Hostess Blames Union for Bankruptcy after Tripling CEO’s Pay

Annie-Rose Strasser
Think Progress / News Report
Published: Sunday 18 November 2012
“While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.”
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Today, Hostess Brands inc. — the company famed for its sickly sweet desert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.

But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.

At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while scorning employee contracts during a bankruptcy reflects a lack of good managerial judgement.

It also follows a trend of rising CEO pay in times of economic difficulty. At the manufacturing company Caterpillar, for example, they froze workers’ pay while boosting their CEO’s pay to $17 million. And at Citigroup, CEO Vikram Pandit received $6.7 million for crashing his company, walking off with $260 million after the business lost 88 percent of its value.



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ABOUT Annie-Rose Strasser

Annie-Rose Strasser is a Reporter/Blogger for ThinkProgress. Before joining American Progress, she worked for the community organizing non-profit Center for Community Change as a new media specialist. Previously, Annie-Rose served as a press assistant for Representative Debbie Wasserman Schultz. Annie-Rose holds a B.A. in English and Creative Writing from the George Washington University.

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33 comments on "Hostess Blames Union for Bankruptcy after Tripling CEO’s Pay"

ps2os2

November 19, 2012 11:16pm

Hostess created Food Porn. They are now the top paid pimps in twinky land.

oldhat

November 19, 2012 12:55pm

eating habits have changed company did not

baltovet

November 19, 2012 12:30pm

I don't believe that corporate executives should be making that kind of money, but it's their company to run into the ground. Unions are useless, and even in the case of a bread maker, they couldn't figure out that a half a loaf is better than no bread at all.

rickdrade

November 19, 2012 2:06pm

NO, it's not their company, it's made up of workers whom they are screwing!
And, unless you like your 40 hr. work week, vacations, and no child laborers working next to you, you've completely bought into the teabagger/gop bs.
And, Wonder bread is poison, along with Twinkees.

Brian Glennie

November 19, 2012 9:36am

The best way to get rid of union jobs is to move production off shore, even if it destroys communities. But who is going to pay the taxes to keep the infrastructure of the country going, the big corporations and the Upper Class won't and the Middle Class is unemployed.

ticonderoga008@...

November 19, 2012 2:39am

Unions aren't the problem: it's GREED and a general disregard and disrespect of the average American worker. In 1980, one in three workers belonged to a union and America had 35 YEARS of spectacular growth. Now only one worker in ten belongs to a union and look what has happened to the middle class and to our eceonomy in general. Our DISASTROUS TRADE POLICIES are really what's at the heart of this evil monster - they are to blame. Over the last decade 50,000 FACTORIES have closed and most have moved to other countries, mainly CHINA and INDIA. 50,000 FACTORIES gone !!!!! That's the real problem that ONLY OUR GOVERNMENT can fix - mainly the HOUSE OF REPRESENTATIVES. But what are our chances there: the REPUBLICANS control the HOUSE. Don't get me wrong - the DEMOCRATS are to blame too.

OUR TRADE POLICIES NEED TO BE FIXED TO BRING MANUFACTURING BACK TO AMERICAN TOWNS !!!!!! BUY AMERICAN IF YOU CAN FIND IT...

American Bolshevik

November 18, 2012 8:09pm

Amen, brother JohnB3950; and not just obesity-producing but artery-clogging as well. Just because a job is unionized doesn't mean that those workers are making something socially useful. Sometimes they are producing things positively socially pernicious. Some coal-miners digging climate-destroying coal are unionized, as are some of the folks making nuclear weapons. Their jobs need to be eliminated too. Of course, we have to take care of those unemployed until they can be put to decently compensated socially useful work.

johnb3950

November 18, 2012 7:49pm

I feel bad for the workers who have lost their jobs.
But honestly, looking at the list of Hostess products, I have to say America would be better off without them. What a gallery of junk obesity-inducers! I think I once had some Wonder Bread - nasty tasteless stuff. As for the others....
But I see they expect some other company to pick up the brands. Maybe they will even use the same plant and hire back the workers....at half the pay and non-union....It's a wonderful world.

