Hostess employees get 8% pay cut, management gets $1.8m bonuses

You remember Hostess.  Home of the Twinkie.  Gone bankrupt and closing down after the previous CEO tripled his salary, knowing full well they were on their way to the poor house.

Well here we go again, Lucy.

While it’s worth noting that current Hostess acting CEO Gregory Rayburn, to his credit, is not accepting a bonus, you have to ask yourself why anyone would be getting a bonus in the first place, with the company in bankruptcy.

Well.  It seems that at the same time the company went into bankruptcy, and now is cutting employees’ pay by 8%, just in time for Christmas, the management team finagled itself a whopping $1.8m bonus.  “The money is intended as an incentive for 19 top-level managers to remain with the Twinkies and Ding Dongs maker to oversee its liquidation,” the LA Times reports. Right, because you wouldn’t want to lose any of the winners that oversaw a company going into bankruptcy.

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Nothing says shared sacrifice like the blue collar guy getting his pay cut while the white collar guy gets a bonus.  (Who negotiated this deal anyway, John Boener?)

Merry Christmas!

And it’s not like Hostess could have found any other good use for that $1.8m in bonuses:

Hostess, which stopped contributing to its pension plans last year, also told the court that it needed to stop paying $1.1 million a month in retiree benefits.

As for acting CEO Rayburn, the reason given for not cutting his pay too – he earns $1.5m a year – is that he’s not on the Hostess payroll.

A lot of Americans have been through similar situations where they’ve been asked to accept temporary pay cuts, but it’s less typical to see the acting CEO – whether he works directly for the company or not – continue at the same pay rate. It’s not what most would consider “working as a team.”

It’s hard to see much future success from a business with a CEO who fails to join the financial pain that others are forced to accept.  Then again, it looks like Hostess is being liquidated.  But if that’s the case, then why give bonuses to keep the management team there if the entire thing is being shut down anyway?

What is also curious is how much big money has been thrown around at Hostess. The unions were forced to take cut after cut but that was never enough.  And now, when the employees keep being told there just is any more money to go around, they found some more money to go around.  (Kind of the way Republicans always find the cash, our cash, to go to war or cut taxes.)

All animals are equal, but some animals are more equal than others.


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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