Hostess closing

[JPhillips]

That just means they'll be even better job creators!

[molson]

If Hostess failed because its CEO's salary was too high, and if they would have survived if only they didn't give those raises, then fantastic, the market worked, and other companies better learn from those mistakes or they risk the same fate.

Usually though, CEO salaries are brought up in a different context, where it's wrong that they make so much even if the company is successful, and that the board of directors should more evenly distribute the company revenue strictly out of generosity. (and I'm sure some boards, and some individuals, are in fact very generous in that way) But still, the criticism that they should be more generous is kind of interesting because usually the line is that economies can't rely too much on generosity, but that we have to rely on the government to legalize what constitutes "good" and "bad" economic behavior.

[cuervo72]

Beginning to wonder (or just even bother thinking about) the merit of publicly-held companies vs privately-held ones. In the latter, it seems you might have parties that are more interested in the actual well-being of the company, rather than just looking to make a buck. *shurg*

[Blackadar]

Originally Posted by molson

If Hostess failed because its CEO's salary was too high, and if they would have survived if only they didn't give those raises, then fantastic, the market worked, and other companies better learn from those mistakes or they risk the same fate.

It's indicative of the kind of money the hedge fund managers have been sucking out of the company the last few years. So the employees saw huge bonuses paid to management, money sucked out and then were asked to take another pay cut. Can't blame them for saying "fuck you".

[TroyF]

Originally Posted by Blackadar

It's indicative of the kind of money the hedge fund managers have been sucking out of the company the last few years. So the employees saw huge bonuses paid to management, money sucked out and then were asked to take another pay cut. Can't blame them for saying "fuck you".

I don't blame anyone for making the choices they make. Clearly, the execs at Hostess were scumbags. When your company has filed for bankruptcy multiple times and is hanging by the balance, you don't give yourself massive raises and look in the mirror at night and see a good person. You just don't.

On the other side, I do question the choices the bakers union made. Here is the problem. . . we all agree they have taken massive cuts over the last few years and the board was run by a bunch of scumbags, right?

So I have to ask the question. . . armed with this knowledge, why were the bakers still there? Because they can't find better jobs. If they could have, they would have been gone a long time ago. So you vote to strike when the company has said they will close their doors if you do go on strike. Now what?

Unemployment for 12 to 18 months? Then what? If it's me in this situation, I'm going to vote to continue, then look for employment elsewhere or try to improve my station somehow. (by learning another trade on the side, going to night school, getting a second job in hopes that would turn into something, etc.

Saying "F you" is perfectly fine, but what do YOU get out of it? Great, they "won" By winning they now get no money (outside of unemployment short term), they get no benefits (as opposed to crappy benefits, wait until they see what Cobra costs), they still can't get a better job and the execs are going to get rich selling off the brand.

I feel for all of these people, but I really do think their decision was short sighted and that many of the 18,500 are going to be far more hurt by their actions than accepting another crappy contract. Just my two cents.

[larrymcg421]

Originally Posted by molson

If Hostess failed because its CEO's salary was too high, and if they would have survived if only they didn't give those raises, then fantastic, the market worked, and other companies better learn from those mistakes or they risk the same fate.

Usually though, CEO salaries are brought up in a different context, where it's wrong that they make so much even if the company is successful, and that the board of directors should more evenly distribute the company revenue strictly out of generosity. (and I'm sure some boards, and some individuals, are in fact very generous in that way) But still, the criticism that they should be more generous is kind of interesting because usually the line is that economies can't rely too much on generosity, but that we have to rely on the government to legalize what constitutes "good" and "bad" economic behavior.

The problem isn't that the CEO's getting massive raises caused the company to fail, it's that they were taking raises while the company was failing and constantly asking the workers to accept concessions.

I don't necessarily agree with your premise here. I don't think people would care how much a CEO made for a company that treats it's workers well with good pay and good benefits. The only time I ever hear CEO salaries brought up are when the company is doing the exact opposite or they've received bailout money.

[kcchief19]

Hostess' problems go well beyond a stubborn union, high-paid management and venture capitalists. The company has been in and out of bankruptcy for almost 10 years, caused primarily by heavy debt acquired during their '90s buying spree when they picked up Wonder Bread and a whole bunch else.

Hostess was in a death spiral with no hope of pulling out. The only real option was liquidation. The brand is too powerful and strong for someone not to pick up the dead carcass and make it work. I find it hard to blame the union. Jobs were going away one or another. The union didn't mismanage the company, management did.

