Hostess: Betrayal without remedy.

[dmcowen674]

As fools on this forum seem to think, only hostess workers should take the wage cuts.

Where does it stop, shall we authorize hostess workers to work for less than minimum wage as the only proper solution.

As only the top 1% that are incompetent deserve the lions share of American wealth as the 99% deserve nothing.

As the more incompetent that top 1% get, the less the 99% should get.

Unfortunately the "Fools" rule.

Until the workers of America rise up against the "Fools" this will be more and more common news.

 

[werepossum]

Simply this... At some level they do know what they are doing and know how to run their portion of the company - regardless of how badly it was run beforehand. You are not going to find any qualified management to come in and fill those shoes and have familiarity with their operations while the company is in bankruptcy or liquidation.

But that assumes they DO know what they are doing simply because they are doing it. That would be valid IF they had saved the company, and might be valid now (assuming one puts all the blame on the intransigent bakers' union) but I see no reason to assume it. The court's reasoning seems to be that since they are there, they need to be incentivized to stay there. That seems like rewarding failure. Why assume that the same people who failed to save the company are better choices for liquidation than, say, liquidation specialists?

seriously, something is seriously wrong. you cant have a company that sells 10 cent cakes for $2 each with the most desirable label in the country and not find a way to be profitable. people never stopped liking hostess, the demand was always there. someone or many people took a shitload of money from that company, no doubt.

From the stories on this forum, people did indeed stop liking Hostess. People are going to more healthy snacks, and to the extent that people are still consuming the less healthy snacks Hostess makes, McKee Foods is simply superior in virtually every product line. That means Hostess must charge less than Little Debbie to compete, but Hostess has considerably higher labor costs; it simply can't survive on what it can get for its products. Management failed to develop the trendier and healthier products, labor failed to recognize their relative worth in the market, and both sides failed to make better products that could compete within their markets. Of course, one side is laid off whilst the other side is getting bonuses. As always, it's good to be the king, even when the kingdom is failing.

 

[Agent11]

Little Debbie isn't nearly as good as hostess imo, from a purely taste perspective.

 

[Geosurface]

I happen to think the executives are greedy pieces of shit who don't need salaries or bonuses anywhere near what they get, but I ALSO think the unions really screwed the pooch here.

Dumbasses on both sides of this issue.

People need to realize that you cannot strong arm capitalists into being moral and nice, and while you can get away with SOME measures like that, (weekend, minimum wage, etc) once you get hooked on the idea that you can always just make more rules and regulations until even the janitor at McDonald's is living in a utopian dream... well, you will one day turn around and see that, while you have passed all these laws that say everything should be perfect and fair and amazing... all those greedy capitalist pieces of shit did exactly what you should've realized they'd do. They packed up shop and moved all the jobs overseas.

 

[Double Trouble]

What a sordid mess that whole situation is. It's also readily apparent that many people commenting have no understanding of how business processes actually work in the real world.

But WHY? Why do we need those particular executives to the point that they deserve bonuses for sticking around?

Because like it or not, those execs - while they may have contributed to the downfall of the company - are the ones who know how things work inside the company and where the bodies are buried. Them leaving destroys a lot of the value of the company in a liquidation or restructuring, costing creditors (including the workers in the form of pensions) a lot more than the amount spent in bonuses to retain the execs. That's why judges in bankruptcy proceedings often OK huge bonuses for execs, even if those execs are the idiots that messed things up to begin with. Having them all bail out is a lot more costly in the grand scheme.

In addition, if you add up all the exec bonuses and salaries, it doesn't add up to a hill of beans compared to the total company numbers. It's a nice hot button to get people mad, but in reality executive bonuses are meaningless in terms of the overall cost structure and don't have anything to do with the survival of the company.

That said, I feel bad for all those who through no fault of their own are now getting screwed out of a pension

 

[Double Trouble]

I happen to think the executives are greedy pieces of shit

I'm sure many of them are greedy pieces of shit, but if you were offered bonuses or salary increases in your job, would you turn them down? Not likely. They do the same as anyone else does when provided with an opportunity to get paid more, it's just that they get paid more.

 

[Geosurface]

I'm sure many of them are greedy pieces of shit, but if you were offered bonuses or salary increases in your job, would you turn them down? Not likely. They do the same as anyone else does when provided with an opportunity to get paid more, it's just that they get paid more.

Oh I agree, the part I left out was that ALL humans are greedy pieces of shit.

 

[dmcowen674]

Originally Posted by Geosurface
I happen to think the executives are greedy pieces of shit

I'm sure many of them are greedy pieces of shit, but if you were offered bonuses or salary increases in your job, would you turn them down?

Not likely.

They do the same as anyone else does when provided with an opportunity to get paid more, it's just that they get paid more.

At least you are an honest piece of shit, right?

