Hostess workers strike may kill company

[WildCat]

Originally Posted by John Albert

"Alternate universe"? I suppose you could call it that. It's called "talent acquisition at the chief executive level."

You didn't know that it's become commonplace nowadays for top executives to negotiate their own salaries, benefits and job "perks," even such traditionally merit-oriented compensations as bonuses and severance packages, prior to the time of hire?





It's standard operating procedure in large corporations. I'm frankly surprised that this is the first you're hearing about these matters.

Evidence?

Originally Posted by John Albert

How do you expect the "owners" of a publicly-traded company to determine the salaries of all employees?

1. Hostes is not a public company.
2. In a public company the board of directors determines compensation for the CEO and other top management. Now you can argue taht boards have become way to cozy with the management, but that's neither here nor there as far as Hostess is concerned.

[WildCat]

Originally Posted by Foolmewunz

Well, HB is owned by a private equity firm, but the mechanism is/was the same. As you noted in your other comments, this is standard stuff. The management was hired and part of the terms of any good CEO is that he has control over the budget and profit/loss.

Please present your evidence that the HB CEO and top staff determined their own salaries, and not the equity group that hired them.

[John Albert]

http://papers.ssrn.com/sol3/papers.c...act_id=1488838

http://abcnews.go.com/blogs/business...ded-100m-plus/

http://diversitymbamagazine.com/nego...sation-package

http://www.salary.com/advice/layouth...69_Par155.html

How many examples do you want?

Just Google "CEO compensation" and you'll find enough material to keep you busy for quite awhile.

A lot of negotiation goes into determining the compensation of top executives. It's not like seeking a job out of the classified section, where standard salary and benefits are spelled out in black and white.

[Foolmewunz]

Originally Posted by WildCat

Please present your evidence that the HB CEO and top staff determined their own salaries, and not the equity group that hired them.

This is getting tiresome, Claus.

The information on the raises they voted themselves has been in several of the articles linked.

[Meadmaker]

Originally Posted by WildCat

So the owners took a loss of hundreds of millions just to give raises and bonuses to the management team they hired totaling $5 million or so?

How does this translate into "profit"?

In publically traded companies, I know how it would work. The owners are the shareholders. They give the company a whole bunch of money. Their representatives are the Board of Directors, and the Board hires the CEO.

What the owners (i.e. shareholders) don't know is that the CEO is friends with the Board and they all recommend large pay raises for each other.

In other words, the real owners, the shareholders, are uninvolved and viewed largely as a source of funds to be given to the folks at the top of the company.

I'm not sure if something similar is at work with private equity firms, but I suspect it is.

Are the people who make real, day to day, decisions on the future of the company the owners, or are they the owners' representatives? If it is the latter, then it seems fairly likely that they will vote themselves big pay raises, even if, or should I say especially if, the company is about to go out of business.

[jhunter1163]

Originally Posted by Meadmaker

Are the people who make real, day to day, decisions on the future of the company the owners, or are they the owners' representatives? If it is the latter, then it seems fairly likely that they will vote themselves big pay raises, even if, or should I say especially if, the company is about to go out of business.

Except that Hostess is in bankruptcy, and any such pay hike would have to be approved by the trustee, which approval is hardly certain given the circumstances surrounding the company's failure.

[Meadmaker]

Originally Posted by jhunter1163

Except that Hostess is in bankruptcy, and any such pay hike would have to be approved by the trustee, which approval is hardly certain given the circumstances surrounding the company's failure.

True. My comments are more likely to be applicable to a company whose future is certain, but has not yet filed for bankruptcy. At that point, it's time to loot it for whatever you can, because it won't be long before that well runs dry.

[WildCat]

Originally Posted by John Albert

How many examples do you want?

One would do, got any?

[WildCat]

Originally Posted by Foolmewunz

This is getting tiresome, Claus.

The information on the raises they voted themselves has been in several of the articles linked.