Forcing liquidation just means you can blame them for the shutdown rather than management when at some point in the next couple of years they couldn't meet payroll or pay their suppliers.

[kcchief19]

Originally Posted by TroyF

Unemployment for 12 to 18 months? Then what? If it's me in this situation, I'm going to vote to continue, then look for employment elsewhere or try to improve my station somehow. (by learning another trade on the side, going to night school, getting a second job in hopes that would turn into something, etc.

I could be proven wrong but I think most of those workers will be back sooner than later. Someone is buying the assets and will hire back many of the workers.

[BillJasper]

Originally Posted by kcchief19

Hostess' problems go well beyond a stubborn union, high-paid management and venture capitalists. The company has been in and out of bankruptcy for almost 10 years, caused primarily by heavy debt acquired during their '90s buying spree when they picked up Wonder Bread and how bunch else.

Hostess was in a death spiral with no hope of pulling out. The only real option was liquidation. The brand is too powerful and strong for someone not to pick up the dead carcass and make it work. I find it hard to blame the union. Jobs were going away one or another. The union didn't mismanage the company, management did.

Forcing liquidation just means you can blame them for the shutdown rather than management when at some point in the next couple of years they couldn't meet payroll or pay their suppliers.

Shouldn't management have sold off some of these assets that didn't fit and tried to refocus the company on its core products then? Instead they used it as a personal piggy bank until it was used up and will now sell off the carcass.

[TroyF]

Originally Posted by kcchief19

I could be proven wrong but I think most of those workers will be back sooner than later. Someone is buying the assets and will hire back many of the workers.

The industry is overloaded with bakers right now. Everything I have read says that even when the assets are sold, very few of the bakers will get their jobs back.

If those projections are proven wrong and they do get their jobs back, they made the right call. We'll see how it plays out over the next bit.

[kcchief19]

Originally Posted by TroyF

The industry is overloaded with bakers right now. Everything I have read says that even when the assets are sold, very few of the bakers will get their jobs back.

If those projections are proven wrong and they do get their jobs back, they made the right call. We'll see how it plays out over the next bit.

Certainly overloaded -- that was a big reason for Hostess' downfall. They developed a ton of debt at a time when the baked goods market was declining. However, if you buy Hostess you're going to start making Twinkies, Ding Dongs and Wonderbread. You're not going to retool your own facilities to make those, you're probably going to fire up the facilities you just bought for a song. There is no capacity in place to make Hostess' core products.

Hostess had already halved their employees over the last decade, so those 18,000 workers are the bare bones to make Hostess products. It's tougher for the 18,000 workers who lost their jobs over the last 10 years due to the company's downfall.

Right or wrong, the union was acting in the best interest of the overall union, which is to have the highest number of jobs at the highest wage possible. Maybe they were willing to sacrifice 18,000 jobs so every other union member wouldn't have their wages devalued by a bad deal at Hostess. Maybe they figure that 15,000 good paying jobs are better for the union than 18,000 lower paying jobs.

The union is acting in the collective interest of all members, not necessarily the best interest of an individual member.

[kcchief19]

Originally Posted by BillJasper

Shouldn't management have sold off some of these assets that didn't fit and tried to refocus the company on its core products then? Instead they used it as a personal piggy bank until it was used up and will now sell off the carcass.

They couldn't due to the bankruptcy. The carried more debt than their assets were worth, and no one wanted to buy Hostess and assume the debt. Now that the bankruptcy court has little choice but to liquidate the company, there will be plenty of buyers who want the assets but not the debt.

[BillJasper]

Originally Posted by kcchief19

They couldn't due to the bankruptcy. The carried more debt than their assets were worth, and no one wanted to buy Hostess and assume the debt. Now that the bankruptcy court has little choice but to liquidate the company, there will be plenty of buyers who want the assets but not the debt.

They couldn't ask the court for permission to sell of the pieces of the company that no longer fit? I know I've seen companies sell off assets before while going through bankruptcy. But then I'm not in that line of work, so I just know what I see on TV.

[kcchief19]

Originally Posted by BillJasper

They couldn't ask the court for permission to sell of the pieces of the company that no longer fit? I know I've seen companies sell off assets before while going through bankruptcy. But then I'm not in that line of work, so I just know what I see on TV.

They can if the bankruptcy court, the debt holders and the owners agree. The debt holders didn't want to liquidate because they could never recoup their losses through liquidation. The bankruptcy court didn't want to liquidate because it would make it impossible for Hostess to repay its debt if it took away its cash cows. As Hostess tried to crawl out of its previous bankruptcy, it gave away equity in the company. There are multiple owners, multiple creditors and a big giant mess.

