Former Hostess Twinkies CEO tripled salary to $2.5m while preparing to file bankruptcy

CORRECTION: An earlier version of this story incorrectly conflated the former Hostess CEO, Brian Driscoll, whose salary was reportedly tripled, with the current CEO, Greg Rayburn.  For a detailed look at who did what, here’s Fortune/CNN:

Even as it played the numbers game, Hostess had to face chaos in the corner office at the worst possible time. Driscoll, the CEO, departed suddenly and without explanation in March. It may have been that the Teamsters no longer felt it could trust him. In early February, Hostess had asked the bankruptcy judge to approve a sweet new employment deal for Driscoll. Its terms guaranteed him a base annual salary of $1.5 million, plus cash incentives and “long-term incentive” compensation of up to $2 million. If Hostess liquidated or Driscoll were fired without cause, he’d still get severance pay of $1.95 million as long as he honored a noncompete agreement.

When the Teamsters saw the court motion, Ken Hall, the union’s secretary-treasurer and No. 2 man, was irate. So much, he thought, for what he described as Driscoll’s “happy talk” about “shared sacrifice.”

The board replaced Driscoll with Greg Rayburn, a restructuring expert Hostess had hired as a consultant only nine days earlier. Rayburn was a serial turnaround specialist who had worked with such high-profile distressed businesses as WorldCom, Muzak Holdings, and New York City Off-Track Betting. He became Hostess’s sixth CEO in a decade. Within a month of taking over, Rayburn had to preside over a public-relations fiasco. Some unsecured creditors had informed the court that last summer — as the company was crumbling — four top Hostess executives received raises of up to 80%. (Driscoll had also received a pay raise back then.) The Teamsters saw this as more management shenanigans. “Looting” is how Hall described it in TV interviews.

Rayburn announced that the pay of the four top executives would go down to $1 for the year, but that their full salaries would be reinstated no later than Jan. 1. Hostess pays Rayburn $125,000 a month, according to court filings.

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Triple the CEO’s Salary, then Blame Lack of Profits on the Union

Hostess Twinkies’ former CEO tripled his salary earlier this year to $2.55 million while the company knew it was heading towards  bankruptcy, according to a statement by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.

And a number of top executives reportedly saw massive pay raises, some nearly doubling their salary. And now the new CEO is blaming the unions for the company’s demise.

Ah, another CEO who courageously blames the union for his company’s failure, while omitting the part about the company tripling his immediate predecessor’s pay, and reportedly doubling the salaries of other top executives, while knowing that the company was on life support. Damn unions, indeed.

Is this what they teach in business school these days? As popular as “peer group compensation benchmarking” is in the corporate world, there’s a distinct lack of evidence that higher compensation delivers results. (Case in point: Hostess. Second case in point: Wall Street.)

Sometimes More Salary Means Less Competence

There’s an odd myth in the corporate world that paying more for a CEO and executive team will mean Steve Jobs-like earnings results. In reality, that’s not the case. Just ask the US airline industry how that worked out for them as they went through bankruptcy after bankruptcy. The rate of executive pay keeps going up, and according to one study, it’s even higher than many of us realize.

Hostess products twinkies

These horror stories are striking a nerve with many Americans these days because they’re so much more common than they were in the past. The media loves to idolize these CEOs (think about CNBC and their regular slobbering over the loony Jack Welch), yet more and more of us have been on the losing end of these deals.

I’ve mentioned before that I had the opportunity to work with a Tea Party crazy who sold the company, just in case his taxes would increase after Obama was elected. Many of us lost our jobs almost immediately so that he might save a few percentage points on taxes, which of course, never happened.

I don’t expect the government to get involved much in these obscene salary cases, but I still hope that public opinion might build enough to start making this less acceptable. The high pay is still acceptable enough to investors who are asking for more voting rights, though still go along with the game.

Mitt Romney with someone’s cash

When You Point One Finger at the Unions…

Something needs to give, and hopefully it will happen soon. We’re all tired of the 1% living by one set of rules. and then blaming the rest of us for their problems, when we keep giving and they keep taking. Whether it’s Fox News’ O’Reilly accusing non-white voters of “wanting things,” or the failed Hostess CEO blaming his own failings on “the unions,” I’m tired of it, and I know that I’m not alone.

If Hostess was willing to triple its CEO’s salary, and double the salaries of other top execs, when they allegedly knew they were heading towards bankruptcy, then the problem at the company certainly seems to extend far beyond “the unions.”  Here’s the union’s take:

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

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.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO’s with no true experience in the wholesale baking business have left this company unable to compete or survive.

So remember, in his bizarre world, the people who produce the products that the management team created are all to blame. Forget about failed market research, or high executive pay, or poorly financing the company — it’s completely the fault of the union workers. Got it?


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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  • Ronie

    The Twinkie is back, this time without the unions and a bunch of new folks who, in this economy, are happy to have a job.