And yet nobody seems able to quote from one of these articles.

[davefoc]

This is a Forbes article about the bankruptcy:
http://www.forbes.com/sites/quora/20...ies-appealing/

Quite a bit of stuff that I didn't realize there. Most surprising was the situation with the pensions. Hostess apparently was part of a multi-employer system for supplying pensions. It sounds like the idea was that if a company failed in the system other companies would pick up the pension liabilities associated with the failed companies. Apparently enough companies have been failing in the system that the load on the remaining companies is becoming very large and there are no new companies joining these multi-employer pension systems so the financial pressure on those companies that remain in the system is strong.

One question, I've had is whether the employees in the baker's union actually voted on reducing their benefits or not. I was a little surprised that the union contract just wasn't automatically abrogated during the bankruptcy proceedings. The point of a bankruptcy (ETA: Chapter eleven restructuring that is) is to allow an entity to continue to operate that would be viable if its debt load was removed. The bankruptcy judge couldn't have just set aside the union contract and allowed Hostess to proceed with non-union workers?

Based on the Forbes article, it looked to me like any plan to exit bankruptcy that didn't deal with pensions, union work rules and union benefits was obviously doomed to failure. I'm not sure what the point of all the negotiating was. There was no chance that Hostess could get private financing to continue on without a substantial reduction in the encumbrances in place that would doom any new Hostess business effort.

If union management had the final say on what the nature of Hostess union contracts would be, it seems very doubtful that they would agree to changes that would essentially eliminate the union control of Hostess. They would rather see it fail because it strengthened their position with the rest of the members of their union. Unions work by restricting the size of the labor pool that can compete for jobs and the failure of Hostess was a better outcome for them than a viable Hostess with non-union wages that would compete with the bakeries controlled by their union.

[davefoc]

Originally Posted by davefoc

...
One question, I've had is whether the employees in the baker's union actually voted on reducing their benefits or not. ...

On the topic of answering one's own questions:

Quote:

The contract proposed by Hostess was rejected by 92 percent of union members.

http://www.kshb.com/dpp/news/local_n...#ixzz2BsF9kRqF

That's an amazingly unified vote. I doubt any potential investor is going to be too excited about reopening plants with those kind of sentiments in the potential employee pool. It looks like the only thing that's going to happen here is the brand names and maybe some of the plant equipment will be sold off. The chances that any of those plants are going to be reopened doesn't look very good.

ETA: Perhaps the bakery union members confused themselves with auto workers. It is true that the federal government will do bail outs on occasion for the most politically well connected unions, but if the baker's union members thought they were in that class of well connectedness*, they appear to have been sadly mistaken.

*grammar digression: My spell checker didn't flag connectedness. I guess connectedness is a legitimate word. Who knew?

[WildCat]

Originally Posted by davefoc

*grammar digression: My spell checker didn't flag connectedness. I guess connectedness is a legitimate word. Who knew?

It's a perfectly cromulent word.

[Fudbucker]

Originally Posted by WildCat

It's a perfectly cromulent word.

You have embiggened yourself in my estimation, sir!

[John Albert]

Originally Posted by WildCat

One would do, got any?

You were supposed to click the links and read the material.

[WildCat]

Originally Posted by John Albert

You were supposed to click the links and read the material.

I clicked your link from salary.com and the page looked like it was generated by a bot, and I saw nothing to support your assertion that CEOs commonly get to determine their own pay and the owners have no say about it.

Which is why I'm asking for an actual quote, not just a list of links. I've been here a long time, and in my experience 95% of the time when people post only links without actual quotes from them it's because none of the links actually support what they're claiming.

So if you want to post a quote that supports what your claiming, feel free.

[theprestige]

Originally Posted by John Albert

You were supposed to click the links and read the material.

I'll have to remember that one as I complete my Master's degree: "What do you mean, I got an 'Incomplete' on my thesis? All you had to do was click the links and read the material!"

