Hostess wants judge to OK million+ for exec bonuses

[Bunnykid68]

Well, scratch everything I said.

Why did they do it? Were the bakery drivers there first vs. someone else? If the union was standing in the way of route closures because it protected a few jobs, that certainly isn't good. If workers were being squeezed to run longer routes and take a heavy compensation cut, that isn't good as well.

Teamsters can be a funny folk. Have dealt with them myself before and my uncle did as well when he ran a restaurant, didn't work out well for the teamster guy with my uncle. Something about having to tailgate 2 pallets of bbq sauce with a 2 wheeler and no help cause he was an assbag

 

[smokingman]

So what?

Last time I checked, (and I think it is still true) Hostess was a PRIVATELY OWNED company. The executives put up the cash to buy the company, they risked their homes and personal funds to buy the company in hopes of turning it around (its had 5 prior sets of failed managers) so now that the company is collapsing, as long as the debtors are paid off then why should the executives, the same ones who risked their private fortunes, not get back some of what they invested?

There is no way they should receive a bonus.Not when the taxpayer is on the hook for 300 million plus already.The corpse is already being divided up and guess who is left holding the bag? YOU.Why? Because we have the Federal Pension Benefit Guaranty corp.Pension Benefit Guaranty Corp - PBGC Protects America's Pensions

Not only will you be paying the pension of the hourly workers,but also those executive pensions(Max per month is currently $14,146.37 per person,the executives will have to take a pay cut,but rest assured you are paying them life long retirement benefits).http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html

That is what the corpse of hostess assets should be sold for.Instead they will be sold liability free so the next hedge fund can load it up with debt again and repeat the process....just like last time.

Only this time they are managing to discard all liabilities,and give them to YOU the taxpayer(something they have been unable to due under normal bankruptcy which is why the liquidation now).

http://www.institutionalinvestor.com/Article/2696150/Research/4002/Overview.html

The above link is just the tip of the iceberg at 82 million for the plan that covered 1500 employees.

 

[level.eleven]

Heh. I have an idea. Lets make one of these equity guys President.

 

[steveh_131]

Heh. I have an idea. Lets make one of these equity guys President.

That wasn't even fair!

 

[rjstew317]

im not sure why they are calling this a bonus. 19 executives are being paid $95,000 dollars each to oversee the liquidation of the company. their goal is to recoup as much money from this process as possible in order to pay back $860 million owed to secured creditors. It's these secured creditors that are funding the pay to begin with.

 

[CarmelHP]

im not sure why they are calling this a bonus. 19 executives are being paid $95,000 dollars each to oversee the liquidation of the company. their goal is to recoup as much money from this process as possible in order to pay back $860 million owed to secured creditors. It's these secured creditors that are funding the pay to begin with.

From the article:
"The compensation would be on top of their regular pay."

How is it not a bonus?

 

[Pinchaser]

So what? It's exactly what they should do.

 

[HoughMade]

im not sure why they are calling this a bonus. 19 executives are being paid $95,000 dollars each to oversee the liquidation of the company. their goal is to recoup as much money from this process as possible in order to pay back $860 million owed to secured creditors. It's these secured creditors that are funding the pay to begin with.

MY point exactly- even if it "on top of regular pay", in reality, it is part of their agreed-upon pay, it's just paid in lump sums based upon performance. I have no problem with this and the class warfare is disheartening.

 

[CarmelHP]

I have no problem with this and the class warfare is disheartening.

You mean that the very rich are winning in a rout? Anyone who has been around here for a few months knows that I'm not exactly a bleeding heart, but firing the guys who are pushing brooms in order to pay more to top echelon pencil pushers is what is "disheartening."

 

[danbb]

The way I read it, they are trying to keep these people on so that they will work to liquidate the company, there would be no incentive for them to stay otherwise. You don't need 18,000 bakers to liquidate a company, you need the executives. Like it or not, greed runs this country and it is the reason that we are prosperous (as compared to the rest of the world)

 

[Prometheus]

If there are any assets left after the company is dissolved, why should the investors not get back those assets? They own the assets. Why should they not be able to recover some of what they invested?



Interesting comments.

In the fresh baked snack market ALL of the bakery companies seem to be floundering and near default. But its all the fault of management and the unions extracting too much pay.

Here are some interesting observations from a former distributor who sold his business and retired in his late 40's (me).

The business model of Hostess is to blame. The unions have prevented management from doing what is necessary to survive. The management has, in the past, been too gutless to FORCE the company into bankruptcy so it could "restructure" under a new business model.

Hostess has 18,500 employees. The business model requires dozens of expensive bakeries, thousands of route delivery trucks and scores of transfer terminals to move their product from regional bakeries to gas station and supermarket shelves in a matter of just HOURS from the time they leave the bakery. Fresh product distribution is VERY EXPENSIVE and VERY INEFFICIENT and VERY LABOR INTENSIVE and VERY CAPITAL INTENSIVE.

IF I had purchased the company I would have taken it directly into Chapter 11 Reorganization Bankruptcy. I would have sold all of the small regional bakeries and all the route trucks and all the semi-trucks. I would have laid off 70% of the workforce. At the same time I would have built 4 new bakeries, one to service the northeast, one the south and midwest. One to service the mountain and plains states, and one to service the west coast. Each bakery would have a massive freezer.

The business model would be changed. Snacks would be cooked, then FROZEN, the shipped via common carrier to independently owned grocery and convenience warehouses. Their sales and distribution staffs would handle the products in their systems just the same as they currently handle other "thaw and sell" items. Independent sales brokerages would arrange sales to the warehouses, national/regional sales events, etc.