    The business owners no doubt made big bucks selling the brand.The union members got left in the cold and now have no work. The union bosses collected dues until the well ran dry. Two out of three ain’t bad.

    Wake up! The union is using you as much as the corporations are.

  • http://www.facebook.com/rswarts416 Robert Equality Swarts

    Notice how I said tax brackets. I didn’t say anything about claimed dependent deductions.

  • http://www.facebook.com/robert.h.hodges Robert H Hodges

    I agree, the union did not think that the end was near, and if they did, shame on them. you may want more money, but if the company closes, and you have no job? what do you get then? no unemployment, you were on strike. you were not under contract anymore, but had you stayed employed, and the company went bust, you would have at least had a chance at a settlement, and unemployment. how many union members can stick around and hope that their pants are bought, and the new owner is a union shop and willing to negotiate with them, and hire them? if they can last that long??

  • http://www.facebook.com/robert.h.hodges Robert H Hodges

    I am a single guy, I can barely afford the things I need, much less the things I want. and you want me to pay more. ha ha. like that is likely to happen, I do without as is.
    so there will definitely not me any More…

  • http://www.facebook.com/robert.h.hodges Robert H Hodges

    My dad was in a union for 30 years, a Proud Teamster!!! Guess where he worked?? Virginia!!! A Right to Work State!!! while business is getting harder for unions and workers, it is not because of Right to Work States!!! unions have operated in virginia, and continue to do so, but with the competition that foreign workers give in manufacturing, it is hard to keep up anywhere in the US.

  • http://www.facebook.com/robert.h.hodges Robert H Hodges

    It Appears that you do not know what you are talking about, hostess was dead the first bankruptcy, but the ones with the money, hired expensive people in hopes that they could turn it around, the union saw the money and thought there was money to go around, there was only money to try and turn the tide, not feed the masses. the union struck and nailed the final nail into the coffin, they did not kill hostess, but they finished nailing the coffin shut, instead of trying to take some nails out.

  • joy

    I agree only to the point that unions are only in it for themselves and are no longer for the good of the worker, but Hostess put themselves under by over paying some fat ass loser to sit on his ass in a suit in an office and rip them off. If you can pay 2.5 million to some spoiled loser in a suit, and take 8% of the actual workers’ pay and 32% of their benefits, then you deserve to go under because of your lack of budgeting skill, aka stupidity.Thank you!

  • joy

    I said the same thing you have posted here at work and my supervisor(the one that is always complaining about his pay being too low) said, “oh, so you want the government running the lives of the people and taking away all of our rights”. I said, “does it matter as long as we the working class would finally be getting fair treatment?” He is a rich-person ass kisser even though he is being used every day. I hope I never get that brain washed.

  • joy

    Imagine if every company that over pays their ceo’s would take that 2 million dollar bonus and split it among the employees that make their business a success every other year. Their are about 70 people that work in the factory where I work and that would be about 28,000 dollars per factory worker every other year!!

  • joy

    I think that unions are corrupt anymore, but the over payment of CEO’s in this country is what is killing these companies and their extreme greed and stupidity keeps them from seeing it.

  • union best I ever had

    what a dream world you live in, what if you are poor single and have no husband and kids..how do you just quite

  • Woody Guthrie Jr.

    Paul E Zukowski, but 36% of public workers are unionized http://en.wikipedia.org/wiki/Labor_unions_in_the_United_States#Membership

  • Woody Guthrie Jr.

    Hi Geek0id, thanks for your repose.

    Hypocrite? I prefer the term “mistaken.”

    Years ago I spent a lot of time researching domestic products. That was before the internet and it was a challenge then. After I got married my wife and I needed to shop “resale.” Over the years our incomes have slowly climbed and we do quite well, but we still shop second hand. So, believe it our not, you called it correct and I’m glad I’m wrong.

    Here’s what I don’t get. I’ve worked for a lot of places over the years. Some employers were great and others were pretty bad. In every situation, there is a range of employee satisfaction. I’ve been with incredible employers and still had coworkers who complained. I’ve been at simply awful places and had some colleagues who, I believe, were truly grateful to have a job.

    If Hostess was such a bad place to work, why didn’t the workers simply quit? Get a better gig with someone else? Why didn’t the all the unionized employees, one day, say “we’re done.” I never stepped in their factories, I have no idea about the working conditions or the compensation, but why take down the whole company? The Teamsters seemed satisfied, have they been reduced to simply delusional tools of management? Pawns to be moved about at will? Why no personal responsibility to work hard and seek an employer that will treat you well? Why the mob mentality? Of those 18,500 folks who got canned, odds say not everyone wanted to walk.

    But that’s how unions have always been. You bow or you get crushed. That tactic was successful back in the day, but times have changed. Companies know there is a whole world that’s ready to work. That’s sad for the folks here in the USA who are ready and willing to work.