It's pretty much just like Chrysler. The mess Hostess is going through is similar to what Chrysler would have gone through had the government not stepped in. Except no one even wanted Chrysler's assets, and the disappearance of Hostess wouldn't bring down the entire bakery industry supply chain.

[Galaxy]

Originally Posted by TroyF

I don't blame anyone for making the choices they make. Clearly, the execs at Hostess were scumbags. When your company has filed for bankruptcy multiple times and is hanging by the balance, you don't give yourself massive raises and look in the mirror at night and see a good person. You just don't.

On the other side, I do question the choices the bakers union made. Here is the problem. . . we all agree they have taken massive cuts over the last few years and the board was run by a bunch of scumbags, right?

So I have to ask the question. . . armed with this knowledge, why were the bakers still there? Because they can't find better jobs. If they could have, they would have been gone a long time ago. So you vote to strike when the company has said they will close their doors if you do go on strike. Now what?

Unemployment for 12 to 18 months? Then what? If it's me in this situation, I'm going to vote to continue, then look for employment elsewhere or try to improve my station somehow. (by learning another trade on the side, going to night school, getting a second job in hopes that would turn into something, etc.

Saying "F you" is perfectly fine, but what do YOU get out of it? Great, they "won" By winning they now get no money (outside of unemployment short term), they get no benefits (as opposed to crappy benefits, wait until they see what Cobra costs), they still can't get a better job and the execs are going to get rich selling off the brand.

I feel for all of these people, but I really do think their decision was short sighted and that many of the 18,500 are going to be far more hurt by their actions than accepting another crappy contract. Just my two cents.

From what I've read, the employees that went on strike will not be eligible for unemployment.

Originally Posted by kcchief19

I could be proven wrong but I think most of those workers will be back sooner than later. Someone is buying the assets and will hire back many of the workers.

I disagree. They will not hire these workers back unless it's on their terms, and likely in right-to-work states (if not in Mexico).

[kcchief19]

Originally Posted by Galaxy

I disagree. They will not hire these workers back unless it's on their terms, and likely in right-to-work states (if not in Mexico).

That's not workable for baked goods. I don't think the margins support having a centralized facility and delivering nationwide. Hostess had 33 factories nationwide. If you buy Hostess in liquidation with the factories, why would you spend the money to retool or build a new factory somewhere else when you have an existing factories and an experienced workforce in place?

Remember, the wages at Hostess were not out of line with the marketplace ... Hostess simply couldn't afford to pay a market wage for bakers since it was paying down a few billion dollars in debt and had a venture capital investor pulling profits out too. No reason not to fire those factories back up.

I'm assuming that a buyer may not bring back all 18,000 because someone will find other jobs and the owner may not want to continue making some products if it overlaps with an existing product.

You also have to consider than a buyer may want to grab Hostess because they have factories where the buyer doesn't currently have a footprint. And the answer to the inevitable question is that the reason they didn't buy Hostess before is the debt. Better to wait for Hostess to be liquidated debt free than be force to buy part or all of the company and swallow the debt.

[JonInMiddleGA]

Originally Posted by kcchief19

why would you spend the money to retool or build a new factory somewhere else when you have an existing factories and an experienced workforce in place?

The expectations, based on what I've read, are that the buyers will largely integrate the products into their existing operations/manufacturing chain. I think we have to keep in mind that while Twinkies etc were what most people associate with the company, they were the 2nd largest bread makers in the nation as well. Those products certainly seem likely to be made elsewhere.

The typical phrase seems to be "a few" of the Hostess bakeries "may" eventually reopen.

[Galaxy]

Originally Posted by kcchief19

That's not workable for baked goods. I don't think the margins support having a centralized facility and delivering nationwide. Hostess had 33 factories nationwide. If you buy Hostess in liquidation with the factories, why would you spend the money to retool or build a new factory somewhere else when you have an existing factories and an experienced workforce in place?

Remember, the wages at Hostess were not out of line with the marketplace ... Hostess simply couldn't afford to pay a market wage for bakers since it was paying down a few billion dollars in debt and had a venture capital investor pulling profits out too. No reason not to fire those factories back up.

I'm assuming that a buyer may not bring back all 18,000 because someone will find other jobs and the owner may not want to continue making some products if it overlaps with an existing product.

