saving the company, I just can't see rewarding failure. If we're looking for executives to turn around a business, I'd rather take only those willing to gamble on their own abilities rather than those who insist on receiving bonuses regardless of success.

don't matter. Nothing is 100%. IF the courts start refuseing to give the bonus if they don't turn the company around you won't get CEO's. well not any that can actually turn around the business.

I have no problem with the bonus. the stuff i have read about the pension though is bullshit though.

 

[techs]

All of you idiots who think the unions were responsible for Hostess shutting down might want to look at the History of Interstate Bakeries. Read about CEO Charles Sullivan and his CFO. This was simply the result of continued mismanagement from the top down dating back to 1999. The company was robbed blind at the very top. Here are some of the management team perks just 6 months prior to filing chapter 11.

Brian Driscoll, CEO, from around $750,000 to $2,550,000

Gary Wandscheider, EVP, $500,000 to $900,000

John Stewart, EVP, $400,000 to $700,000

David Loeser, EVP, $375,000 to $656,256

Kent Magill, EVP, $375,000 to $656,256

Richard Seban, EVP, $375,00o to $656,256

John Akeson, SVP, $300,000 to $480,000

Steven Birgfeld, SVP, $240,000 to $360,000

Martha Ross, SVP, $240,000 to $360,000

Rob Kissick, SVP, $182,000 t0 $273,008

These were simply the latest but, by no means, the greatest thieves. I repeat, read about Charles Sullivan and learn how Hostess shutting it's doors in 2012 was the direct result of his raping the company in 1999 followed by a host of management scavengers.

Here's the sad part. From other stories on Hostess it is clear that when sales were dropping due to consumers preference for healthier foods, Hostess practically refused to do what its competitors were doing. Make healthier, or at least trendier products.

Apparently the corporate executives didn't want to take any risks that might cost them their cushy jobs. So they just kept cutting corners, cutting wages, deferring modernization, etc while the company was spiraling downward.

In fact the unions in a previous negotiations had proposed a temporary wage reduction with the money to be used for new products. Hostess declined the offer.

So, while practically every food company and restaurant chain in America was responding to the changing marketplace for healthier foods, Hostess basically made the decision to ride their company all the way to the end with a failing business model.

But at least their executives got paid.

 

[Lemon law]

Techs may be wrong about no remedies, when the executives of Hostess should go to jail, straight to jail, and lose all their illegal money.

And if we do that to Hostess executives, other companies will learn their lessons and not try the same stunt.

You do the crime, you do the time. But why should it only apply to people use guns, when white collar steal far more.

As for me, I am pissed off, why should my tax pater dollars go to fund Hostess employee pensions. But by law, that is why we have a pension guarantee law as its the fair thing to do.

But still there is only one lesson here, jail the bastards and throw away the key. And no resort prison for them, threat them like all common criminals.