ONTD Political

Judge Approves Up To $1.8 Million In Bonuses For Hostess Executives

5:41 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.


Source
hinoema 3rd-Dec-2012 03:44 pm (UTC)
I thought bonuses were for going above and beyond, not for, you know, egregiously fucking up. *The more you know*
shadwing 3rd-Dec-2012 04:17 pm (UTC)
It's also an out and out bribe. When Companies go under, people will bail as soon as they see something else out there.

The bonus might be tied to a contract/severance, stay till the bitter end and you'll get this cookie. they need the staff or at least a chunk of them to keep the place running till they shutter the doors.

At least I HOPE it's some sort of severance deal and not a REAL Bonus.
recorded 3rd-Dec-2012 04:42 pm (UTC)
lbr, would it beneficial at all to keep the people who sank the company for years around? not worth it.
fenris_lorsrai 3rd-Dec-2012 05:37 pm (UTC)
Unfortunately they know where the bodies are buried...

Perhaps not quite literally, but do know a lot of the info required to wind the business down. HOWEVER, they still should be able to cut out a lot of the execs since really the OPERATIONS ones and the ones directly tied to ACCOUNTING are probably the only ones that have absolutely vital knowledge for winding down the business. The marketing and sales department... not so much.
shadwing 3rd-Dec-2012 05:46 pm (UTC)
Oh Lordy THIS. I was part of a wind down, the new company was desparate to keey myself and my two coworkers who worked payroll, AR and AP.

So yeah we knew EVERY inch of those books, they even offered a hell of a deal to keep us on the payroll with the new company. I took it, my coworkers decided to pass. One already had an offer elsewhere, and the other didn't want to comute to the new location.
fenris_lorsrai 3rd-Dec-2012 06:04 pm (UTC)
I was manager at a theatre for about 6-7 months right after college before leaving to buy my own business. The owner agreed to keep me on the health plan so I'd keep coming in and doing the weekly schedule every week. I only worked one to two hours each week! That went on for two years. It was the only way the weekly ads and schedules ended up at all the newspapers on time because he kept losing managers.

He was an obsessive compulsive manic depressive with attention deficit disorder. I am so not kidding. He was a nice guy, but you wanted to murder him at least a few times a day. More if he'd recently switched medicines since god knows what the new array of sideeffects was going to be... I saw him recently and they FINALLY seem to have found a mix that works. He looks SO MUCH BETTER.

(keeping me on health plan actually was a great deal for both of us since he had so many health problems, plus two small children, so since I had never made a claim for anything except preventatives, I lowered the pool cost for everybody. most of the full time staff that was there more than 3 months was on there as well for same reason. no dicking around with hours, more cost effective to add them to the pool!)
paksenarrion2 4th-Dec-2012 04:42 am (UTC)
Yeah, I worked for a company that was seized for taxes. The State kept people on at the individual stores to liquidate the inventory and a few people to wind up the accounting. They ended up paying me a pretty decent sum to stay on for eight months part time to help wrap things up since I knew where everything was/how to run things. The customer base trusted me so was willing to continue to shop while they liquidated. (Sadly for my pocket book, nothing like that)
furrygreen 3rd-Dec-2012 10:03 pm (UTC)
It's the way they're paid. They're given salaries and bonuses on how well the company is doing. However, all that needs to be shown is that companies are taking in large amounts of money. The law doesn't say where that money is coming from nor does it take into consideration things like bankruptcy.

Companies raid their retirement funds when they file of bankruptcy. That wipes the obligation off their books AND puts a large amount of money that is "coming in", thus these CEO's and executives get huge bonus's. XD
carmy_w 4th-Dec-2012 03:47 pm (UTC)
I'm more than a bit surprised that the judge approved it, frankly, since he cast such a side-eye on their initial motion.
bnmc2005 3rd-Dec-2012 04:05 pm (UTC)
I hope this brings light on the fact that the CEOs and executives have been running this company into the ground for years— NOT THE UNIONS

A lot of people lost their jobs because of a horribly run business. That is the fucking tragedy here.

Edited at 2012-12-03 04:06 pm (UTC)
blackjedii 3rd-Dec-2012 04:08 pm (UTC)
Dear IRS:

tax the shit out of them
shadwing 3rd-Dec-2012 04:20 pm (UTC)
We can only hope that when the checks are cut...they are noted as 'Bonus' and get the higher tax rate..but if they are listed as 'salary/wages' they get the normal rates. At least I believe thats how it works.

I've been though a few layoff situations and that's part of the packet I got when I was offered severance, that part of my package was considered a 'bonus' and subject to a higher tax rate than my salary was.
lone_concertina 3rd-Dec-2012 05:11 pm (UTC)
Your former company is an asshole for calling severance a bonus. Mine have always called it salary/wages and made it 2-4 weeks of future pay.
shadwing 3rd-Dec-2012 05:49 pm (UTC)
Oh yeah...20/20 Hindsight and all there. There was some SERIOUSLY shady/stupid accounting going on around there.

I got most of that tax back when I filed my returns, but still...it would have helped more if I was actually unemployed for long term, I dodged a bullet and found a new position that allowed me to stay till the end (and get my severance) and start the new job the following week.
kitanabychoice 3rd-Dec-2012 04:56 pm (UTC)
oh what the hell. your company files for bankruptcy twice and yet you still come out with millions in bonuses while other people just lose their jobs? that's just fucking gross.
skittish_derby 3rd-Dec-2012 05:33 pm (UTC)
a lot of those people lost their retirement funds too. D:
shortsweetcynic 3rd-Dec-2012 09:09 pm (UTC)
"fucking gross" was pretty much what i came in here to say. :/
romp 4th-Dec-2012 06:56 am (UTC)
this right here
fenris_lorsrai 3rd-Dec-2012 05:49 pm (UTC)
I can see SOME justification for needing to keep some of the top brass because they unfortunately are often the only ones that know vital data related to operations and accounting. The majority of the necessary info is going to be scattered among operations and accounting staff already. The other divisions... fuck it, the lower level staff probably knows everything necessary.

