Hostess asks judge to approve executive bonuses
NEW YORK (AP) - Hostess Brands Inc. is asking for 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 says 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.
Hostess is also seeking final approval for its wind-down, which was approved on an interim basis last week.
The process includes the quick sale of its brands, which also include CupCakes, Donettes and Wonder Bread. Hostess says it has received a flood of interest in the brands, including from national packaged food makers, international companies and its own customers, which include supermarkets and big-box retailers. 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.
The company's shuttering means loss of about 18,000 jobs.
In court Thursday, 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.
The company's demise came after years of management turmoil, with workers saying the company failed to invest in updating its products. In January, Hostess filed for its second Chapter 11 bankruptcy in less than a decade, citing steep costs associated with its unionized work force.
Although Hostess was able to reach a new contract agreement with its largest union, its second biggest union rejected the terms and went on strike Nov. 9. A week later, Hostess announced its plans to liquidate, saying the strike crippled its ability to maintain normal production.
The maker of Twinkies, Ding Dongs and Ho Hos says 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.
Hostess is also seeking final approval for its wind-down, which was approved on an interim basis last week.
The process includes the quick sale of its brands, which also include CupCakes, Donettes and Wonder Bread. Hostess says it has received a flood of interest in the brands, including from national packaged food makers, international companies and its own customers, which include supermarkets and big-box retailers. 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.
The company's shuttering means loss of about 18,000 jobs.
In court Thursday, 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.
The company's demise came after years of management turmoil, with workers saying the company failed to invest in updating its products. In January, Hostess filed for its second Chapter 11 bankruptcy in less than a decade, citing steep costs associated with its unionized work force.
Although Hostess was able to reach a new contract agreement with its largest union, its second biggest union rejected the terms and went on strike Nov. 9. A week later, Hostess announced its plans to liquidate, saying the strike crippled its ability to maintain normal production.
Standard operating procedure people, not even sure this qualifies as a story outside of a biased attempt to demonize "evil corporate bonuses", and it's simply a retention bonus, otherwise there's no incentive for them to stay.
@deejm2112Â ...Â
Hostess has had to cut more than 18,000 jobs as it closes its doors for good. These workers may find it tough to find new work. The company had operated 33 bakeries, 565 distribution centers and 570 outlet stores across the country.â¦production workers earned up to $20 plus an hourâ¦, plus they had access to medical benefitsâ¦now, thanks to the bakers union they have nothingâ¦if I were the teamsters Iâd do as Hoffa might have. Hostess Teamsters workers could have earned between $50,000 to $100,000 a yearâ¦nowâ¦.372 concessions made to the union in less than 7 years...I'm not sure, in view of all this it is fair game to blame exec bonus for all the failure...since I dislike greedy unions they get my blame...I'd have thrown up my hands long before this and let the chips fall when they may....
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There are over 100 different company and suppliers waiting for a shot to buy hostess right now.They had over 2 billion in sales last year so all this tap dancing is baloney.The new owners get solid sales and routes as millions of loyal Hostess cupcake lovers.They will be back better then ever with No Unions and No creditors owed just new owners.Rumors are saying they already have a buyer just have to go though the steps.How do i know, well my grandfather worked at hostess 52 yrs and before you all badmouth the union ,they did a great job while my grandfather worked there as we even got are flu shots though them.
so a total gross of 2.3 billion and they can't pay out 0.5 % of that to pension funds but they can hire some clown to "restructure" for 1.5 million a year.....free market hey !
 @sargerator ... you must take into consideration the 372 concessions made to the union in less than 7 years...a bit excessive I'd say.  Do the math,,,enough is enough and a breaking point will occur...guess the union didn't much care....about $41,200,000 divided by 18000 people = $1120 per employee per year using your formula,...a bit much....and would take more sales to cover...of course if the union's idea was to take over Hostess, forced by the way, and keep the profits for themselves...sick....
How about hell no!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
They should get the bonus of getting their Twinkies stuffed.
I think they should be allowed to receive any bonus they want and it should be paid out in twinkies and ding dongs.