  • drew

    The person with a family of nine made that choice.

  • Geek0id

    Obviously the choice is only valid when it is choice. I didn’t think I needed to spell it out.
    That said:

    Tyan computer.
    Wesley Allen, Lang Furniture, and Elite are three American made furniture companies,

    Or is ‘custom crafted’ anything that cost more then 20 bucks?
    Appliances? http://www.stillmadeinusa.com/appliances.html

    Toys? lots. Fat brain toys, cheap ass games.
    This company is bringing manufacturing back to the US:

    http://www.reapermini.com

    If you need something that isn’t made in the US, then fine. But don’t buy the cheapest one. When other companies see there is money in it, then manufacturing will come back.

    Did you even look? no, of course not because people like you are the problem. You go to the store, pick the item that’s 15% cheaper made by people who are little more then slaves in another country and excuse your undermining the economy on ‘unions’, or any other excuse you can use to blame others for your actions.
    You sir, are a hypocrite.

  • Woody Guthrie Jr.

    Geek0id thanks for your reply.

    By American or do without?

    You tell me, where do I buy a computer made here? TV? Radio? Where can I buy a table and chairs if I can’t afford to purchase custom crafted furniture? Where can I buy a blender made in the USA, or a toaster? Can you name one manufacturer? Canisters? Toys? Lamps?

    We still have assembly but nobody makes anything domestically.

    If unions continue, they will run every last corporation to foreign lands. http://www.breitbart.com/Big-Government/2012/11/24/Vulture-Capitalism-Not-Responsible-For-Hostess-Demise

  • md

    your are possibly retarded

  • http://www.facebook.com/robert.adcox.9 Robert Adcox

    If you work for someone, you don’t tell your employer what your demands are. You took the job on the employer’s terms, not yours. That’s because you don’t own the company and therefore have no authority to impose your will on that company. The union tried that and that union lost big. 18,000+ are now without jobs. I don’t blame Hostess at all. Frankly, I’d have done the same thing. Unions have had their day in the sun. As a consumer I’m tired of being jerked around every time they decide to go on strike. UPS, CWA, UAW, and now even the bakers’s union being discussed have decided that their interests are more important than those of the consumers. Excuse me. How do union workers get paid? By money coming indirectly from the consumer (that’s me, Bill_Perdue). If I took that attitude where I work, it would take all of 30 seconds before my boss fired me. And you know what? He would be right to do so under those circumstances. Union workers have had an “I only matter” mentality for far too long in this country. It shows: consumers either have to wait until strikes are settled, endure delays due to fat lazy union workers sitting on their asses on lawn chairs and holding up signs when they should be working, or, my favorite, they take a give-a-crap attitude while building cars which routinely fall apart due to poor assembly an NO pride in their work. Unions make me sick.

  • http://www.facebook.com/robert.adcox.9 Robert Adcox

    What if the person who makes 85k only has to feed himself, but the person making 178k has a family of nine?

  • http://www.facebook.com/robert.adcox.9 Robert Adcox

    Waa. Waa. I’m an Obamabot union worker who wants more than I’m worth. I DEMAND that I get what I want when I want it. If I don’t then I’ll go on strike and the customers won’t get to buy the product we make. Screw the customers. All I care about is more money for me. When someone else wants more money THAT’S called GREED, but when I want more money THAT’S called FAIRNESS, isn’t it? What?! You’re shutting down the plant? AND walking away with millions? Boo hoo. I’m a sad little union worker who didn’t get away with strongarming my employer >sobsniff< Okay all you idiot libtards. Time to click the "thumbs down" icon because we all know you can't handle negative feedback. This is you opportunity to prove it.

  • http://www.facebook.com/robert.adcox.9 Robert Adcox

    The strike was stupid in its timing and strongarm tactics. They theought, like unions too often do, that they’d tell the very people who hired them what the employment terms would be. Hostess said no you won’t and shut down its plant. The jobs creators walked away with money in their pockets and the union effectively screwed itself. Now over 18,000 workers are unemployed in an Obama economy which isn’t friendly to jobs creators. I can only shake my head at the utter stupidity of the BCTWGM. Learn a lesson from this, unions. If you go to work for someone, you DON’T go to work on YOUR terms because it ISN’T YOUR BUSINESS.

  • Geek0id

    The primary reason many manufacturing jobs went overseas in the 70s, was that management and owners sold key technologies to other countries.
    So keep that in mind.
    The other big driver now is people are so self centered and selfish they will pay
    15 dollars for a pair of pants made overseas v. 25 dollars for American made.

    We do know what happens without organized workers, and it’s not good. SO what do we do? take a pay cut every year until people are indentured servants? It’s not like the employees got massive raises and bonuses when the company did well.
    When doing well, management got rich and employees had to fight for a raise. When the company did badly… management got rich and employees got blamed for not taking another massive cut. The employees had already lost pension, saving the company 160 million.