And I bet it will come in handy in the workplace: "Here's the environmental impact report you asked for. Just click the links and read the material."

Ha ha no.

Do you own homework.

[The_Animus]

Originally Posted by theprestige

I'll have to remember that one as I complete my Master's degree: "What do you mean, I got an 'Incomplete' on my thesis? All you had to do was click the links and read the material!"

And I bet it will come in handy in the workplace: "Here's the environmental impact report you asked for. Just click the links and read the material."

Ha ha no.

Do you own homework.

That could be considered quite ironic considering at these forums posting links to your evidence is generally sufficient and other posters not reading the links would be them not doing their own homework.

Evidence is evidence, nothing requires someone to pick out specific parts to quote for you or to summarize it for you because you don't want to bother reading it.

This isn't really a negative comment towards you or anyone in particular, just saying.

[WildCat]

Originally Posted by The_Animus

That could be considered quite ironic considering at these forums posting links to your evidence is generally sufficient and other

Actually a link with a relevant quote is what's expected here.

We see link bombings (multiple links without any relevant quotes) from the woos when they don't have any actual evidence. "Here's a link to a 200 page article and the answer is in there somewhere" is hardly sufficient.

And I'm still waiting for the evidence that the Hostess CEO gave himself and his team a pay raise without any participation from the owners.

[davefoc]

FWIW,
I think the point that Wildcat is making is that the executives in question did not raise their own salaries.

The wording that the Snopes article agrees is true is this:

Quote:

Hostess approved large pay increases for executives while the company was preparing a bankruptcy filing.

Snopes article:http://www.snopes.com/politics/business/hostess.asp

Although, Snopes doesn't specifically say that it was the owners of the company that approved the large pay increases, without any evidence to the contrary there is a strong implication in that statement that it was the owners of the company or the board of directors that had approved the salary changes.

And soon after this, the CEO that had his salary tripled was replaced. Under the new CEO the salaries of four top executives were reduced to $1 and the salaries of four others were returned to their original levels. Snopes doesn't talk about it, but in addition to the agreement of the individuals involved, presumably the board and/or the owners also approved the decision to lower the salaries of these executives.

One issue here though, is what was the ownership stake of the executives who had their salaries raised. I don't know the answer but perhaps an argument could be made that if their ownership stake was large they might have played a significant role in raising their own salaries. Whoever raised the salaries, potential creditors weren't too happy about the raises and sued the company over them.

As to the issue of on topic links: I clicked on a few of them and I couldn't figure out what they had to do with the topic. If people have a point to make, as Wildcat points out, a quote with a single link is a sign that they are putting forth real evidence. And the converse, a bunch of links without a quote, is usually an indication that the person providing the alleged evidence is not actually providing any evidence.

[psionl0]

Originally Posted by davefoc

Although, Snopes doesn't specifically say that it was the owners of the company that approved the large pay increases, without any evidence to the contrary there is a strong implication in that statement that it was the owners of the company or the board of directors that had approved the salary changes.

It would have to be the board of directors.

Maybe company law is radically different in the US but I find it difficult to imagine that shareholders would have a say in the day to day running of a company. It would imply that they were also liable for any criminal acts the company might commit which would destroy the concept of "limited liability".

How would it be if you could expect a knock on the door simply because the company who's shares you bought last night was killing people and harvesting their organs?

[The_Animus]

Originally Posted by WildCat

Actually a link with a relevant quote is what's expected here.

We see link bombings (multiple links without any relevant quotes) from the woos when they don't have any actual evidence. "Here's a link to a 200 page article and the answer is in there somewhere" is hardly sufficient.

And I'm still waiting for the evidence that the Hostess CEO gave himself and his team a pay raise without any participation from the owners.

That's nice, but that isn't the case in this thread so...

[davefoc]

Originally Posted by psionl0

It would have to be the board of directors.