Jeffrey Hill

November 18, 2012 5:37pm

The most counterproductive, worthless assholes who don't want to get their expensive wardrobes wrinkled, dirty, or sweaty put themselves at the top of the pay scale while the workers who produce the wealth for the corporations with their blood, sweat, health, and sometimes lives are treated like lepers.

EOE -- l/i/e.

Lightning Joe

November 18, 2012 5:22pm

RON IN NM: All the way, Ron, all the way.

STRUGGLINGTOMARKET: You want rigor, in your mentation. I know this because you fault the CEOs, fault the institutions, and yet think that YOU might be better in that top slot.

You have bought Wall Street's story that smaller government is necessarily better, when the government THEY want is not only smaller, but powerless against them as well. Indeed, THAT is WHY they want it small; to maximize their profits. It's all in the interest of the Almighty Buck.

And what about the rights WE have lost on the way? The government no longer supports our Unions in the struggle, letting Corporations ROUTINELY violate Labor standards and go unpunished. Is MONEY the ONLY legitimizer you can recognize, when you look for what rights ARE? What about simple human decency?

Have you, at last, no decency left?

And now, they (scratch that -- YOU) are coming for our retirement supports...

XtremLiberL

November 18, 2012 3:56pm

The Foxbots and Igors who are in the 99% rail against the Unions because they are so easily convinced by the 1% that Unions are evil and unAmerican. If it had not been for the Unions the corporations would still have all of us working for $1.00 an hour and that's exactly why 27 Republican Senators voted to abolish the minimum wage so that corporations could negotiate for lower minimums. It's very difficult to inform anyone about what is truth when they have been indoctrinated for so long with lies and deception.

Randy

November 18, 2012 3:28pm

This is just like the upcoming walkout at Walmart. The greedy CEO and top management want all workers to be nothing more than slaves. If this kind of greed continues there will have tro be a revolution to fix America and take down the ultra Greedy criminals.

jeltez42

November 18, 2012 2:30pm

This is just another example of corporate incompetence gone wild. Paying workers and paying taxes are costs of doing business. Pay your workers a fair wage with fair benefits and you get loyal workers that are highly productive.

I will grant that many unions no longer give a fig about the workers, but want the workers' money and are driven by greed rather than the getting a safe work environment and fair compensation for a fair day's work.

Besides, there are companies lined up to buy Hostess from a bankruptcy judge.

Abilene Brace

November 18, 2012 2:29pm

I am very pro-union. They are one of the FEW groups which can have some chance of standing up to the criminal, greedy (greed is a sin, remember?) hyper-self-entitled increases in CEO pay, bonuses and golden parachutes. Vikram Pandit did some things wrong, BUT he was given the job of Citigroup CEO in Dec 2007. Remember folks?? That was the beginning of the recession, which the Bush Administration didn't admit had started until JULY 2008! After they had to admit it. SO a lot of people on Wall Street probably knew things were going downhill, nobody wanted the job I bet. We can't blame him for major decrease in Citi's value, the stage for the macro-economic meltdown was already set.

mklund

November 18, 2012 2:19pm

Sweet product; sour management. Their epitaph: They killed the "Golden Goose" - America's Middle Class.

JR05

November 18, 2012 1:20pm

In other words, the executives looted the "store" before throwing it to the wolves. What a bunch of scum bags. But it doesn't matter because they will all get hired someplace else and continue to rape and pillage, then desert.

brad roon

November 18, 2012 1:04pm

Thank you for saying what i've maintained for years: if management (i use the phrase loosely) thinks they must deport jobs to remain viable, they are incompetent management. If management and shareholders take all the funds and thus make it impossible to keep the processes efficient (repair/maintenance, training, etc) they are incompetent managers.
i call these people, including Romney, Pretty Women after the movie w/Julia Roberts/Richard Gere. (i think) She likened him to a chop shop of industry. That is not good management or productive. Unlike in the movie, the good guys seldom win.
Be aware: the world's authority states that if he couldn't study psychopaths in prison, he'd do it on Wall Street. These literally psychopathic "leaders" are somehow respected in this society because people believe that large amounts of money are indicative of greater wisdom or intelligence. In point of fact, they likely indicate an exploitative, perhaps sociopathic personality.
And we follow their lead. How depressing.