    Here is a clue: By American or do without. If it’s an item you actually need, then don’t by the cheapest one. If you aren’t doing that, then you are the reason company’s leave.

  • Eric Greene

    Not once in my post did I comment on whether the blame should rest with management or the unions. Members of the management team who received raises were removed, and the new management team cut their salaries to $1. A bonus of $1.75 million to be split between 19 people was recently announced as a way to incentivize management to stay on through the bankruptcy process.

  • erin805

    Well, (reliable sources) Forbes and Fortune magazine are putting a LOT of the blame on management. The Union did make concessions more than once. For example, the company knew they were going to file for bankruptcy yet gave executives huge raises. Where were their sacrifices? Forbes and Fortune also blamed the company for not keeping up w/ changing consumer desires. Fault of the union–NADA.

  • http://www.facebook.com/vito.bovino.1 Vito Bovino

    Edward
    , you need a history lesson on unions.

  • http://www.facebook.com/vito.bovino.1 Vito Bovino

    Well said Stan, as an example Lindsy Grahme R. SC said don’t worry you will still have your Twinkies, someone will take over and move the operation to a “RIGHT TO WORK STATE” . I guess unions and workers can just go to hell.

    Well said Stan, as an example Lindsy Grahme R. SC said don’t worry you will still have your Twinkies, someone will take over and move the operation to a “RIGHT TO WORK STATE” . I guess unions and workers can just go to hell.

  • Mike Blais

    I love the Tea Party! They divide the Repubs into the selfish, greedy, individualists we all know and love.

  • Mike Blais

    So there was no hope for this company. If they can’t pay their workforce a living wage and stay solvent they were going under. I don’t buy your blame the libs crap either. Too much Howie,Laura, Rush, and Fox news for you. We know Regan-omics won’t work. Rich people don’t put their money back into their companies. They put it in private bank accounts. What’s the excuse for all the non-union companies packin it in. Polaroid for example..

  • Mike Blais

    Universities and Colleges do not teach business ethics anymore. They teach what is legal or illegal.

  • Mike Blais

    When did we start taxing people and not money? Let the Bush era tax cuts run out. I’d rather see the 1997 tax rates back again.

  • Mike Blais

    My dad worked for Polaroid for 25 years. The CEO and many executives they had did the same thing to that company. Unfortunately, the days of business ethics and company loyalty died in the mid 1980’s.

  • ron montoya

    What a shithole libtard marxist site this is.

  • k

    why don’t they prosecute these people for armed robbery for heaven’s sake. How many CEO’s are going to get away with these huge salaries while asking the working class to make concession. We need to start making some laws so this does not keep happening time and time again.

  • JoePli

    These “fine morally endowed” CEO and consultants were graduates of the Mitt Romney School of Business

  • Woody Guthrie Jr.

    Hi rae, thanks for your repose. Clearly, the cost of labor is much cheaper in other countries. Unfortunately, that means Americans need to work all the harder to stay competitive. Quality, innovation, delivery time could all be factors we could offer. Years ago I insisted on purchasing American products. I gave up long ago because I could not find any stores which stocked any. I long ago looking for anyone to fix anything that broke.

    Corporate greed is certainly a factor too. Every year we read about the “Top Paid Executives” I’d be much more interested in a little investigative journalism about companies who pay their workers the least. I often wonder how taking distributing one middle-manager’s annual bonus between the lowest paid workers would literally change their way of life. Yes, I get it that things are unfair. Yes, that is wrong. However, rather than taking individual responsibility and working hard, demonstrating value to the company so they actually wants to employ you, unions need mob mentality to shut down the entire operation. Before long, there won’t be anybody factories left this side of China.

    Also, I wonder several things:

    a) Why does labor hate management? Labor needs owners to build the factories. Labor needs a place to work. Even if people who buy the factories come up through the trades, by the time the could offer anyone a job they are management and hated by the unions.

    b) In this case, Hostess was in bankruptcy for years and even the Teamsters said the BCTGM should make concessions. Are the Teamsters nothing more than tool of the Republicans, too?

    c) Why does labor vote Democratic? Between the taxes and regulations the dems place on business, none of us are going to have any place to work before long.

    d) Why do folks get angry when management will make money selling off the brands. If you had something worth buying, wouldn’t you consider selling it?

  • http://twitter.com/pez1963 Paul E Zukowski

    only 6 % of the private sector are in unions. http://www.bls.gov/news.release/union2.nr0.htm

  • http://twitter.com/pez1963 Paul E Zukowski

    You do understand The equity firm lost everything 190 million. The 2 hedge funds since they are lucky if get 1/2 their money back…..

  • http://twitter.com/pez1963 Paul E Zukowski

    That is not true union lower productivity.