Maybe company law is radically different in the US but I find it difficult to imagine that shareholders would have a say in the day to day running of a company. It would imply that they were also liable for any criminal acts the company might commit which would destroy the concept of "limited liability".

How would it be if you could expect a knock on the door simply because the company who's shares you bought last night was killing people and harvesting their organs?

I was trying to be categorical in my list of possibilities. In this case the company was privately held and the board of directors and the owners may have overlapped to a degree. Presumably there was a board of directors though that made the decision but presumably not without a pretty good idea that it was in sync with what the owners wanted.

The possibility exists though that there was a significant overlap between the board of directors, the owners and the executives and it is conceivable that a claim that the executives played a significant role in setting their own salaries might be true.

Whatever transpired here, it looks shady. When the possibility of a bankruptcy hangs over a company there are restrictions on the owners to prevent self dealing. It looks like there might have been some of that going on here. At least the creditors thought so.

Of course, the issue of executive salaries was a red herring as far as what was wrong with the company. It did provide something for the union management to hang their hat on while they were firing up the union members to vote for union management interests over union member interests though.

[WildCat]

Originally Posted by The_Animus

That's nice, but that isn't the case in this thread so...

It's not? Feel free to link to the post that contains evidence which supports the statement "Hostess CEOs gave themselves raises while they cut those of the union workers". The underlying conspiracy theory mentioned by some others here is that Hostess was deliberately driven into failure just to give the top management raises and somehow the private equity company (the owneres) made boatloads of money by drastically reducing the value of Hostess.

Now it's possible I missed that post in this thread, but I don't think so.

[Foolmewunz]

Originally Posted by WildCat

It's not? Feel free to link to the post that contains evidence which supports the statement "Hostess CEOs gave themselves raises while they cut those of the union workers". The underlying conspiracy theory mentioned by some others here is that Hostess was deliberately driven into failure just to give the top management raises and somehow the private equity company (the owneres) made boatloads of money by drastically reducing the value of Hostess.

Now it's possible I missed that post in this thread, but I don't think so.

Are you now asking for a single statement that says it all in one sentence? How about in one article. From the Fortune article back in July. I've snipped it apart to avoid posting an entire article that you can find yourself. Bolded portions apply.

I don't actually understand the importance (other than scoring debate points) of whether or not the owners had anything to say about the proposed raises and bonuses. Whether they did or not, are you saying that the management team were just victims of bad planning and strategy by the equity company? It is very clear that the proposed bonuses and payment schemes were proposed by Hostess. Not by the NLRB, not by the unions, not by a caller on Larry King Live, not by Al Gore. Hostess, either with or without the owners and management working together, proposed the remuneration package. And Hostess, either with or without the owners and management working together, are the same folks who convinced the unions that in order to save the company and preserve at least some of their jobs, they had to agree to major concessions that saved the company 110 million dollars.

Quote:

Hostess was able to exit bankruptcy in 2009 for three reasons. The first was Ripplewood's equity infusion of $130 million in return for control of the company (it currently owns about two-thirds of the equity). The second reason: substantial concessions by the two big unions. Annual labor cost savings to the company were about $110 million; thousands of union members lost their jobs. The third reason: Lenders agreed to stay in the game rather than drive Hostess into liquidation and take whatever pieces were left. The key lenders were Silver Point and Monarch. Both are hedge funds that specialize in investing in distressed companies -- whether you call them saviors or vultures depends on whether you're getting fed or getting eaten.

Quote:

As revenue declined, the company continued to burn cash -- in the second half of 2011, the rate was $2 million a week. The liquidity crunch forced Ripplewood in the early spring of 2011 to pump in $40 million more in return for more equity as well as debt that was subordinate to that held by Silver Point and Monarch. In August -- to save a company teetering on the edge of fiscal calamity and forced liquidation -- Silver Point, Monarch, and the group of other lenders put up an additional $30 million to see if a negotiated turnaround was possible.
They turned to the unions and demanded new concessions. But the unions, having three years earlier given up thousands of jobs and millions in benefits, flatly refused.

