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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 millionfor crashing his company, walking off with $260 million after the business lost 88 percent of its value."
Yeah, ALWAYS those dam Union employees gouging the employer. Wake up and smell what your shovelin.
Having been scolded by IBALEE in the past, I want to make this apolitical.
I think this issue really shows how divided our country currently is. Pro Union/Liberal = the greedy executives are lighting their cigars with $100s while the common man starves. Pro Business/Conservative = the greedy union leadership only cares about their slush fund and cares less about the business or their own members. Both sides believe that if you do not see it my way you are too stupid to figure it out.
We need to find a way to bring all of us in from the extremes, to somewhere near the middle so we can at least see the other's point of view. If someone doesn't figure out how to do this soon, our country is in bigger trouble than we all realize. We have structural problems in our economy, and society, that need fixing to remain sustainable.
China will surpass us in GDP in the next decade. Latin America's middle-class has grown fifty percent in the past decade. If we wish to remain relevant in the world economy we need to come together, not pull apart.
There are none so blind as they who will not see.
We should just be grateful for whatever scraps the vultures deign to leave us after they destroy the company, right?
Sent from my iPad using Motorcycle
I haven't seen where anyone posted this. It is the judges ruling that both sides go to mediation as the union struck with out objections to the company's offers.
More than meets the eye every day this goes forward.
Management at Hostess also ignored opportunities to create new products that reflected changing consumer tastes ( launching "healthier" whole grain products for example ), and it's attempts to streamline costs by centralizing it's bakeries led to product changes that had a bad effect on taste and texture. What management was good at was obtaining huge financing deals with huge amounts of leveraged debt that they never intended on actually being able to pay back. As had been pointed out, this is a how to in Vulture Capitalism.
Never ending saga gets even more convoluted.
Could save a few jobs.
It is very plain to see that the Bakers Union has dragged the company to liquidation with their strike. Even the Teamsters wanted a secret vote of the Bakers Union employees.
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