  • http://twitter.com/pez1963 Paul E Zukowski

    You the Executive are employee’s? They did not own it. The people who did own it one was unsecured they 190 million. They two were secured but they still losing money.

  • http://twitter.com/pez1963 Paul E Zukowski

    The Teamsters the largest union agreed to the same terms. It was 9 to 1 vote.

  • http://twitter.com/pez1963 Paul E Zukowski

    It put it into perspective. Hostess 2.5 Billion dollar company. The CEO making 2.5 million is not a lot.

  • http://twitter.com/pez1963 Paul E Zukowski

    Seriously OSHA and EPA do that…not unions. Very few people are still in unions. They killed off many industries.

  • http://www.facebook.com/ScottsToysandCollectibles Scott Marshall

    So let me see….we are talking about a company that pays out what? around a billion a year in pay and benefits to its employees, creates how many billions of dollars of ecomonic activity each year, and you IDIOTS are focusing on what? a few million dollars in pay increases that you are taking completely out of context with how this all went down? They switched from one CEO to another one part way through this process, so they asked the bankruptcy court to approve the increased pay to bring in the new guy. So I guess the bankruptcy court is in on it all too? I just read ABOVE how they saved $160 million over ONLY 15 months by stopping payments to the pension plan. I would say that information ALONE should sound off alarm bells to anyone who understands anything about business and costs. You don’t need to be a baker to see the problems with Hostess. Just using those numbers would mean over a 12 month period that they pay out around $120 million JUST TO COVER PENSIONS on top of what they pay per year in total pay and benefits to current employees. That is just not feasible. So the company paid out AT LEAST somewhere around $1.1 billion to $1.3 billion a year to past and current employees for pay and benefits and you libs want to seize on a few million in executive pay increases?!?!?!? And then you fail to bring up that the new guy in charge wanted to cut the top executives pay to $1 until the company emerged from bankruptcy. So did they even get their raises? No one seems to know or care just so long as they can keep beating the same old drum of “CEO PAY” over and over like braindead libs like to do. At least in this case the private sector, with jobs that still paid a decent wage with decent benefits, would have kept funding the operations to keep these 18,500 people and their families off of the public dole – now WE get to while they try to find a job in a tough sector to find a job in within an already challenging job environment. And instead of discussing ALL of the issues that lead to this happening with union based companies, you libs want to ONLY focus on a few million in CEO pay that was never really the issue. It had bad optics, but did not lead to the downfall of Hostess. The numbers and issues that add up to this failure are much bigger and happened WAY BEFORE. It just takes people willing to look for the facts, whether the facts are poltically convenient or not, to properly understand this story beyond the liberal battle cry of “CEO PAY!” Until we can do that, then few people will ever understand why these kind of things happen. And what makes the point even more is how the same people critical of “CEO PAY” never hold their elected representatives(the ones YOU voted for – not the “other guy”) accountable for how they waste our money and ruin OUR “business”(this country) while bringing it to bankruptcy. The re-election of Obama shows this lack of willpower. If our elected officials are not going to step up to the plate and be accountable for their actions with OUR money and none of you are going to do anything to hold them accountable, then who the heck are any of you to chastise a PRIVATELY run company for how it spends its money? At least it is NOT YOUR MONEY they are wasting.

  • http://www.facebook.com/ScottsToysandCollectibles Scott Marshall

    I’m sorry, are you talking about Obama -or someone else?

  • Ouch

    Yeah to bad though because if Romney was elected we could cross train these people for coal and oil jobs but now Obama has been elected there will be no jobs and we are 18000 jobs closer to socialism!

  • Rudewaitress

    This is exactly how Romney made his money…off the backs of the working people!!!!! An equity firm and 2 hedge funds were running the operations!!!!

  • CapnFatback

    Bob, I’d get my Sarcasmeter checked if I were you.

  • rae

    yes, they’ve gone to countries with very few labor laws where workers make less than $2/hour and in China for example, live on site in dorms along with working 60 hour work weeks. God Bless the people who have the courage to stand up for simple human rights when it comes to the work place and shame on the government and the people in the country who do not demand that if a company wants to sell products in our country, they manufacture x-amount of product every year in the country. Corporate greed and the bottom line should not be all that matters. I realize that if I work in a factory, I am not going to strike it rich, but I should be able to earn a decent living and save for a future.

  • irandom

    So if they fired the $2.5 million CEO and redistributed it to 18,500 works that would be $135 per worker or a less than a 1% raise for a $27K baker salary. I doubt the workers would’ve been happy with that. Governments also underfund pension liabilities, so that is nothing unique. That Tea Party crazy is probably right to sell a business, especially if there is a unionization risk or a medical manufacturer.

    http://articles.kwch.com/2012-11-16/hostess-brands_35117277

    http://www.indeed.com/salary/Baker.html

  • http://twitter.com/Rick_Burgess Rick Burgess

    You realize these people were making about $12 per hour and were being asked to take ANOTHER pay cut plus reductions in their pension and increased insurance premiums. Oh yeah, greed.