So 18,500 workers would be gone and replaced by 3500 workers. The price of a "fruit pie" would drop from $1.09 each to about $0.49 each. But I would be the greedy corporate raider.

On the other hand, if I try to keep a failed business model up and running then I'm a greedy bastard for asking for concessions from unions because the consumers are not willing to pay $1.09 for a "fruit pie."

So answer me this: how does an investor win (win = operate a business profitably) without being called a total douchebag?

I stopped reading after this post.

If people don't get it after this post, they never will. Well said.

 

[Napalm217]

I am not surprised that the execs are wanting to get money out of the company but that is typical for any corporation it would seem.

 

[Pinchaser]

Do you think the union workers have yet realized that they are the ONLY losers in this story? The Execs are going to get theirs, the union bosses just move on down the road to the next company they want to screw, but the lowly union worker is now out of money and out of luck. Again.

You'd think some of these union workers would catch on after a hundred or so years of union nonsense......

 

[Justin Case]

This is typical in large bankruptcies. These are usually included in the plan given the court prior to the company selling off assets. The thinking is execs need incentives to stick around and see the company through to the end and doing so is in the best interest of the creditors. The majority of the creditor committee normally agree up front to the plan including the bonuses so it's usually a formality for the judge to approve them. The judge has the final say, but they will do what the creditor committee wants 99% of the time. When I say majority of the creditor committee I mean those holding +50% of the value of the indebtedness, not a majority of the actual numbers of creditors.

 

[smokingman]

This is typical in large bankruptcies. These are usually included in the plan given the court prior to the company selling off assets. The thinking is execs need incentives to stick around and see the company through to the end and doing so is in the best interest of the creditors. The majority of the creditor committee normally agree up front to the plan including the bonuses so it's usually a formality for the judge to approve them. The judge has the final say, but they will do what the creditor committee wants 99% of the time. When I say majority of the creditor committee I mean those holding +50% of the value of the indebtedness, not a majority of the actual numbers of creditors.

Hostess has had multiple bankruptcies.This is not a bankruptcy,this is a liquidation.It will have the same result as a bunkruptcy,accept the next hedge fund will not have any liabilities as they will belong to the taxpayers.

There is no way they should receive a bonus.Not when the taxpayer is on the hook for 300 million plus already.The corpse is already being divided up and guess who is left holding the bag? YOU.Why? Because we have the Federal Pension Benefit Guaranty corp.Pension Benefit Guaranty Corp - PBGC Protects America's Pensions

Not only will you be paying the pension of the hourly workers,but also those executive pensions(Max per month is currently $14,146.37 per person,the executives will have to take a pay cut,but rest assured you are paying them life long retirement benefits).http://www.pbgc.gov/wr/benefits/guar...guarantee.html

That is what the corpse of hostess assets should be sold for.Instead they will be sold liability free so the next hedge fund can load it up with debt again and repeat the process....just like last time.

Only this time they are managing to discard all liabilities,and give them to YOU the taxpayer(something they have been unable to due under normal bankruptcy which is why the liquidation now).

PBGC Assumes Hostess Brands Plan | Institutional Investor

The above link is just the tip of the iceberg at 82 million for the plan that covered 1500 employees.

 

[beararms1776]

I think it is an interesting comment on our society reflecting our views of responsiblity. I have read 100's of comments in the newspapers and internet and heard dozens of comments on talk radio. The battle cry has generally been, "those darn greedy union people are killing a great American company" Never mind that the peoples wages are right at the federal poverty level, or slightly above. Never mind that the employees has made several wage concessions in the past to "help the company through hard times" never mind the the executives continued to add to their personal profits at the expense of the company. These same executives that are making poor business decisions and running the company into the ground. I am as pro-business as they come, but I believe in checking out the whole situation before assigning blame. I am convinced that the unions are not to blame for the Hostess failure, and that the rank and file made personal sacrifices to try to save the company while the leaders were greedily tapping every last drop of blood out of the carcass.

Lee Iococca, who walked out of FORD with a million dollar a year retirement made an interesting comment about this new breed of business executives. He called the taking of 100's of millions out of struggling companies scandalous. He noted that even the middle level "punks" were getting a couple million at a time. No business model can support that foolishness.

We are all on a wodden boat in the middle of the ocean and the wind is cold. The captain says "lets burn the boat so the business travelers can be warm". No body says anything and as the passengers are drowning, the captain blames the crew for being union, and all people in the life rafts applaud this "wise" captain.

Same here and for the rest of the post I leave you this

 

[mrjarrell]

Well, with the new news that the oh, so competent executives raided the pension fund to stave off collapse, I have to side with the **** 'em proponents. No bonuses and they should be forced to pay back every centime they diverted from the people who were supposed to receive those pensions. Now, of course the taxpayers will be responsible for those pensions.
Hostess used employee pension funds to stay afloat | abc7news.com

 

[level.eleven]

Well, with the new news that the oh, so competent executives raided the pension fund to stave off collapse, I have to side with the **** 'em proponents. No bonuses and they should be forced to pay back every centime they diverted from the people who were supposed to receive those pensions. Now, of course the taxpayers will be responsible for those pensions.
Hostess used employee pension funds to stay afloat | abc7news.com

The Republicans wanted one of these fellows to be president. Pensions are a soft target. Harvesting 101.

 

[level.eleven]

For those that aren't aware, pension harvesting happens quite often.

[ame="http://www.amazon.com/Retirement-Heist-Companies-Plunder-American/dp/1591843332"]Amazon.com: Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (9781591843337): Ellen E. Schultz: Books[/ame]