You also have to consider than a buyer may want to grab Hostess because they have factories where the buyer doesn't currently have a footprint. And the answer to the inevitable question is that the reason they didn't buy Hostess before is the debt. Better to wait for Hostess to be liquidated debt free than be force to buy part or all of the company and swallow the debt.

Jon answered it for me. They will be buying the assets for the brand and product lines, not the factories (if they're included in the sale, not sure if they'll sell the company as a whole or if they'll sell everything piece-by-piece). If a company that buys it and has existing factories that offer lower operating costs, you can be certain they'll produce the products in their own factories.

[Blackadar]

There is a suitor for the business!

http://finance.fortune.cnn.com/2012/...out/?hpt=hp_t3

I found this particularly relevant since it confirms what I've been saying since page 1 of this thread:

"I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week," says Sun co-CEO Marc Leder, in an interview with Fortune. "We also think that one point the unions have made is that there hasn't been a great amount of reinvestment in the business. We've found that investing new capital into companies like this can be very positive for brand, people and profitability... We would look to invest in newer, more modern, manufacturing assets that would enable the company to become more productive and to innovate."

[molson]

I can't wait to see what kind of "innovations" are in store for the processed snack food industry. I bet bacon is involved somehow.

[BillJasper]

Originally Posted by Blackadar

There is a suitor for the business!

http://finance.fortune.cnn.com/2012/...out/?hpt=hp_t3

I found this particularly relevant since it confirms what I've been saying since page 1 of this thread:

But, is it innovations that can be incorporated into the current facilities or is this innovation that'll take place in Mexico?

EDIT: Hopefully it doesn't fall through.

[molson]

The bankruptcy court is going to make the company mediate with the union before they can liquidate.

Judge asks Hostess to mediate with union - Business - Boston.com

‘‘Many people, myself included, have serious questions as to the logic behind this strike,’’ said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. ‘‘Not to have gone through that step leaves a huge question mark in this case.’’

[Marc Vaughan]

One major things which I haven't seen mentioned here is that it appears by going bankrupt they dislocate the pension schemes which they were on the hook for ... which are shifted to the responsibility of the government/funded by the tax-payer.

The deficit for such pensions is apparently $34bn per year at present .... to me this seems wholly unethical and is simply a 'dodge' to avoid obligations a company has already undertaken (ie. to the pension holders).

Twinkies Defense Is Private Equity's Pension Offense: Street Whispers - TheStreet

[DaddyTorgo]

Originally Posted by Blackadar

It's indicative of the kind of money the hedge fund managers have been sucking out of the company the last few years. So the employees saw huge bonuses paid to management, money sucked out and then were asked to take another pay cut. Can't blame them for saying "fuck you".

To support what you've said

Originally Posted by cnnmoney article

Mike Hummell, a receiving clerk and a member of the Bakers' union working in Lenexa, Kan., said he was making about $48,000 in 2005 before the company's first trip through bankruptcy. Concessions during that reorganization cut his pay to $34,000 last year, earning $16.12 an hour. He said the latest contract demands would have cut his pay to about $25,000, with significantly higher out-of-pocket expenses for insurance. "The point is the jobs they're offering us aren't worth saving," he said Friday. "It instantly casts me into poverty. I wouldn't be able to make my house payment. My take-home would be less than unemployment benefits. Being on unemployment while we search for a new job, that's a better choice than working these hours for poverty wages."

He then goes on to say the following in a blog post i just read.

Originally Posted by mike hummell

A lot of people seem to think this mediation thing is a big deal. Mostly because they see an 'opportunity to save jobs'. There will be no yes vote from me if my pension is not restored. I doubt mediation will help us find new owners. It will be an attempt to find compromise with terrorists.

I think it's a big deal for a different reason. They went to their rubber stamp judge in the morning to defend asking for bonuses to close the company, on top of their normal salary. A rep from the DOJ showed up and argued against the excessive pay. I must say I was shocked. I didn't see government intervention coming. I am sure without it we would have sent bonus checks by now.

I also see mediation as proof we are winning. As our story gets out it seems to become almost impossible to defend the company. The more people know our story, the more we are winning. This has gotten out of the boards and CEO Rayburn's control. We are playing on our home court now.

I do not speak for everyone in the Union, these are my thoughts. Let me be clear, the goal isn't to compromise with terrorists. It is to be sold or be closed. We are officially fighting back. I agree with BCTGM President Frank Hurt, Wonder Bread "will be produced somewhere, some time and by our members." This would be a good place to point out that I am extremely proud of my Union and it's gutsy follow through. It takes a committed membership to hold the picket line with everything that is hanging over our heads.