  • bob

    Tell that to other third world countries that don’t have unions. The last I heard they made… what about 20.00 dollars a hour and most lived in 200,000 thousand dollars … Give me a break cambridgemac wake up the the real world. Without unions we would be in the same boat

  • Eric Greene

    There are no hedge funds involved. There is a private equity fund involved (Ripplewood Holdings) that is expected to lose its entire equity share in Hostess (http://money.cnn.com/2012/11/16/investing/hostess-twinkies-wonder-bread/index.html). Proceeds from the sale of brand names will be used to pay debtor-in-possession loans that allow Hostess to continue functioning through the bankruptcy.

    Someone with “baking” experience wasn’t required. They put executives with turnaround experience at the helm, and this time it happened to fail. That happens. Had the private equity fund not provided financing during the first bankruptcy then these workers would have been out of a job a long time ago.

    You’ve demonstrated you have a fundamental misunderstanding of economics and finance. You do not appear to be qualified enough to comment on the intricacies of private equity or bankruptcy. Rather than reading partisan news sources and using them to form preconceived notions, try doing some independent research in hopes of becoming informed.

  • dula

    Your biggest dream is to finish turning the US into China…no labor rights, no Middle Class, no wages that keep pace with inflation, no safety or environmental regulations, etc. You’re not going to be happy until we starting putting lead, mercury, and melamine in all our products.

  • cambridgemac

    If we didn’t have commie Unions we’d all be rich!

    If CEO’s could slash wages and benefits to the bone, we’d all be rich!!!

    Because capitalism!

  • HeartlandLiberal

    Compare with what owner of Bob’s Red Mill foods did with his company:

    As reported on ABC’s World News Tonight, employees of Bob’s Red Mill Natural Foods
    became owners of the multimillion-dollar company that opened in 1978.
    At a time of recession, in large part caused by greed and accumulation
    of wealth “at any cost,” this is an uplifting story of faith in the
    “American way.”

    “It’s the only business decision that I could make,” [Bob Moore] said.
    “I don’t think there’s anybody worthy to run this company but the
    people who built it. I have employees with me right now that have been
    with me for 30 years. They just were committed to staying with me now
    and they’re going to own the company.”

    http://www.examiner.com/article/employees-reap-benefits-of-loyalty-owner-gives-multimillion-dollar-company-to-workers

    I leave it to you gentle readers to draw the appropriate contrasts and comparisons. They sorta write themselves. I think.

  • http://ronrule.com Ron Rule

    Some major flaws with this one-sided article… for starters, even if the CEO made $ZERO the union payroll was still too much overhead. Second, the union only represented 6,700 of the 16,000 workers. If your employer forced you to choose between an 8% paycut or unemployment, you would have a choice: You can take the pay cut (and probably start looking for another job), or you can say “F-You” and quit. But it’s YOUR choice. These workers didn’t have that choice, the union made it for them. Think they’re happy about that decision?

  • FunMe

    Yes.

  • OtterQueen

    Eustace Tilley, is that you?

  • evans1216

    they are only doing what our government has been doing for decades. Why should the government have all the fun? borrowing and spending, giving themselves and their friends access to our tax dollars, then asking us to pay more in taxes.

  • Woody Guthrie Jr.

    @David Story,

    Consider if any of your strikes made it financially feasible to ship an entire factory to China. Lots have gone. None are ever coming back.

    Thanks!

  • http://twitter.com/realmyiq2xu Myiq 2xu

    Are you sure that you know the truth?

  • Twinkie lover

    No bailout yet, but I heard Obama has a sweet tooth.

  • http://www.facebook.com/edward.reyes.397948 Edward Reyes

    Another pathetic excuse.. The UNION commies thinks they can dictate how a Privately owned company should pay them,and when the company did not budge, they threaten to strike till the company fold.. .. they dont want to take a pay cut of 13%,they instead choose to strike, now they striked themselves out of a job and loss of 100%, and that stupidty is UNION THUGGERY & GREED !! and that union greed is whats going to drive this country to the ground..

  • Indigo

    Business ethics is the moral imperative to enrich oneself, regardless of the consequences to others. The behavior we see in the Hostess executives is clearly ethical by those standards. If that is in fact unacceptable then we must say so loudly and clearly and repeatedly.

  • cambridgemac

    Or someone who makes 178k every day of the year. Like Paul Johnson.

  • cambridgemac

    Not so different from what the 1% is doing to the country as a whole.

  • cambridgemac

    “Is this what they teach in business school these days?”
    Well, when I was at MIT Sloan in 1980-82, it’s not what was taught, but it’s certainly what MBA’a BELIEVED. We were taught that the evidence was incontrovertible: after controlling for industry, size and all other relevant variables, uinionized companies clearly had higher productivity and greater profits. As far as I know, there has never been a study to the contrary. Nonetheless, my sense was that a majority of my MBA classmates were anti-union, although perhaps not a large majority.

