You are viewing the NationofChange archives. For the latest news and actions, visit the new
Get Email Updates | Log In | Register

Hostess CEO Cuts Worker Pay, but Leaves Own Salary Untouched

Travis Waldron
Think Progress / News Report
Published: Tuesday 4 December 2012
“Earlier this year, Hostess’ former CEO received a pay increase from $750,000 to nearly $2.5 million even as the company was struggling.”
Article image

After failed Twinkies-maker Hostess filed for bankruptcy in November, acting chief executive Gregory Rayburn imposed an 8 percent across-the-board pay cut on the company’s workers. Despite those cuts, Rayburn, who took the company over after its second bankruptcy filing in March, will not be subject to the pay cut because he is not technically a company employee, the Huffington Post’s Bonnie Kavoussi reports:

Though he imposed an 8 percent pay cut for all Hostess workers, Gregory Rayburn’s monthly $125,000 pay — or $1.5 million a year — will remain unchanged, a company spokesman told The Huffington Post on Monday. Rayburn is not on the Hostess payroll and therefore isn’t subject to the imposed pay cut, the spokesman explained.

Earlier this year, Hostess’ former CEO received a pay increase from $750,000 to nearly $2.5 million even as the company was struggling. The pay package was later reduced to $1.5 million, and Rayburn reduced the salaries of four other senior executives who received bonuses to just $1 until the company emerges from bankruptcy, according to a company spokesperson. Four other executives who received raises, the spokesperson said, had their salaries reduced to pre-raise levels.

Still, the company asked a judge to approve $1.75 million in bonuses for 19 executives after it filed for bankruptcy in November. The judge approved the bonuses this week, making Hostess the latest company to dole out big pay packages to executives even as their firms were failing.

Author pic
ABOUT Travis Waldron

Travis Waldron is a reporter/blogger for at the Center for American Progress Action Fund. Travis grew up in Louisville, Kentucky, and holds a BA in journalism and political science from the University of Kentucky. Before coming to ThinkProgress, he worked as a press aide at the Health Information Center and as a staffer on Kentucky Attorney General Jack Conway’s 2010 Senate campaign. He also interned at National Journal’s Hotline and was a sports writer and political columnist at the Kentucky Kernel, the University of Kentucky’s daily student newspaper.

i am so sick of all these ceo

i am so sick of all these ceo that have all the judges in there back pockets there houses sould be picketed and they should be harrested and any thing else that could be gotten away with just as they get away with getting hard earned money from employees this world is in a bad place !!!

But BayouMama, the world is

But BayouMama, the world is NOT really in a "bad place" (EXCEPT for Global Warming, which IS bad and going to get worse).

The "poor" CEOs see the END of their train coming, is why they won't relax and enjoy the ride, but must make hay out of gold for us, while THEY pocket the change.

They only have so much time to get all the goods and money they can, you see, before the game is over and they HAVE no more ways to get Rich (because WE'LL have their number).

Still, it's hard to feel sorry for them, considering how badly they are treating us.

Why is it that when

Why is it that when corporations succeed, it's necessarily the result of insightful decision-making by top management ... who inevitably are granted huge bonuses for their accomplishments?

But when a corporation fails, it's clearly the fault of the wage earners and labor unions, and the obvious solution is to cut wages and benefits, lay off a major portion of the workforce ... and then grant top management huge bonuses for their accomplishments.

Why are we supposed to be so

Why are we supposed to be so shocked by new junk morals at a corporation long dedicated to producing and marketing junk food?

That's because people at this

That's because people at this level are not responsible for their actions. I wonder if we all acted like that what would happen? Would Atlas Shrug? LMAO.

To DWDALLAM...Howl!!!! Two

To DWDALLAM...Howl!!!! Two funny!!

$83 is $83. I wouldn't turn

$83 is $83. I wouldn't turn it down--that pays my cable bill for a month plus a few dollars' pocket change--especially if it came with the knowledge that it was taken from the bonus some millionaire exec didn't get.

That's the same kind of

That's the same kind of mentality which you object to in George Rayburn. It solves nothing.

It's true that $1.5 million

It's true that $1.5 million would only give about $83 to each of the 18,000 employees, but that's like saying my one vote doesn't count, or my $25 won't go far in helping feed kids, or carrying a sign to make a statement is futile. But it's all part of a higher purpose: to move forward in making things more equitable, tolerable, and hopeful for all of us.

Whacking executive salaries

Whacking executive salaries may make you feel better. But, it doesn't solve the problems of the working poor. Good paying jobs require strong, competitive companies.

So, how does reducing the

So, how does reducing the CEO's pay help the employees? If he was paid nothing, that would free up $1.5M to be divided among 18,000 people which comes to $83 per person per year. Furthermore, Rayburn is not the person who got the company into trouble.
If you're really worried about the employees, you're focusing on the wrong thing. You should be looking at other aspects of the problem. For example, is there a business model that will support the union pay scale and at the same time generate a profit for the investors?

Well jerrybrown11743, if

Well jerrybrown11743, if that's your real name, shall we start with the false assumption that the CEOs exorbitant and oddly timed pay increase would necessarily be divvied amongst the workers. It may or may have not have been but it sends a signal about executive priorities ..... Is there a business model that will support the union pay scale and generate profits for investors? I don't know but I'm willing to go out on a limb and say that the current regime is not going to fill the bill. Hostess may have had many problems that predate Rayburn, but unilaterally granting ones self a 300%+ pay raise while the company is on the rocks is, shall we say, an indicator of less than noble intent for either the stockholders or the employees.