Quote:

Even as it played the numbers game, Hostess had to face chaos in the corner office at the worst possible time. Driscoll, the CEO, departed suddenly and without explanation in March. It may have been that the Teamsters no longer felt it could trust him. In early February, Hostess had asked the bankruptcy judge to approve a sweet new employment deal for Driscoll. Its terms guaranteed him a base annual salary of $1.5 million, plus cash incentives and "long-term incentive" compensation of up to $2 million. If Hostess liquidated or Driscoll were fired without cause, he'd still get severance pay of $1.95 million as long as he honored a noncompete agreement.

When the Teamsters saw the court motion, Ken Hall, the union's secretary-treasurer and No. 2 man, was irate. So much, he thought, for what he described as Driscoll's "happy talk" about "shared sacrifice." Hall says he tracked Driscoll down by phone and told him, "If you don't withdraw this motion, these negotiations are done." Hostess withdrew the motion a few weeks later when Driscoll left -- the same Driscoll who, Hostess told the court in its motion, was "key" to "reestablishing" Hostess's "competitive position going forward." Abbott and Costello couldn't have made this stuff up if they'd gone to Wharton.

[WildCat]

Originally Posted by Foolmewunz

Are you now asking for a single statement that says it all in one sentence?

No, just support it if you think it's true. I don't know if you subscribe to the conspiracy theory that Hostess was intentionally driven to failure just so the CEO and his team could get raises and somehow this means big profit for the owners.

Originally Posted by Foolmewunz

How about in one article. From the Fortune article back in July. I've snipped it apart to avoid posting an entire article that you can find yourself. Bolded portions apply.

Nothing in the part you quoted says that the CEO and his team were able to set their own pay without pernission from the owners (Ripplewood). But it confirms that Ripplewood was pouring boatloads of money into the sinking ship.

Originally Posted by Foolmewunz

I don't actually understand the importance (other than scoring debate points) of whether or not the owners had anything to say about the proposed raises and bonuses.

Because the claim earlier in this thread is that Hostess was purposely driven into bankruptcy just so the CEO could get a raise, and that somehow driving the company into failure meant profit profit profit for the owners. And therefore they made the company fail on purpose, under the novel theory that it would somehow be worth more money that way.

I think that's a ridiculous conspiracy theory, how about you?

Originally Posted by Foolmewunz

Whether they did or not, are you saying that the management team were just victims of bad planning and strategy by the equity company? It is very clear that the proposed bonuses and payment schemes were proposed by Hostess. Not by the NLRB, not by the unions, not by a caller on Larry King Live, not by Al Gore. Hostess, either with or without the owners and management working together, proposed the remuneration package. And Hostess, either with or without the owners and management working together, are the same folks who convinced the unions that in order to save the company and preserve at least some of their jobs, they had to agree to major concessions that saved the company 110 million dollars.

So now you're walking back from the claim that the CEO was able to write his own checks?

I explained early on why management in a bankrupt company often get raises, it's because they have options to go elsewhere and you are unlikely to get anyone remotely competent (even to wind down operations) on the cheap (let alone the ridiculous $1 salary mentioned earlier) to do it.

[Foolmewunz]

Okay, now it's your turn. Please quote me the party who said that the company "was driven into bankruptcy just so the CEO could get his raise/bonus/remuneration". No fair just saying that the information is out there. You have to quote it or it just didn't happen.

And it proves my point about this just being a diversion on winning debate points.

[Newtons Bit]

Originally Posted by Foolmewunz

Okay, now it's your turn. Please quote me the party who said that the company "was driven into bankruptcy just so the CEO could get his raise/bonus/remuneration". No fair just saying that the information is out there. You have to quote it or it just didn't happen.

And it proves my point about this just being a diversion on winning debate points.