  • http://www.facebook.com/story.david.e David Story

    The costs are, one less facility that is screwing the American family. I would say the cost was well worth the gain. I have struck numerous times over the course of my lifetime and generally the strikes were for incoming workers pensions and insurance benefits. In other words, I was fighting so that our children may have a living wage and maybe a little dignity at retirement. The one’s that didn’t strike were more worried about themselves than our future generations. I won’t judge your husband because I don’t know your situation but I will say this. I am a proud union worker and will be till the day I die. I struck so people like your husband could have good jobs. Take a moment and think about that before you talk about price and consequences. I have went hungry so future generations could eat.

  • Andrew

    Chris,

    I could not find your email address or other contact information, so perhaps you read these comments.

    Your article is factually incorrect and rather embarrassingly so. The CEO who supposedly received a large raise was former CEO Driscoll, not current CEO Greg Rayburn. Within a matter of weeks after the change in Driscoll’s compensation package, he was fired and replaced with Rayburn. This occurred in March of this year. Shortly after Rayburn took over as CEO, he cut his salary to $1 for the remainder of the year.

    If I were Mr. Rayburn, I would be rather upset by this libelous article you have written. I suggest you issue a correction to this factually incorrect article and redact portions that impugn Mr. Rayburn’s integrity.

    Its really a shame to see such sloppy reporting from a fellow Buckeye. I trust you will make the necessary corrections, as I trust that your commitment to accuracy and journalistic integrity outweigh your desire to rail against excessive CEO compensation.

  • http://www.facebook.com/bob.higgins1 Bob Higgins

    I keep seeing this “300% raise” thing…and a REAL good idea might be to present a source for that that ISN’T the union.

  • Kevyn Jacobs

    Hostess got Bained.

  • http://www.facebook.com/ThomasJKramer Thomas Kramer

    Why pay a bunch of workers when you can more effectively make money licensing or selling the legacy brand names outright! Power to the Union People!

  • Woody Guthrie Jr.

    Union Wins a 100% pay cut for all workers.

  • Bill_Perdue

    Hostess management set this whole thing up. Workers there had already bailed them out once but the greed of the new breed of Wall Street managers is and their protectors in the White House and Congress is insatiable. Management demanded more and more cuts and finally the workers got fed up. They knew what was coming, another union busting raid by predatory owners.

    Management “it had already planned to close plants even if the workers accepted the cuts and stayed at work. BCTGM (Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union) president Frank Hurt says the workers understood who they were dealing with: Our members know
    that the plans all along of the Wall Street investors currently in control of this company did not include the operation of Hostess Brands any longer than it takes to sell the company in whole—or in part—in a way that will maximize the profits of these vulture capitalists regardless of the impact on the workforce.” AlterNet, today, 11 16 2012

    These new layoffs, and the layoffs of others, including 50,000 union postal workers in an Obama approved plan to further gut federal workers unions are going have the effect of deepening the Depression. Combined with the Austerity Bomb Obama and the Congress are going to drop late this year or early next year I’d say we’re in for ‘interesting times’.

    For non Obots and non-GOProuders the way to proceed is clear, build unions and the union left and the smoldering struggle of the un and underemployed embodied in the Occupier movements and continue to prepare for a showdown struggle with Obama, the Congress and the rich who they represent.

  • UncleBucky

    It would be very interesting to know how many workers got canned in the years under this C-level crew for stealing hot twinkies, ho hos and cupcakes. Hm.

  • http://www.facebook.com/people/Chu-Hyon/100002401074716 Chu Hyon

    Some people sign the front of the check.
    Losers like you sign the back.
    Enjoy the Obama economy that you voted for.
    LMAFROTF

  • UncleBucky

    Legal theft. The dream of every CEO….

  • http://twitter.com/skyblueerik E

    Are there any food related companies (hell, ANY companies) who don’t have assholes for executives? WTF is the matter with these people?

  • http://www.facebook.com/rswarts416 Robert Equality Swarts

    I personally hate the tax bracket model and would rather see a tax scale. I find it insane that someone making 85k pays the same tax rate as someone who makes 178k.

  • FunMe

    I’m making sure people I know the truth through emails and Facebook updates.

  • FunMe

    So Romneyesk!

  • http://twitter.com/jacobsamuels Jacob Samuels

    Privately held company.

  • Chris is an idiot

    incorrect. hostess settled with teamsters already but knew that the bctgm wasn’t going to follow suit. it was only AFTER they knew that bankruptcy was going to happen and started preparing for it that they raised their pay (which is exactly what the title of this ridiculous blog article says). why? because they knew the company was going under and it would have been stupid to leave it.