Cliffb2nh

November 18, 2012 12:57pm

Unions are a good thing. They help keep the business equation balanced. The thing missing from this rendition of the hostess story is that the company was private. Not public. The management and shareholders here decided that closing the doors now would preserve their accumulated wealth better than keeping the doors open. They bought into the idea, true or not, that continuing to do business as they had done would lead to a court ordered closure with everyone broke. We all have the right to make our own decisions about what we do with the things that belong to us ... Don't we?

brad roon

November 18, 2012 1:09pm

In such an interconnected society your query is very important. How much control of our private property should we have, if our usage of that private property damages others? The civic authorities seem to think they can force you to jump through any hoops they choose, and make you pay fees and permit fees for the effort, but these corporations have a larger effect on more people and are essentially unregulated.
i see the only possible solution the revamping of corporate law to hold officers of corporations responsible for the decisions that they make. ie if Monsanto shareholders and execs are imprisoned for all the death and disease they caused through forcing the public to eat their toxic GMO crops (proven) and the toxic products placed on the (proven) less nutritious and more contaminated "food" they produce, perhaps they would decide not to push these products upon an unenlightened public through their (34) high level govt employees, their purchase of market advantage (suing other countries, forcing consumption of their products, and theft of virtually all farmer's freedoms, and more) by virtually owning the govt.

ProfessorEmeritusPB

November 18, 2012 12:56pm

The president of this company tripled his pay and assorted executive increased their by as much as 80%.

This is a situation tailor made for the Attorney General the Justice Department to apply the RICO ACT. This is nothing less than a felonious Racketeering conspiracy. I like Twinkies and we have always bought Wonder Bread but no more. FASCISTIC attitudes have no place in a democracy. I say drive them out of Business through BOYCOTTING ALL OF THEIR PRODUCTS!

Show some good old AMERICAN discipline and BOYCOTT ALL of their products. Yesterday I gave to the local homeless center a carton of TWINKIES and one of SNOWBALLS and the last three loaves we have and will ever buy of Wonder Bread!!!!!

Support our Union Working men and women!

Professor Emeritus Peter Bagnolo
My Granddad co-founded one of the the First Integrated Labor Unions in Illinois.

God Bless the unions!

Pres. Murkin Muffley

November 18, 2012 2:09pm

Just like UAL, this was done by "bankers"/venture vultures=thieves, who WILL STEAL the employees' pension fund.
The remaining liability will be put on OUR backs, of course.
All the while bashing what's left of unions.
Stop corporate entitlements !!

William Bednarz

November 18, 2012 12:43pm

. . When this started I predicted a name change... I've seen companies go out of business - to avoid liabilities.....to- restart anew. Only thing changed is the pay-package and benefitts............that and the C.E.O. gets another bonues for it. I actually saw a bus company go out of business on Friday and start again on Monday under a new name ( with pay and benefit cuta)
Twinkie's become twinkles
....same packaging - same company - oops different name??/different company.....
... A FRAUD AGAINST THE CONSUMER AND THE WORKER
(( NOTE: THIS HAS NOTHING TO DO WITH THAT - -) I understand John Boehner is trying to get Social Securty put on the table with the fiscal cliff deal to cut it........after losing the election where they stated Social security was off the table and not going to be cut.....politicians talk out both sides of the mouths).

strugglingtomakeit

November 18, 2012 12:23pm

It is called corporatism. Occupy Wall Street was going after Capitalism, when they should have been going after Corporatism. And don't shake your head when I tell you that all the Dems in Congress, AND President Obama are corporatists. They are..and are taking US for a ride, while they get fat off of knowing when the stock market is going to rise and fall. The whole lot of the people in control up in D.C. are as corrupt as they come. With power comes corruption. We should kick them all out and start over with the "common" man and woman and have term limits.

Capn Canard

November 18, 2012 12:20pm

Well lets admit it: Hostess products were less than high quality, but I admit, I will miss the much maligned Twinkie. I wonder if Little Debbie has a version? Of course Dolly Madison used to have some of those little cakes too. Back to Hostess: the Unions were never the problem, they are just the scapegoat for all the mismanagement done by the upper corporate management of Hostess.

strugglingtomakeit

November 18, 2012 12:25pm

My poor elderly, disabled Uncle up in CT worked himself to death for Wonder Bread...and now I am wondering if he will still get the rest of his pension????