 

[Pr0d1gy]

Oh I agree, the part I left out was that ALL humans are greedy pieces of shit.

Not true at all. What I find totally hilarious is almost nobody is pointing out that a company that makes snacks, and had sales totaling $2.5billion was operating at a $300million loss. Yeah, I blame the unions for that, too.






Wait, what???

 

[techs]

seriously, something is seriously wrong. you cant have a company that sells 10 cent cakes for $2 each with the most desirable label in the country and not find a way to be profitable. people never stopped liking hostess, the demand was always there. someone or many people took a shitload of money from that company, no doubt.

Actually from the stories in the news people did stop liking Hostess. Sales were down as people switched to healthier, or at least perceived healthier snacks.

Just from my own shopping experience the bread aisle has changed a lot over the last ten years. It used to be your basic bread in white, wheat, pumpernicle, etc. Now its full of 12 grain, honey wheat, etc. Apparently as other companies were introducing new types Hostess just kept making Wonder Bread in its same old way. People wanted variety and new types. Yet Hostess seemed to not care.

Hostess big problem, which I read about a few years back, is that as a national brand they competed in every market and had to have bakeries across the US. Their competition was local bakeries that were better suited to local areas and their different preferences. Also, store brand bread, like a lot of store brands, has become much more popular as people have become less brand conscious and more cost conscious.

 

[Pr0d1gy]

Actually from the stories in the news people did stop liking Hostess. Sales were down as people switched to healthier, or at least perceived healthier snacks.

Yeah, I wish people stopped liking me. Maybe then I could rake in $2.5billion in a sales in a year.

Derpa derp

 

[soulcougher73]

Most companies provide pensions through single-employer plans that they fund themselves. When companies with these plans file for bankruptcy protection, they sometimes terminate the plans, leading the Pension Benefit Guaranty Corp., the government agency that insures corporate pensions, to take over the plans and make payouts to their retirees.

What is to stop any company from doing this and putting it onto the tax payers backs? I was actually unaware we have a gov agency that picked up private companies pension funds when they just didnt feel like paying them anymore.

 

[Genx87]

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

You realize those bonus's are designed to get the company through bankruptcy? They arent bonus's for doing a job above and beyond the call of duty. They are to keep people on staff.

 

[soulcougher73]

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.

IMO you never deserve a bonus if you are on board when a company goes bankrupt. Obviously you and the other management suck at your jobs otherwise you wouldnt be going bankrupt.

 

[soulcougher73]

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

But Hostess makes pies

 

[Mursilis]

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.

I have a hard time believing jobs paying in the six and seven figures will go wanting for candidates.

 

[soulcougher73]

They didn't mess with the pensions or steal from the pension funds... they simply stopped contributing and the unions were informed of it as they should have been. Nothing was done wrong in that regard.

From what i gathered they were taking the employee contribution to the pension, not the companies. That would be like my company taking my 401k contribution and not there 401k matching contribution. I can understand them stopping their matching contribution if times are tough. But dont touch mine.

Maybe im reading it wrong, but that is what i was getting.

 

[soulcougher73]

Mismanaged? Yes. Overcompensated? Probably not based on Hostess being a multi billion dollar operation. Those salaries are not out of line and nor did they contribute much to Hostess shutting down... Those salaries do not add up to the $300 million dollar a year losses now do they? Note: All of Hostess management took the same 8% pay cut as the unions did in their last contract negotiation.

And then turned around and voted themselves a pay raise as the company is sinking? yeah..make sense

 

[soulcougher73]

Thank you, come again.

What would Jesus do? Yeah..not what Hostess did.

 

[Thump553]

Hostess was in bankruptcy, and operating under the control of the bankruptcy court and pursuant to bankruptcy law. This is not unfettered capitalism by any stretch-talk to any business person who has operated a company under these rather onerous restraints.

My main question: Where the f*ck was the US Trustee's office? They should have been monitoring the bankruptcy and not permitted this diversion of trust funds, especially where management was pulling down both healthy renumeration plus bonuses.

It's easy to see in retrospect why Hostess failed. Management was out to loot the company, labor had absolutely no faith in management (but all appearances justifiably so). No way any company can be saved unless ALL major players are willing to sacrifice and there is at least some trust among them.

 

[soulcougher73]

Ah yes, punt the issue to the board of directors of Hostess. I have no problem with that, put the board of directors in jail too. Why did those rat finks authorize huge bonuses to Hostess executives when the company was being mis manged? When the board of directors were equally responsible for the tax payer rip off, why should they escape criminal liability. After all, only the board of directors could have authorized Hostess executives who did not pay their pension obligations while they authorized huge bones to clearly incompetent Hostess executives.

As fools on this forum seem to think, only hostess workers should take the wage cuts. Where does it stop, shall we authorize hostess workers to work for less than minimum wage as the only proper solution. As only the top 1% that are incompetent deserve the lions share of American wealth as the 99% deserve nothing. As the more incompetent that top 1% get, the less the 99% should get.