[molson]

The workers have every right not to work for any salary they think is too low, but they also don't have some moral right to the same salary the always had or higher. If parties can't agree on terms there's no deal, it happens every day, it what makes the system work. I don't get the anger towards either side. Neither have an ethical obligation to continue the Hostess brand on terms that don't work for them for whatever reason - whether the reason be the economic realities of the day, they'd rather try to get a better job, they'd make more on unemployment, either side thinks the other is bluffing, etc.

[Blackadar]

Originally Posted by molson

The workers have every right not to work for any salary they think is too low, but they also don't have some moral right to the same salary the always had or higher. If parties can't agree on terms there's no deal, it happens every day, it what makes the system work. I don't get the anger towards either side. Neither have an ethical obligation to continue the Hostess brand on terms that don't work for them for whatever reason - whether the reason be the economic realities of the day, they'd rather try to get a better job, they'd make more on unemployment, either side thinks the other is bluffing, etc.

I'd get pretty angry too if I were publicly blamed for "destroying the company", when the facts clearly show the company was destroyed by a management group who was intent on picking the carcass clean. I'd be pretty angry if that management team was giving themselves 300% pay raises while choosing not to fund their contractually negotiated pension obligations. I'd be pretty angry with a management team who put my livelihood at risk and asked me to take another huge pay cut because they decided to pay themselves millions in bonuses.

You don't get the anger? When for chrissake *should* someone get angry if not now?

[CrimsonFox]

I heard some mexican company wants to buy it.

[CrimsonFox]

Originally Posted by CrimsonFox

I heard some mexican company wants to buy it.

oh, that's bimbo. Man I am way behind.

[molson]

Originally Posted by Blackadar

I'd get pretty angry too if I were publicly blamed for "destroying the company", when the facts clearly show the company was destroyed by a management group who was intent on picking the carcass clean. I'd be pretty angry if that management team was giving themselves 300% pay raises while choosing not to fund their contractually negotiated pension obligations. I'd be pretty angry with a management team who put my livelihood at risk and asked me to take another huge pay cut because they decided to pay themselves millions in bonuses.

You don't get the anger? When for chrissake *should* someone get angry if not now?

You're make a lot of assumptions there. OK, I'd certainly be pissed off if I were publicly blamed by "destroying the company." But, that's just speech, and I can make my own side of it public and plenty of people would agree with me too.

But you seem to suggest that this was simple as the company cutting employee salaries strictly and exclusively for the purpose of giving themselves raises. I don't think you can prove that and I don't think the numbers match up. This seems like a garbage company that can't make their shit food unless they pay their workers nothing. So, they will no longer exist. I have no problem with this.

But even if Hostess, as you seem to be implying, was a superbly run company that could afford to pay its workers more, it's hard for me to accept the idea that they're just required to pay what someone else thinks they should. This concept always annoys me in labor negotiations. It's OK for workers to ask for more but it's apparently always unethical for companies to try to get more. I've tried to wrap my head around the idea but to me I just can't get enraged over it. I guess I see both sides as just different parties in a business arrangement. I understand that others see it more as if management are this ruling class who has some obligation to take care of their "children" workers. But I think in our society the line between "labor" and "management" has blurred a bit (both in a lot of job functions, and the fact that you don't have to be born into the .01% to be "management" - a lot of managers are crappy at their jobs and get spit out by the system just like any other workers). Sure processed food baking factories I guess are one of the business arrangements that still resembles an 1870s London factory or something, but maybe we shouldn't be surprised (or sad) when that model implodes.

If the company made obviously unreasonable financial decisions and as a result, could not comply with their contractually negotiated pension obligations, that would potentially make me the most upset but I don't think you can prove that's what happened here - that if there were no salary increases for anyone in management, that all of the pension obligations would be 100% satisfied. I'm guessing it's really difficult to retain competent management at a dying company, you probably have to pay more than market value to have anyone who would give your company a chance. Maybe they paid too much, I have no idea, but I don't think those were financial obligations that on their own ruined the company, which is the assumption your entire post makes. I don't think the numbers match up. If they did, and that was clear, I believe you'd have the potential for a civil action (and if you didn't, I'd support government regulation to facilitate that...but only if it was clear fraud. Raising management salaries isn't clear fraud unless, MAYBE, the amounts of the raises would have saved the company if spent elsewhere.)