Probably this:

Originally Posted by jj

So, you're ignoring how the officers of this company made out like bandits on the money "saved" from the employees, without reinvesting a thing, and how they stripped it and ripped it?

This is not an unknown method, it happened in the 1920's too, before the now-demised set of regulations was set in place to prevent deliberate destruction like this.

[Dr. Keith]

Originally Posted by WildCat

Because the claim earlier in this thread is that Hostess was purposely driven into bankruptcy just so the CEO could get a raise, and that somehow driving the company into failure meant profit profit profit for the owners. And therefore they made the company fail on purpose, under the novel theory that it would somehow be worth more money that way.

I think that's a ridiculous conspiracy theory, how about you?

Well of course it is ridiculous, isn't that the point of a strawman?

My brief reading of this thread shows many patient posters trying to point out that there are many ways to make money off of a struggling company. The fact that these strategies were discussed at length in recent political debates about Gov. Romney has led a few here to assume that full explanations would be redundant. I tend to agree.

If you buy a struggling company for cheap there are many ways to make money from it. One way is to turn it around. This is the most profitable solution, but it is also very difficult. But, if the company can turn the corner everyone will make lots of money. Sometimes there are obvious ways for doing so that the preceding management were either unwilling or unable to implement. In those few cases the venture capital group can really hit a home run. More often it is simply no longer possible to right the ship. In those case the venture capital group needs to figure out the most profitable exit strategy.

The new owners often hedge against the likely failure with other strategies. One is to get lenders into the game by offering them debt at well below face value with very attractive returns. Throw in a well known brand name and you will certainly get some lenders no matter how bad the books look. That seems to have happened here.

That cash can be used to repay the new owners either directly by reducing the purchase debt or indirectly through consulting fees. The consulting fee structure was popular with Bain, but I have no idea which structure was used here. There are probably other options that I am not aware of, but the exact mechanism is less important. What is clear is that the fresh cash was not used to update facilities or pay down accrued pension debts.

As a worker, union or not, the lack of investment in long term assets or in reducing pension debts is a red flag that the owners and management are not in this for the long haul. Using the cash to reduce the owners exposure rather than increase the likelihood of a turnaround is the proverbial middle finger to any worker. This is not a union issue, it is an employee issue. When the captain stops working on the ship and instead is readying his personal life boat it is time for the crew to do the same. Especially if the ship owner has already off-loaded the cargo and is trying to get you to stay on board at a reduced salary.

So, you're point is partially right: turning the company around is the most profitable end game for the venture capital company. But, the other posters are also right: when a company is not likely to be turned around there are ways to make money off the sinking ship and most of them include treating the worker very badly.

And your strawman is every bit as ridiculous as you claim it to be. Congrats!

[Meadmaker]

Originally Posted by Dr. Keith

Well of course it is ridiculous, isn't that the point of a strawman?

My brief reading of this thread shows many patient posters trying to point out that there are many ways to make money off of a struggling company....

Well said.

[davefoc]

Originally Posted by Meadmaker

Well said.

It may have been well said, but where was the evidence?

The contention seems to be that the owners of hostess may have looted the company before the bankruptcy. Easy enough to prove it would seem. How much did they pay? How much have they taken out of the company?

I agree, the large executive raises seems shady. Is it possible to tie this into something nefarious beyond the fact that the creditors didn't like it and the raises were withdrawn?

[The_Animus]

Originally Posted by WildCat

It's not? Feel free to link to the post that contains evidence which supports the statement "Hostess CEOs gave themselves raises while they cut those of the union workers". The underlying conspiracy theory mentioned by some others here is that Hostess was deliberately driven into failure just to give the top management raises and somehow the private equity company (the owneres) made boatloads of money by drastically reducing the value of Hostess.

Now it's possible I missed that post in this thread, but I don't think so.