@The Voice of Reason Yes. Please see my post below
These poor CEO's have a very difficult, back-breaking job. Their 7-figure compensation package is not nearly enough. After all, they have to fight so hard against the unions when the unions try to get more money for the workers. So, not only should these bonuses be approved - we need to ensure that the marginal tax rate that they pay for over $250,000 each year does not go up. Otherwise, they will certainly resign and get a job at Wal Mart.
I could really use a Twinkie and a shot of Jack.
Think if I were the judge, I'd have to say no. If they have other jobs lined up, then should go ahead and move on. Otherwise, they'll stay and do the job they get paid to do. Incentives? Really? How about you get a bad reference if you don't preform up to par. Cause we all know these high paying positions are a dime a dozen.
I cannot see how anyone can grant these people their bonus. According to news reports, Hostess has declared bankruptcy twice - this breing the second time.In 2004, labor gave concessions.  The second time they declared nearly twice as much debt as they did the first time. It has been reported that Hostess has had seomthing like seven CEOs in ten years. I am sure each one of those got a signing bonus and a departing bonus. Now they want more money as they trash 18000 jobs.
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Consdiering the debt and management errors, how can theyt think they deserve more moeny? How can anyone exoect that?
This is a private company and can do as they wish.....the judge needs to do something about unions that deprive and demand beyond reasonable and deprive people of their jobs....this case is classic - but it still remains, this is not a public property but privately owned and it is theirs to make or break...with the help of the union they-are-no-more....,annnnd, you occupier types are not entitled to what others work hard for...try getting a job and earning your own....gees....
 @KHEB Hostess made some horrible decisions in their supply and distribution chains, I'm certain that had more to do with it than the unions. They're so messed up they couldn't afford any concessions.
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That said, I heard the union wanted to try to make it an employee owned company so they might have had some motivation but without a complete operational overhaul they wouldn't have gotten far.
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What the heck does Occupy have to do with this? (about as much as Bhangazi I'd imagine)
 @deejm2112 ... just defining the nuts that are so jealous and vindictive and can't understand why they can't be paid hundreds of thousands of dollars for something they did not build...it's as good a definition as any and most people understand the graspy, no-good-niks wanting something for nothing other than the fact they were born I guess...., Oregon is apparently over run with them - and it is showing up only you don't see it ....just try and recognize it and either join them or get some semblance of reality and go to work...any job will do until something you want comes along....
This may be a private company but don't forget 'private' usually means publically held through stock Looking at facts and historey, it's more then a stretch to blame this on unions. Seven CEOs in twn years. The company declared bankruptcy .in 2004 with about $500 million in debt. This time, they have almost twice that much debt. Are you sure that is not the fault of management? That same group of people who now expect to be rewarded.
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Give up Faux news. You may get some different information and in doing so may get more accurately informed.
@jbloe ...look it up ...
Founded in 1930 by Ralph L. Nafziger, Hostess Brands has headquarters in Irving, Texas. Hostess filed for Chapter 11 bankruptcy protection in September 2004 and emerged as a private company in February 2009. In January 2012, it filed for its second Chapter 11 bankruptcy. The privately-held packaged goods confectioner was burdened with 372 union agreements following its post-2004 bankruptcy restructuring led by Ripplewood Holdings, which led to Hostess' second bankruptcy filing. As of January 2012, 83% of Hostess' 19,000 employees were unionized. As the result of an national strike imposed by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) in November 2012, Hostess filed for Chapter 7 in bankruptcy court on November 16, 2012.
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 @sargerator   ... soooo....it was their right - and all the more power to them.  The unions did nothing but force the end of twinkies..,.they had no rights to excessive money for themselves and I''m happy the owners of Hostess got the money before they could....I feel for the people that have lost their jobs but they they did choose the lousy union to represent them... I do think 372 union demands, and met, in 7 years, but it did take 82 years to destroy them.  is more than excessive...guess they thought they had a cash-cow but in the end they did not have their members best interest at heart...so, I guess I really have no sympathy for them... been there done that...I do feel sorry for Hostess - and me. I liked twinkies, ho-ho's and ding-dongs....
@KHEB @jbloe Ya right kreb, it's all the unions fault...grow a brain ! And as jbloe said, don't depend on fauxe nooze for enlightenment !!
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"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."
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http://notsocrazynews.com/p/unions-hostess-received-raise-before-bankruptcy
OK, I'm curious.......