[CrimsonFox]

Originally Posted by molson

Usually though, CEO salaries are brought up in a different context, where it's wrong that they make so much even if the company is successful, and that the board of directors should more evenly distribute the company revenue strictly out of generosity. (

AHAHAHAHAHAHAHAHA!

[RainMaker]

Originally Posted by molson

This seems like a garbage company that can't make their shit food unless they pay their workers nothing. So, they will no longer exist. I have no problem with this.

Sure they aren't as big as they were, but it's still a company that did $2 billion in revenue. There is still demand for their products. And there are other examples of similar successful business models. I think it's silly to act like this is a company that can't possibly survive in this country.

It looks like a company that was poorly run and had incompetence at the highest levels. A smarter group of individuals will take over the name or company and likely succeed.

Originally Posted by molson

If the company made obviously unreasonable financial decisions and as a result, could not comply with their contractually negotiated pension obligations, that would potentially make me the most upset but I don't think you can prove that's what happened here - that if there were no salary increases for anyone in management, that all of the pension obligations would be 100% satisfied.

No one but the most connected individuals know the details of what went on there. But they did give management raises. Management that was failing miserably to keep Hostess afloat. Typically that's not a good strategy and it's fair to ask whether they are incredibly stupid or engaging in something more nefarious.

[Blackadar]

Originally Posted by molson

You're make a lot of assumptions there. OK, I'd certainly be pissed off if I were publicly blamed by "destroying the company." But, that's just speech, and I can make my own side of it public and plenty of people would agree with me too.

But you seem to suggest that this was simple as the company cutting employee salaries strictly and exclusively for the purpose of giving themselves raises. I don't think you can prove that and I don't think the numbers match up. This seems like a garbage company that can't make their shit food unless they pay their workers nothing. So, they will no longer exist. I have no problem with this.

But even if Hostess, as you seem to be implying, was a superbly run company that could afford to pay its workers more, it's hard for me to accept the idea that they're just required to pay what someone else thinks they should. This concept always annoys me in labor negotiations. It's OK for workers to ask for more but it's apparently always unethical for companies to try to get more. I've tried to wrap my head around the idea but to me I just can't get enraged over it. I guess I see both sides as just different parties in a business arrangement. I understand that others see it more as if management are this ruling class who has some obligation to take care of their "children" workers. But I think in our society the line between "labor" and "management" has blurred a bit (both in a lot of job functions, and the fact that you don't have to be born into the .01% to be "management" - a lot of managers are crappy at their jobs and get spit out by the system just like any other workers). Sure processed food baking factories I guess are one of the business arrangements that still resembles an 1870s London factory or something, but maybe we shouldn't be surprised (or sad) when that model implodes.

If the company made obviously unreasonable financial decisions and as a result, could not comply with their contractually negotiated pension obligations, that would potentially make me the most upset but I don't think you can prove that's what happened here - that if there were no salary increases for anyone in management, that all of the pension obligations would be 100% satisfied. I'm guessing it's really difficult to retain competent management at a dying company, you probably have to pay more than market value to have anyone who would give your company a chance. Maybe they paid too much, I have no idea, but I don't think those were financial obligations that on their own ruined the company, which is the assumption your entire post makes. I don't think the numbers match up. If they did, and that was clear, I believe you'd have the potential for a civil action (and if you didn't, I'd support government regulation to facilitate that...but only if it was clear fraud. Raising management salaries isn't clear fraud unless, MAYBE, the amounts of the raises would have saved the company if spent elsewhere.)

Actually, I made no assumptions. However, you've made a bunch of 'em in this post.

[molson]

Originally Posted by CrimsonFox

AHAHAHAHAHAHAHAHA!

Educate me then, what's the basis of the complaints about CEO salaries generally? The complaint is that it's greedy, isn't it?

It's totally fair to call someone out as greedy. As I think it's fair to call someone out as greedy for not giving any money to charity.

If you're saying instead that the criticisms are more business-related - that the companies could get CEOs just as good for the same or less money, that seems like more an issue for the shareholders, and something the market will either prove or disprove.

[molson]

Originally Posted by Blackadar

Actually, I made no assumptions. However, you've made a bunch of 'em in this post.

That's true, I did make a couple of assumptions, but they were based on what you posted, like "I'd be pretty angry with a management team who put my livelihood at risk and asked me to take another huge pay cut because they decided to pay themselves millions in bonuses"

That sounds like you're saying the relationship between the two events was pretty direct. That BECAUSE of the raises, salaries were cut and the pensions not honored. If you're saying instead that those things have nothing to do with each other, than I REALLY don't know what you're pissed about.