But..but the Hostess execs voted the other Board of Directers big bonus' at their respective companies They all sit on each others boards and do a big FU circle jerk to America.

 

[Exterous]

What is to stop any company from doing this and putting it onto the tax payers backs? I was actually unaware we have a gov agency that picked up private companies pension funds when they just didnt feel like paying them anymore.

It's not 'didn't feel like paying' its 'has no ability to pay'

I am not fully versed on the group as I don't have a pension but there are limits to the payouts and some people (people with less tenure?) have been known to take pretty noticeable haircuts upon takeover

I think its also important to note that only about 70% of the Hostess pension was funded. In to late 90s when the stock market was doing well everyone got the great idea that pension plans didn't need to be 100% funded. I mean, look at all the extra cash they had! Why would we need to keep that around? The good times will always be here right?

Well, now companies are struggling with underfunded pensions because low growth. Sure would be nice to have that cushion about now...

 

[Exterous]

From what i gathered they were taking the employee contribution to the pension, not the companies.

That's what I get too:

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.

I would think that would be considered coming from the employee but:

The maneuver probably doesn't violate federal law because the money Hostess failed to put into the pension didn't come directly from employees, experts said.

So either we are missing a detail or since it was deducted before the paycheck was issued it is 'not coming directly from the employee'. If thats the case that seems like an absurd loophole.

However this may be part of the confusion:

Hostess had 115 different collective-bargaining agreements with employees represented by the bakers union. Each contract let those workers choose an amount of wages to direct to the pension plan.

Maybe its stealing for one of those contracts but not the others?

 

[hans007]

I have a hard time believing jobs paying in the six and seven figures will go wanting for candidates.

You won't get anyone good. The company I work for declared bankruptcy 3 Yeats ago. We pay our new CEO a ton but in his 3 years actually did quite a bit to raise revenue and get certain areas growing. It was probably worth it.

Last place I went was a startup that was bleeding money. New CEO rebranded the company and changed its focus to enterprise and the place ends up getting sold for 400 million like 6 years later.



Put it this way. Lebron wants 20 mil a year from the heat. The heat want to spend less and hire some random 6'8 guy for a million a year. Tons of people want a million a year should be easy Ro fine them. New guy sucks the heat lose fans and lose more than the 19 mil they should have just paid Bron.

People who lack talent to command wages always say things like there's plenty of people who'd be able to fill CEO x's shoes. They also believe everyone in america can become anything they aspire to be.

 

[werepossum]

What a sordid mess that whole situation is. It's also readily apparent that many people commenting have no understanding of how business processes actually work in the real world.



Because like it or not, those execs - while they may have contributed to the downfall of the company - are the ones who know how things work inside the company and where the bodies are buried. Them leaving destroys a lot of the value of the company in a liquidation or restructuring, costing creditors (including the workers in the form of pensions) a lot more than the amount spent in bonuses to retain the execs. That's why judges in bankruptcy proceedings often OK huge bonuses for execs, even if those execs are the idiots that messed things up to begin with. Having them all bail out is a lot more costly in the grand scheme.

In addition, if you add up all the exec bonuses and salaries, it doesn't add up to a hill of beans compared to the total company numbers. It's a nice hot button to get people mad, but in reality executive bonuses are meaningless in terms of the overall cost structure and don't have anything to do with the survival of the company.

That said, I feel bad for all those who through no fault of their own are now getting screwed out of a pension

Hostess was a HUGE company, so I'm betting that for each CXO level executive there are half a dozen people underneath them who know that part of the business better than does the CXO. These are the people without impressive resumes, but who actually handle things while the CXOs are in meetings to determine strategic direction. The people who prepare the briefs and presentations the CXOs present and use to make decisions, who implement the broad directives set from above. Given that Hostess is dissolving for debts, could these people really do worse? (Absent any CXOs or executives running still-profitable divisions, of course.)

Part of my problem with this process is that it removes any penalty for failure. I would much prefer a system by which the CXOs work for a pittance but get huge bonuses if they get the company back into the black for a year, but then get no bonuses if the company does dissolve. Then we'd get CXOs willing to bet on themselves. As the system exists now we get the CXOs who look best on paper, and they are guaranteed a year or two of very lucrative work whether they do well or do ill. Let's introduce some competition for results rather than competition in resumes. If you're really worth a million or two a year, surely you'll be willing to bet on yourself, no? Instead of paying you $4 million for two years, succeed or fail, give me two years for $10 million if you succeed and $200K if you fail.

IMO you never deserve a bonus if you are on board when a company goes bankrupt. Obviously you and the other management suck at your jobs otherwise you wouldnt be going bankrupt.

I tend to agree. At the very least, surely ALL these execs aren't deserving of continuing employment, much less bonuses.