That said, retaining them that long through the process is total overkill. and they shouldn't get a bonus for doing well at cleaning up their fuckup.

Let them give two weeks notice. Promote upward and let the second (or third or fourth...) handle the wind down once they get the vital info from them. Yup, some of the second and thirds will jump ship as well, but some will see it through so they CAN list that top level title on their resume. Just make the promotion contingent upon them staying X long. Roll downward again if necessary.



(the only reason I am for them staying at all is I had a friend suddenly die of a heartattack earlier in the year. every now and then, his daughter is STILL finding stuff that's in the category of "oh shit, do you know what this is?" six months later and that was a small business. Luckily he did write down most of he stuff absolutely VITAL to running it, just was touchy there for first month)
vulturoso 3rd-Dec-2012 06:19 pm (UTC)
I used to work in HR/Payroll and this is part of the reason I got out. My company wasn't going under, but during the recession there was a "freeze" in annual merit increases, while at the same time we'd be adding more VPs (all with signing bonuses, of course), and the existing executives would reward themselves with bonuses for basically doing their jobs.

It's disgusting and I was tired of seeing it all clear as day, knowing that everyone in the department was grossly underpaid and over-worked.
aviv_b 3rd-Dec-2012 06:49 pm (UTC)
Sounds like the judge is just another ding dong for sale.
layweed 3rd-Dec-2012 08:06 pm (UTC)
ho ho.
aviv_b 3rd-Dec-2012 09:00 pm (UTC)
It will be a Sno Ball's day in hell when you make pun of me!!
terra_tenshi 3rd-Dec-2012 09:10 pm (UTC)
Maybe this judge has Twinkies for brains? #notverygoodatthis
aviv_b 3rd-Dec-2012 10:36 pm (UTC)
It's a Wonder (bread) that he made this ruling!
layweed 3rd-Dec-2012 10:10 pm (UTC)
What, you don't like my Zingers?

Edited at 2012-12-03 10:22 pm (UTC)
aviv_b 3rd-Dec-2012 10:39 pm (UTC)
Listen, Cupcake, your Zingers are nice, but I like Suzy Q's better.
just_awkward 3rd-Dec-2012 09:50 pm (UTC)
I get a bonus of $100 a week if I stay through my store's liquidation. And the government will likely take half of it. But I probably would have stayed anyway since I can't collect unemployment if I quit.

Fuck these guys, seriously. And fuck everyone else worried about where they're going to get their precious twinkies.
lady_borg 3rd-Dec-2012 10:39 pm (UTC)
And fuck everyone else worried about where they're going to get their precious twinkies.



Agreed.
astridmyrna 4th-Dec-2012 06:48 am (UTC)
I third that. I work at a grocery store, and there were a few people who look liked they were about to loose their twinkies over the lost of Hostess. I told them how Hostess will probably sell its recipes and you'll see them in no time, just get some spongecake and inject it with a can of whip cream to hold you over.
kitanabychoice 4th-Dec-2012 04:40 pm (UTC)
just get some spongecake and inject it with a can of whip cream to hold you over.

you know, I've never been the biggest fan of twinkies and always thought "eh, they're okay" but something about this description just made me throw up in my mouth a little, egads.
astridmyrna 4th-Dec-2012 04:48 pm (UTC)
Wait until you actual read what's in that crap. Maybe it's because I bake sweets with less than 37 ingredients, but I hate twinkies. Haaaaate. You can taste the rocket fuel they're made out of.
kitanabychoice 4th-Dec-2012 07:26 pm (UTC)
haha, yeah, I can't remember the last time I ate a twinkie. I'm pretty sure it's been years at this point. All the handwringing about Hostess going out of business makes me think of Zombieland, where one character is like, desperate for a twinkie because it reminds him of stuff from before the zombipocalypse. XD
maladaptive 4th-Dec-2012 07:13 pm (UTC)
That's probably better/tastier than what's in a Twinkie. I mean, I've had some tasty sponge cakes and you can't go wrong with whipped cream.

And I actually like overprocessed junk food that may or may not actually contain food.
kitanabychoice 4th-Dec-2012 07:23 pm (UTC)
Haha! I'm pretty addicted to some overprocessed junk foods too (slim jims anyone?) but I happen to not really care for whipped cream either, so that is probably what gave me the knee jerk 'ugh!' reaction. In fact, I don't like most "filled" sweets. The insides are generally too sweet for me, sickeningly so. XD
lickety_split 4th-Dec-2012 08:57 pm (UTC)
Slim Jims are so fucking good omg hahahaha.
lady_borg 3rd-Dec-2012 10:38 pm (UTC)
The thing I can think off is that I am appalled workers are still going to fucking suffer and these gross over processed snacks are still going to be on the market.

Fuck these guys, I understand wanting to sell your wares but that money should be going to the workers comps funds not to save their pinstriped arses.
simply_blah 4th-Dec-2012 12:11 am (UTC)
I wonder if this wasn't somehow their goal. File Bankruptcy. Sell Hostess. Screw Workers. Get $$$$
alryssa 4th-Dec-2012 04:54 am (UTC)
The definition of vulture capitalism, basically. This is what companies like Bain do. All the time.
thevelvetsun 4th-Dec-2012 06:15 am (UTC)
Yay Capitalism!
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