Many are pointing or placing blame on the company's management. I am not disputing any of that. My question is: just how much money do the union officials make? Are they going to take pay cuts once their 18,000 members across the US lose their jobs? I know in other unions, officials are making in EXCESS of $100k a year. In the national post, many are making $300,000 to $500,000 a year (or more). For one reason or another, people (rank and file) are ignoring this or are simply not aware of this.
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Like it or not, the management bonus is accepted business practice in bankruptcies. It keeps the management in place while the company shuts down. As another poster said, it placates the creditors to ensure that no one bails out leaving them holding the bag (unions included since they're creditors as well).
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 @GeauxOSUÂ
The union leaders of the bakers union makes over 250k per year. He has successfully laid off 18,000 of his union workers who he was looking out for.
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Good luck finding a job in this economy.
Get your facts right ! Hunt make 210K per year, he leads an 80K member group while the ceo of hostess, driscol,  gets 2.5 million a year to lead ....18K people....which one gets payed more per person they lead ??
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http://www.bizjournals.com/dallas/news/2012/11/16/bakers-union-releases-statement-on.html?page=all
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 "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."
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http://www.dailykos.com/story/2012/11/17/1162730/-Hostess-CEO-Received-300-Raise-Before-Bankruptcy
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And don't try the "union pensions are whats causing this" kinda crap...pension costs per year were 0.5 % of hostess gross last year ! Ya unions are causing it...when pigs fly !Â
 @sargerator Interesting point! Just the other day, it was announced in the US Bankrupcty court that the CEO is making $125,000 a month. I don't know how that comes to $2.5mm.
 @GeauxOSU Do you feel the head of an organization representing hundreds of thousands of employees making 500K is excessive?.?. Â
 @darren vandervort Good question Darren. I simply do not have an answer to that. In theory, one would say: no, not an issue since he's the head of this union. On the other hand, just as with the management at Hostess, if people are suggesting that the bonuses are excessive for a group of management who is "driving the company into the ground", what difference is there when the union head is "driving his members to destitution?".
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   We're talking eighteen THOUSAND employees of the Bakers' union. This does NOT include the other 7,000 teamsters who had already agreed to a concession just several weeks before. That is a significant impact not only on the US economy, but on the livelihood of the rank and file themselves. They are going to be hard pressed to find jobs in this market.
No the "management" shouldn't get bonuses for driving the company into the ground.
the 18000 loyal hard working employees who are out of a job should get all the bonuses.
@Rey Arteb Loyal? How are they any more "loyal" than the execs? You should get out into reality more often.
NO! NO! NO!
I hope the judge denies their request. Although I'm not defending the unions, the executives have made several bad decisions over the years that have brought this company to its knees. They have a history of shedding profitable lines during mergers and failing to reinvest into product and marketing. Their failure was cemented well before now. Shame on these guys. My heart goes out to the 18,000 workers who are out of work for no fault of their own.Â
 @DeaconBugg Well if this were the case, then the judge would probably have to order the managers to stay on the job until the closure is 100%. Typically bonuses are paid in order to keep the managers there to aid in the closure/bankruptcy process. Without the bonus, there's no incentive for these mangers to stay on. I'm not saying it's right, just that it's typical, otherwise the process could be more difficult and take a lot longer.
 @scoreboard Very true. It'll be interesting to see how this plays out. It would be ideal if the company was purchased rather than simply the rights to the hostess lines, but that's a slim chance.
For all of you that want to solely blame the unions for the demise of Hostess, how can you justify giving the CEO's who couldn't keep the company profitable 1.8 million in bonuses on top of all the bonuses they have already received. To me it sounds like the company execs were more than happy to milk off the money and go bankrupt. Like they really care about 18,000 workers.Â
 @peckishpete I blame the union executives and the corporate executives.
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Do you see a common denominator? It's not unions, it's not corporations. I don't want to invoke the term "1%" because I happen to truly love my job, but, there it is. It's the executive class.