None of your response has anything to do with what you are responded to. You said quoting a portion of the article is necessary because sometimes people link bomb (aka posting 20 links) or post links with 200 pages. I said that happens but doesn't seem to be the case in this thread so... Why even bring that up? You then responded with the above.

[Meadmaker]

Originally Posted by davefoc

It may have been well said, but where was the evidence?

I don't think what he said really requires evidence, because he was simply pointing out a possibility.

Was management/ownership deliberately running Hostess into the ground? I don't know, but I do know that some of the people who were making the decisions will make a chunk of money out of it. Was that their goal, or their fallback position? I certainly don't have enough information to figure it out.

On the other hand, I can look at what happened and say that they either weren't trying to save the company, or they weren't very good at it.

Meanwhile, as for blaming the unions, I'll note again that there is almost no information available in the easily accessible media describing what it was that they turned down, but what little I've seen suggests that what they turned down was pretty awful. Most of them won't miss the jobs that they could have had if they had taken the deal.

[balrog666]

Originally Posted by Meadmaker

I don't think what he said really requires evidence, because he was simply pointing out a possibility.

Was management/ownership deliberately running Hostess into the ground? I don't know, but I do know that some of the people who were making the decisions will make a chunk of money out of it. Was that their goal, or their fallback position? I certainly don't have enough information to figure it out.

On the other hand, I can look at what happened and say that they either weren't trying to save the company, or they weren't very good at it.

Meanwhile, as for blaming the unions, I'll note again that there is almost no information available in the easily accessible media describing what it was that they turned down, but what little I've seen suggests that what they turned down was pretty awful. Most of them won't miss the jobs that they could have had if they had taken the deal.

Except those Teamsters who were making 125K year ...

[davefoc]

Originally Posted by Meadmaker

I don't think what he said really requires evidence, because he was simply pointing out a possibility.

I realize he was just pointing out a possibility. But without evidence pointing out that somebody might have done something bad isn't very useful. Hostess managers might have all been axe murderers, but without some supporting evidence making note of the possibility doesn't accomplish much.

Fox News spun off Patraeus resignation/Benghazi conspiracy theories like sparks coming off a grinding wheel. They had no evidence for any of it but sure it might have happened. Was that fair or useful?

Quote:

Was management/ownership deliberately running Hostess into the ground? I don't know, but I do know that some of the people who were making the decisions will make a chunk of money out of it. Was that their goal, or their fallback position? I certainly don't have enough information to figure it out.

The owners of the company seemed to have voluntarily increased the money they will lose by hiring expensive talent in an effort to turn the company around. It is also possible that the owners were engaged in some self dealing to suck money out of the company before the bankruptcy. But that possibility is obvious, what isn't obvious is evidence that would support that possibility. I just asked if there was any.

Quote:

On the other hand, I can look at what happened and say that they either weren't trying to save the company, or they weren't very good at it.

Meanwhile, as for blaming the unions, I'll note again that there is almost no information available in the easily accessible media describing what it was that they turned down, ...

I've read specifics on what was turned down. I suppose I could look back and try to find out where I read it, but the gist as I recall was that people were going to have to take about an 8% pay cut, lose any future pension benefits, increase their share of the medical insurance and give up right to reclaim pension benefits that the company had used up in trying to stave off bankruptcy. Presumably the restrictive work rules would have been out the window as well. I'm not sure how reliable the source was but the simple situation was that benefits were going to be cut substantially.

Quote:

...but what little I've seen suggests that what they turned down was pretty awful. Most of them won't miss the jobs that they could have had if they had taken the deal.

Not so awful, I suspect that there wouldn't have been people lined up around the block to apply for the jobs, but of course the nature of unionism is to exclude people from competing for union jobs, in this case, according to you, even jobs that they didn't care about losing.

[Meadmaker]

Originally Posted by balrog666

Except those Teamsters who were making 125K year ...

That explains why the Teamsters took the deal. The only article that I saw that talked about Bakers pay talked about $25,000 per year.