[molson]

Originally Posted by RainMaker

No one but the most connected individuals know the details of what went on there. But they did give management raises. Management that was failing miserably to keep Hostess afloat. Typically that's not a good strategy and it's fair to ask whether they are incredibly stupid or engaging in something more nefarious.

Sure, its fair to ask, and transparency is really important with public companies, especially when there's a bankruptcy involved. I'm all for regulation to help ensure that and transparency, and I'm especially for severe criminal penalties when laws are broken. I'm talking more here about the perceived ethical/moral obligations of the parties rather than the legal ones.

And I don't have a business degree but I'm not sure that it's never a good salary to increase management salaries (or fork out more for different managers) when your company is in the crapper. If the money issues are in the hundreds of millions, I don't think it's always necessarily the wrong move to spend a a few million to keep all of your management from bailing. I know that rubs people the wrong thing but I think these raises are pretty small in the grand scheme of the kind of business these companies can do. I have no idea if the raises were warranted here or not, but I don't think they were the thing that took down the company.

[CrimsonFox]

Originally Posted by molson

Educate me then, what's the basis of the complaints about CEO salaries generally? The complaint is that it's greedy, isn't it?

It's totally fair to call someone out as greedy. As I think it's fair to call someone out as greedy for not giving any money to charity.

If you're saying instead that the criticisms are more business-related - that the companies could get CEOs just as good for the same or less money, that seems like more an issue for the shareholders, and something the market will either prove or disprove.

I was just laughing at the thought of CEOs nowadays diong anything out of generosity.

[thesloppy]

Originally Posted by molson

But you seem to suggest that this was simple as the company cutting employee salaries strictly and exclusively for the purpose of giving themselves raises. I don't think you can prove that and I don't think the numbers match up.

I think you're getting lost down the wormhole a bit, and tying the figures of the workers/managers salaries into a bigger question than it needs to be. Although the worker's compensation is an interesting point to argue, I think we can remove them from the equation entirely, before asking why management was giving themselves massive raises for driving a globally recognized brand into bankruptcy.

Regardless of what moral and financial questions lie behind the generalities driving the economic factors that decide the widening discrepancy between management and labor's wages, this particular management team didn't just give themselves pay raises, they gave themselves massive wage raises for catastrophically bad performance. To ignore that crucial fact, while continuing to question whether workers deserve to even ask for any kind of raise on moral or ethical grounds, sounds ridiculous.

[molson]

Originally Posted by CrimsonFox

I was just laughing at the thought of CEOs nowadays diong anything out of generosity.

I think there's some great CEOs in this country that are very generous in their personal lives. In business context it gets a little trickier, they're running a company, they don't own it, and they don't own the assets or have the authority to give them away out of the goodness of their hearts. The bad ones have certainly killed the reputation of the group as a whole though.

[CrimsonFox]

I actually think it is a mistake to think that a CEO giving back to the company and its workers is a thing of "generosity". It is not. It is a NECESSITY to put back into the business and its people as a way of making a successful business. As we see by hostess being such a clusterfuck.

[molson]

Originally Posted by thesloppy

To ignore that crucial fact, while continuing to question whether workers deserve to even ask for any kind of raise on moral or ethical grounds, sounds ridiculous.

I absolutely don't question whether the workers deserve to ask for anything, of course they can ask for anything they want. I disagree with the reverse. I disagree with the idea that it's necessarily unethical for the owners of a company or management to try get a better deal, but OK for workers to try to get a better deal. I think it's OK for both to do so (as long as there's no fraud.)

[larrymcg421]

If I was asked to take concessions to almost half of my original pay and get worse benefits, while the management was giving themselves huge raises, I'd be pretty fucking angry. I wouldn't care whether those raises were the direct reason why I had to make the concessions. I really don't understand anyone who wouldn't angry in this scenario.

[Aylmar]

Originally Posted by larrymcg421

If I was asked to take concessions to almost half of my original pay and get worse benefits, while the management was giving themselves huge raises, I'd be pretty fucking angry. I wouldn't care whether those raises were the direct reason why I had to make the concessions. I really don't understand anyone who wouldn't angry in this scenario.

I wouldn't be angry...I'd be looking for other work. Immediately.

[molson]

Originally Posted by CrimsonFox

I actually think it is a mistake to think that a CEO giving back to the company and its workers is a thing of "generosity". It is not. It is a NECESSITY to put back into the business and its people as a way of making a successful business. As we see by hostess being such a clusterfuck.