Hostess has been in the hands of a Bain like (Ripplewood in this case) private equity firm. Like most private equity takeovers, the company was so loaded up with debt, that it was a forgone conclusion that the bankruptcy would end with the dissolution of the company. One of those debts being the payoff on Rayburn's contract which will no doubt receive preferential treatment against the claims of other creditors. It also guaranteed that the cash flow acquired by the restructuring of bankruptcy was not going to go back into actually preserving the company, and thus, employees jobs.

So Rayburn comes out looking like a klepto-hero to his Wall St. buds. He came away with mo money and mo money, but he got to shaft a union in the process. I guess if he gets to marry his secretary its a hat trick.

If economic efficiency is the issue and its out with the old and in with the new, how is it that we a a nation are still in the thrall of dinosaurs like Boeing and Lockheed/Martin with no bid and cost plus contract for the most expensive purchases in the history of history? If economic efficiency is the issue, why are we not providing paid education for every student that wants one? Your thinking, huh? Just do the math.

I don't disagree with your

I don't disagree with your observations on takeovers. They are often predatory and destructive. But I think you'd have to concede that this publication tends to make overly-simplistic comparisons of hourly and executive compensation which suggest that hourly employees could have been paid significantly higher rates if the funds had not been diverted to executive compensation.
There is a lot that's wrong with our business culture. But, in my opinion, that's just one aspect of a much larger cultural problem which we as consumers, workers, union members and executives have created.
In many cases, even in a company with enlightened management, it may not be possible to meet the market demands, pay hourly employees $15/hr and maintain a positive bottom line.
It would be interesting to see what becomes of Twinkies and Ding Dongs. Will the companies that buy these brands make the products using employees who are paid significantly more than at Hostess? Maybe they will be made at factories with more automation where employees are paid more because fewer people are needed to produce much more product.

"But I think you'd have to

"But I think you'd have to concede that this publication tends to make overly-simplistic comparisons of hourly and executive compensation which suggest that hourly employees could have been paid significantly higher rates if the funds had not been diverted to executive compensation."

Do you know what the word "principles" means? Because THAT is what you are entirely overlooking, here. I DO know what it means, AND I LIVE MY LIFE ACCORDING TO MINE.

The PRINCIPLE at issue here, is that those who drove the company to bankruptcy were NOT the workers, but the managers, and having PRINCIPLES would preclude letting the PROBLEM WORKERS (the management) give themselves raises at all... much less CUTTING the wages of those who did NOT cause the problem in the first place.

And this sort of "anti-" principled stance is the USUAL stance of management today. They go to SCHOOL to learn it, and it rules their every transaction and interaction in running their business.

"In many cases, even in a company with enlightened management, it may not be possible to meet the market demands, pay hourly employees $15/hr and maintain a positive bottom line."

And in that case, the company should not be in business, trying to do whatever they do. If that level of income is the level of income the company can make, then it needs to either figure a way to pay its workers what they are WORTH (rather than what they WANT to pay them), or... find another business model.

Put the judges' profile on FB

Put the judges' profile on FB and get him as much publicity as possible. Hell, I'd say toilet paper his house, but that's making income for the Koch bros! (and BTW, Koch does NOT spell coke!!). Everyone should know who he is and what he does...and check his bank account!

you are so right!!

you are so right!!

I'm confused, how is this

I'm confused, how is this possible? The judge should be fired for allowing them to steal money that belongs to the creditors. The creditors should sue.

Well, Mr. Rayburn needs to

Well, Mr. Rayburn needs to maintain his high pay. Afterall, he's one of them thar "job creators". You can't create jobs on less than 1.5 mil.

Twinkies and HoHo's for life

Twinkies and HoHo's for life must be the 'argument' used to get the bankruptcy "judge" to approve executive bonuses. An offer he/she couldn't refuse! Would that make the judge a real Ho?

The Perfect Union Ding Dong

The Perfect Union

Ding Dong Zingers! We'll triple "our" pay
Atop a Cupcake...The American Way
Twinkie, Suzy-Q, and Sno-Ball we'll slay
Ho-Ho,Ho-Ho; thousands of workers?
You'll just have to go
Privatize the profits
Socialize the losses
The "ingrained" manner
Of the bosses
Ain't it a "Wonder"?
How much "bread" these "crats" make?, are ever, are ever witty!!


UNCONDITIONAL1, And you are ever kind. Thanks!!

Comment with your Facebook account

Comment with your Disqus account

Top Stories

comments powered by Disqus

NationofChange works to educate, inform, and fight power with people, corruption with community.

If you would like to stay up to date with the best in independent, filter-free journalism, updates on upcoming events to attend, and more, enter your email below:

7 Compelling Reasons Why You Should Support NationofChange

Our readers often tell us why they’ve decided to step up and become supporters. Here are some of the top reasons people are giving.

1. You’re keeping independent journalism alive
The corporate owned media has proven that it can’t be trusted. In a media landscape wrought with spin and corruption, NationofChange stands in very scarce company.

2. You’re sticking it to the rich, powerful, and corrupt
When you have money in this country you can get away with damn near anything, and they do. NationofChange isn’t afraid to expose these criminals no matter how powerful they are.

3. Your donation is 100% tax-deductible
NationofChange is a 501(c)3 charity. People tend to assume that many other organizations are (most nonprofits are NOT) but it’s that 501(c)3 status is a bit more rare than you think.

Read the rest...