FullBlad

November 18, 2012 12:11pm

The execs were just buffing the till before the company went belly up. That is their mindset of entitlement, even as their stewardship of the company was pathetically inept. If they knew even the slightest about business they might have realized that their product was being rejected by the consumer and therefore they should have brought out a new product line more likely to find favour. Their fraudulent idea that labour costs caused the demise of the enterprise also points to a mindset of class warfare instead of seeking solutions in an atmosphere of esprit de corps. They were the brain trust so the blame resides with them and true to their mindset they could never blame themselves.

Ron in NM

November 18, 2012 12:09pm

Unlike some "addicts" in our country, I'm not going to miss Twinkies at all, since I've probably only eaten a couple in my entire life. And the ones crying about the Twinkies' demise seem to be generally in the obese crowd and would probably be better off without them. But I'm glad that the news about the tripling of the CEO's salary came to light.

CEOs nowadays seem to get compensation that has nothing to do with merit, or actually earning their salaries or "golden parachutes." Yet CEOs write books about how to be successful ( how to get rich), and untrammeled greed seems to be the norm in upper management these days. CEOs in American corporations get the highest compensation in the world, far more than in Japan or Germany. Yet, as we've all seen, it often has nothing to do with actually deserving what they get.

And the "filthy rich" wonder why the 99% are getting angry and restless. They'd better make sure the walls in their fortresses are thick, and they know the reasons why. They'd better wise up and start acting like fellow Americans, instead of robber barons. When the peasant rebellion comes, the good rich will fall along with the baddies, so they'd all better get their noses out of the air, push for fair tax rates, and share some of the wealth with those who created it for them.

danh

November 18, 2012 12:01pm

I wonder if it is now time to legally control compensation at the upper end?

For example, would it be feasible to demand that the CEO makes no more than 10 times the salary of the lowest paid worker?

It seems like this would help apply pressure to keep the bottom paid better and the top paid less.

Now, there may very well be sound economic arguments against such an arrangement.

But the fact that you never even hear anything like this proposed says something about our corporate media (and that something is not very good).

strugglingtomakeit

November 18, 2012 12:32pm

@DanH...If I worked my butt off and broke the glass ceiling, and made it as a CEO...I would not want the government getting involved with my hard earned property. Without ownership of property...we will truly fail as a nation.

But then..if you want Socialism or Communism..then you will get just that.

WE need smaller government and more Freedom! Do you have any idea how many freedoms we have lost in the last 50 or 60 years?

Now the CEO and upper echelon of this business DID know the end was near and were padding their pockets. With power comes Greed. There are very few CEOs in this world who are people with good morals.

woetopoe

November 18, 2012 1:11pm

STRUGGLINGTOMAKEIT, Wall St. malfeasance, the decimated industrial base, the developing "ghost towns" throughout the Midwest
and beyond, the massive number of foreclosures, outrageous college debts,
unions under constant and withering attack, CEO rapaciousness, the world's largest "for-profit" prison industry, defense spending outstripping all the nations in the world "combined." We don't need "smaller" government. We need an "honest" government that employs actions that benefit a majority of the people not just a few "sub-human" vermin who
allegedly are the "best and brightest." You bemoan the idea of Socialism.
Take a good look around and tell me that "Capitalism," as currently
practiced in this country is working. And if it is...who's it working for?

anono

November 18, 2012 11:25am

No worries!!! The twinkies that are on the shelves will still be good a decade or two from now. But this does give us a new name to refer to ceo's in regard to being all fluff and no substance.. "It's not the unions that are the problem. It's those damn snoballin' wallstreet twinkies that are ruinin' this country!"

Sunflowerbio

November 18, 2012 12:03pm

This is a big relief, especially for someone contemplating "going postal". It means the Twinkie defense will be viable for quite a while yet. Said person should probably stock up now, however, as the shelves are rapidly emptying.

BozoAdult

November 18, 2012 11:20am

This is all too common.

Has the deunionization of America resulted in increased domestic manufacturing? No it has not.

The fewer union jobs, the fewer jobs, period. It is all about greed. Unions have been taking major concessions for forty years. It's never enough for the greedy management.