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Carly Fiorina got over ten million dollars to be FIRED from Hewlett Packard, after HP laid off hundreds of the people who actually designed, developed, manufactured and created products such as the Inkjet printer. At one point, HP-Corvallis' problem was that it couldn't manufacture inkjet cartridges fast enough to meet the worldwide demand. What? Design AND manufacturing in Corvallis? Not so much anymore. Carly had other plans and all those people who made HP great were S.O.L.  The icing on the cake is the $50,000 they gave her for "career retraining" or whatever which is more than a line tech would make in a year there after several years of excellent service. And of course you know, McCain snapped her right up to be a campaign adviser because the fact is, there is a upper-crust segment of America that Simply Does Not Get It. Â
 @peckishpete This is an all too familiar scenario, the company is run into the ground and the executive staff get their bonuses. Bonuses for what? The people in charge are always exempt from the consequences from their actions. Our entire capitalistic system has been based on it for years. The Unions are partly to blame but the bulk of the responsibility should be carried by the executives.Â
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This is America, and this is the way it works. The Sprint/Nextel merger is a perfect example.
Pity the poor executive... Not only did they manage the company into the ground, but they have to go to a judge to ask for bonuses. And add on to that, now that Obama won, they might have to pay a marginal rate of 39% on those bonuses! There is no justice...
 @Max Quinn ....union demands went a long way in helping destroying the company...just as they are doing to our Country but the "gimme-gimmie" people don't give a dam.......
 @KHEB Yes, the gimmie-gimmie people - like someone hired to restructure a company who manages it into liquidation for $125,000 a month and then demands a bonus to fill in the grave. They are destroying the country.
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Lucky for them, they have guys like you willing to fight for their cause!
 @Max Quinn  @KHEB Whats a landline?
 @Max Quinn ... yer a riot - not...just one more tax...have you taken time to figure out all the new taxes and the amounts voted for in last election that  we will now be paying... and all you can come up with is sarcasm...,guess you don't have to worry about that...hmmmmm...
 @KHEB Premium stuff, KHEB. I guess nothing socks it to the successful like raising taxes on land-line phones... You got me there.
 @Max Quinn ... quite frankly it is none of your business what a private company does....or how they got there, or where their going....I suppose you are all for the raise in land-line phone rates passed by the City Council...right up your alley.  Hate the successful, envy the prosperous mentality .... sock it to anyone that has more than you...be happy.
A bonuses for messing the company up? Â Are they crazy,,.....damn demorcrats/
 @sortbait Carly Fiorina (R) got tens of millions of dollars for nearly destroying HP before wasting millions of contributor dollars running for Governor of California and then signing on as campaign adviser for John McCain and Sarah Palin.*CACKLE* THOSE DAMN DEMOCRATS/    Yeesh. Some people are just natural born tools for their party.
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 @wahoo Another ignorant comment from a clueless liberal. I hardly think they are just getting paid minimum wage. Unions will see to it that they are getting more than that. However, the combination of mismanagement and union demands are the cause the demise of Hostess. Both sides bear responsibility but you have your blinders on as usual and can't see it. WAKE UP WAHOO!!!
 @scoreboard  @wahoo ". Both sides bear responsibility but you have your blinders on as usual and can't see it. "
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There's cluelessness enough to go around on this forum and I think *both* sides have had their blinders on for far, far too long now. You are correct; BOTH sides bear responsibility but the left will only go after the corporate execs and the right will only go after the union. Everything else is verboten by the angry white men on the radio.
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Thank God I own my own business which caters to rich people because while an entire nation of working-class fools and factory chumps yell at each over or who's a liberal and who's a conservative, BOTH THE UNION EXECUTIVE AND THE CORPORATE EXECUTIVES ARE RAPING THEM OVER A BARREL BECAUSE THE WORKING CLASS IN AMERICA WILL TURN ON ITSELF BEFORE IT TURNS ON THEM.
 @wahoo minimum wage, huh? So that's how useful unions are these days?Â
Are you kidding me? a bonuse? with all these people layed off. My God I could just scream! If this Judge approves this he should be shot on the spot. Pay these Ding Dongs their bonuse in Twinkies.
 @Pvpbw ~ Pay off these exec bonuses in Twinkies"... i LIKE that..!  :-)
Oh yea... you get a bonus...corporate scumbags, what about all the employees layed off.
 @FrankCastle ~ All the employees get is laid off... disgusting, isn't it..?   I don't see how those execs can even ask for such a thing; I would be far too ashamed...