  • RepubAnon

    Creating new personal tax brackets at top 10%, top 1%, top 0.1% and top 0.01% salary levels (based on prior year’s cumulative tax returns for all US Citizens, scaling up to a max marginal rate of 50%) might have an effect as well. That, and changing long-term capital gains to holding an asset for 5 years minimum, might change the outlook.

    You’d want to put in some ability for folks such as professional athletes to put a larger-than-usual chunk of their income in a 401k-type account (they’ll be retiring sooner than the rest of us) – but the ever-lowering marginal tax rate for the upper income levels has a high correlation with the growth in outsized salaries.

  • JNo

    Seems the media is not really covering this part of the story? They’re obsessed with -the baby-boomers and gen x’ers won’t getting their twinkies anymore- narrative.

  • http://www.facebook.com/profile.php?id=1173480024 Rob Michael

    Bain style lol. Zero understanding of private equity.

  • Outspoken1

    Is this not where the stockholders should sue the mgt.?

  • Jim

    Hi Chris,

    You’re right about no evidence that higher pay equals better management.

    May I suggest to you that you read Daniel Pink’s, “Drive: The Surprising Truth About What Motivates Us.”

    Pink presents a lot of evidence that higher pay leads to bad (often recklessly selfish) decisions. But the bulk of the book shows how giving people tasks they enjoy and giving them enough autonomy better results are gotten.

    It is a fascinating and encouraging argument. I think you’d find it very useful.

  • Gospellady

    According to to trhe exec’s the money given from the 1st bankrupcy was returned. None was given since then. I guess we have to take that with a grain of salt too. Since they redeclared bankrupcy and closed……….is it a moot point?? 18000 people flooding unemployment lines across the country including my husband who did not strike. Funny thing is the dummies who did strike are STILL picketing a closed facility today! Wait until they go to the unemployment line and find out…..they are NOT eligible! That will remind them that they should have counted the cost.

  • Gospellady

    And just to let you know, Twinkies did not get bail out funding so the government did not get into the fray.

  • Gospellady

    This is what we get for idolizing college diplomas and figuring if somone has one they know what they are doing. Mr. Rayburn knew and capitolized on what he did and his cronies also made out like bandits as well. The small union that would not budge was just a pawn in his game. Watched it all go down around the hard workers who did their best to keep Twinkies on the store shelves. It is all his fault as the buck should have stopped on his desk. If any other corporation hires Gary Rayburn they are looking for a demolition crew!

  • http://twitter.com/stanchaz stan chaz

    Wall street vultures are blaming workers for getting rid of your sweets—and that’s just not right.

    You might have heard that Hostess Brands, the company that makes Twinkies, Ding Dongs and other desserts, filed for court permission to go out of business, and that its blaming a worker strike for the shutdown.

    The Wall Street hedge fund managers who run the company have squeezed every cent out of Hostess for eight years. And they’ve put their friends with no experience in the baking industry in high-level management positions

    What’s happening here is a classic Bain Capital-style assault—blame the little guy to cover the greedy corporate policies that are gutting the middle class.

    It’s not just happening to the workers who make the great products Americans love. What’s happening at Hostess is happening to workers all over this country. It’s wrong. And it has to stop.

    Crony capitalism and poor management drove Hostess into the ground, not the workers who are now paying the price. In this struggling economy, the greedy corporate executives are willing to let 18,000 people lose their jobs—just so they can pad their pockets.

    Hostess’ executives are now blaming workers who’ve offered their company multiple concessions and want it to succeed. This is what’s wrecking our country.

    Workers have borne the brunt of bad decision-making by executives who didn’t know anything about the baking business. And they’re the ones getting fired?

    These brave workers need to know we stand with them—and we’ll stand with everyone who will take a stand against the corporate race-to-the-bottom.

    Hostess workers are being scapegoated because they are standing up to corporate greed.

    Hostess’ executives are now blaming workers for poor decisions they made that drove Hostess into the ground.What’s happening here is a classic Wall Street tactic—blame the little guy so that they can cover their greedy corporate policies that are gutting the middle class. Sign our pledge to stand with Hostess workers and against the tide of corporate greed wrecking our economy. http://act.aflcio.org/c/18/p/dia/action3/common/public/?action_KEY=5109

  • http://voenixrising.com/ Mark Alexander

    Of course they did. It’s the ‘murikan way!

  • RepubAnon

    So, they paid the “job creator” executives massive salaries to run the company into the ground, thus destroying jobs? Could it be that the real purpose was to bleed the company dry, then sell the corpse for parts – all while harming the unionized work force?

  • A reader in Colorado

    Actually there is something the government can and should do.

    It can demand extremely modest salaries for executives for companies and institutions that receive federal subsidies or bailouts, no stock options, no golden parachutes, and no use of corporate funds to provide other compensation of any kind.

    If companies want to suck at the trough of corporate welfare, they can do it without their CEO’s, board members and others personally profiting from it.

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