Judge Approves Up To $1.8 Million In Bonuses For Hostess Executives5:41 pm - 12/02/2012
Hostess In Talks With 110 Potential Buyers For Its Product Lines
NEW YORK (CBSNewYork/AP) – Hostess Brands Inc. got a judge’s approval to give its top executives bonuses totaling up to $1.8 million as part of its wind-down plans.
The maker of Twinkies, Ding Dongs and Ho Hos said the incentive pay is needed to retain the 19 corporate officers and “high-level managers” during the liquidation process, which could take about a year.
Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The bonuses would be in addition to their regular pay.
The bonuses do not include pay for CEO Gregory Rayburn, who was brought on as a restructuring expert earlier this year. Rayburn is being paid $125,000 a month.
The bakers union, Hostess’ second-largest union, also asked asked the judge to appoint an independent trustee to oversee the liquidation, saying that the current management “has been woefully unsuccessful in its reorganization attempts.”
Hostess also said it’s in talks with 110 potential buyers for its product lines — including Twinkies, Ding Dongs and Ho Hos.
A financial adviser for the company said in bankruptcy court that the suitors now include at least five national retailers. He says the buyers are “serious” and that they are ready to pay “substantial” amounts.
Last week, the judge approved the company’s request to begin winding down its operations, giving Hostess the green light to begin terminating about 18,000 jobs and selling off its brands.
An attorney for Hostess noted that the company is no longer able to pay retiree benefits, which come to about $1.1 million a month. Hostess stopped contributing to its union pension plans more than a year ago.
Hostess sales have been declining over the years, but still come in at between $2.3 billion and $2.4 billion a year, a banker for the company said in court last week.
“Sales are not the issue,” Rayburn told WCBS 880′s Irene Cornell earlier this month. “It’s the cost structure and if you can’t sell it at a profit, then you’re not in business.”
Hostess has been spending about $1 million a day in payroll without any income since it halted operations.