[Meadmaker]

Originally Posted by davefoc

but the gist as I recall was that people were going to have to take about an 8% pay cut, lose any future pension benefits, increase their share of the medical insurance and give up right to reclaim pension benefits that the company had used up in trying to stave off bankruptcy.

I've seen "8% pay cut", but I've never seen from what to what. Was it from $20/hr down to $19.40, or was it $10/hr down to $9.20?

[jhunter1163]

Quote:

Even as it played the numbers game, Hostess had to face chaos in the corner office at the worst possible time. Driscoll, the CEO, departed suddenly and without explanation in March. It may have been that the Teamsters no longer felt it could trust him. In early February, Hostess had asked the bankruptcy judge to approve a sweet new employment deal for Driscoll. Its terms guaranteed him a base annual salary of $1.5 million, plus cash incentives and "long-term incentive" compensation of up to $2 million. If Hostess liquidated or Driscoll were fired without cause, he'd still get severance pay of $1.95 million as long as he honored a noncompete agreement.

When the Teamsters saw the court motion, Ken Hall, the union's secretary-treasurer and No. 2 man, was irate. So much, he thought, for what he described as Driscoll's "happy talk" about "shared sacrifice." Hall says he tracked Driscoll down by phone and told him, "If you don't withdraw this motion, these negotiations are done." Hostess withdrew the motion a few weeks later when Driscoll left -- the same Driscoll who, Hostess told the court in its motion, was "key" to "reestablishing" Hostess's "competitive position going forward." Abbott and Costello couldn't have made this stuff up if they'd gone to Wharton.

You might have missed that last bolded sentence there.

[Foolmewunz]

Originally Posted by jhunter1163

You might have missed that last bolded sentence there.

No. We didn't say they got away with it, but that the management voted itself a big bonus. That much we have evidence for. Whether or not the owners were behind that, we can't say.

And the fact that they withdrew it does not change the fact that they proposed another one a few weeks ago that they're waiting to float in front of the bankruptcy judge. This one is for bonuses and departure packages. This is where the argument started from a few pages back. One side says that it's a bit absurd that they can vote themselves a couple of million in golden parachutes "because that's the market" for this sort of work, yet they need to squeeze 8% (of $16.50 per hour) out of the bakers. The other side says that this is fine because those management members earned it.

All the "show me the precise wording" stuff was a distraction. We're still left at that point and we won't settle the differences of opinion/approach until this has gone fully through bankruptcy and we get to see the actual figures.

[davefoc]

Originally Posted by Foolmewunz

No. We didn't say they got away with it, but that the management voted itself a big bonus. That much we have evidence for. Whether or not the owners were behind that, we can't say.

...

How did management vote themselves a big pay raise. Was Hostess a unique company where the management set their own wages? Wildcat has asked for evidence of this several times in this thread. Numerous links are provided, none of which seem to provide evidence for this contention. Could you quote from the source that leads you to think this is the case?

[The Don]

Originally Posted by davefoc

How did management vote themselves a big pay raise. Was Hostess a unique company where the management set their own wages? Wildcat has asked for evidence of this several times in this thread. Numerous links are provided, none of which seem to provide evidence for this contention. Could you quote from the source that leads you to think this is the case?

I don't have specifics for Hostess, but if they're like most corporations, then executive pay is determined by the board of directors.

http://en.wikipedia.org/wiki/Executi..._United_States

The most senior Executives like the CEO will be a member of that board but of course will not be responsible for approving their own pay but will be involved in approving the pay of their fellow directors.

It is true that executives are not responsible for setting their own compensation but they are responsible for setting the compensation of their fellow executives. If the CEO approves the CFO's $1 gajillion compensation package then the CEO can expect to get more than $1 gajillion when his compensation is reviewed. At least that's the way it appears to have worked when you look at the way that compensation has (usually) increased over the years and the maintenance of pay differentials.