Agreed. If Hostess screwed themselves by hiring terrible management and then by paying them more to stay, then they deserve to fail.

I'm not debating blame. I don't see it as a blame thing, at least from an outside perspective. To the extent this result is bad for management, then they have nobody to blame but themselves. It's beyond silly for them to "blame" workers, nobody's ethically required to work in factories for a certain amount of money, that's just stupid. If a worker really really wanted to keep working at Hostess for less money, then they can blame the union. But otherwise, they just probably made the right choice for themselves given the circumstances, no blame needed.

[RainMaker]

Originally Posted by molson

And I don't have a business degree but I'm not sure that it's never a good salary to increase management salaries (or fork out more for different managers) when your company is in the crapper. If the money issues are in the hundreds of millions, I don't think it's always necessarily the wrong move to spend a a few million to keep all of your management from bailing. I know that rubs people the wrong thing but I think these raises are pretty small in the grand scheme of the kind of business these companies can do. I have no idea if the raises were warranted here or not, but I don't think they were the thing that took down the company.

If you're hundreds of millions in the crapper, why would you even want to keep them, let alone give them raises? Smart businesses fire or demote those who fail.

[thesloppy]

Originally Posted by larrymcg421

If I was asked to take concessions to almost half of my original pay and get worse benefits, while the management was giving themselves huge raises, I'd be pretty fucking angry. I wouldn't care whether those raises were the direct reason why I had to make the concessions. I really don't understand anyone who wouldn't angry in this scenario.

Even if the worker's poor raises aren't a direct result of the upper management's wages, they are most certainly a direct result of the upper management's performance/decisions. Whether you want to draw the line from the worker's wages to the management's wages or the management's decisions, does it really matter? One way or another, the workers were being asked to take massive paycuts for management, while the management got massive raises for running a global brand into dust.

[molson]

Originally Posted by RainMaker

If you're hundreds of millions in the crapper, why would you even want to keep them, let alone give them raises? Smart businesses fire or demote those who fail.

Only when it's not their fault. Maybe there's a new competitor, or a recession, or a societal change that impacts the popularity of your product. If it's clearly their fault (which it probably is most times), than ya. But I think cutting salaries of your management positions across-the-board in tough times could just accelerate your death.

And are we even sure there's been zero management turnover in Hostess over this period of decline? People in management do get fired all the time for poor performance. We don't hear about it as much because the only time the inner workings of a company are in the news, its because the company has crapped the bed. It creates the illusion that once you're "management" you're set for life and are free to steal from workers.

[thesloppy]

Originally Posted by molson

I absolutely don't question whether the workers deserve to ask for anything, of course they can ask for anything they want. I disagree with the reverse. I disagree with the idea that it's necessarily unethical for the owners of a company or management to try get a better deal, but OK for workers to try to get a better deal. I think it's OK for both to do so (as long as there's no fraud.)

Well, in general I don't disagree with you, I just think this is probably a bad place to make that argument in general, as the specific management in this case obviously didn't deserve their massive raises.

[CrimsonFox]

I really don't care if hostess never sells another twinkie really. I haven't eaten the vile things in like 20 years. Maybe they should replace it with something more people want to buy. In addition to the mismanagement, obviously the trend of eating healthier has hurt this business when all they sell is junk.

And it is funny. NOw that they closed I'm craving zingers. Again I haven't eaten these things in decades. Why do I suddenly want one?

[PilotMan]

Originally Posted by Aylmar

I wouldn't be angry...I'd be looking for other work. Immediately.

It's such an easy answer but not all careers are made so easily. The person faced with such a choice has many more things to consider than just the quality of their management. A worker should want to support the company and the management they work for, not worry about being totally fucked by them.

[molson]

Originally Posted by thesloppy

Well, in general I don't disagree with you, I just think this is probably a bad place to make that argument in general, as the specific management in this case obviously didn't deserve their massive raises.

Ya, that's probably true, I'm being too general here with my labor/management perception pet peeves. I don't know anything about Hostess's specific situation. It appears they were terrible. I just don't totally get the heartburn/blame over the raises part of it, that's such a minor thing to me in the bigger picture. I think they destroyed the company through business incompetence. And if they did anything illegal to destroy the company or profit from its destruction, I hope they get locked up. But my hunch is (ya, a hunch, no data), is that this brand just didn't evolve and was therefore doomed. Is anyone surprised Hostess failed in 2012? Except that it took so long?