Example: [Collected via e-mail, November 2012]
"I wonder when the media will start reporting that while Hostess was trying to cut Bakers pay by 8% & benefits by 32% the CEO gave himself a 300% raise (750,000 to 2,550,000).
Origins: Amidst the dire November 2012 news for snack lovers that Hostess Brands Inc. was going bankrupt and shutting down, possibly spelling the end of the beloved Twinkies snack cake, came charges and recriminations over exactly who put Hostess out of business. Company representatives maintained Hostess was forced into bankruptcy because it was unable to withstand prolonged and ongoing strikes by its workers; union representatives countered that employees were being asked to accept "draconian wage and benefit cuts and give up their pension" in order to enrich the company's executives and investors:
Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The baker's union said the company's demise was the result of mismanagement, not the strike. It pointed to the steep raises executives were given last year as the company was spiraling down toward bankruptcy.
According to an April 2012 report by the Wall Street Journal, Hostess' creditors claimed that in July 2011 the company had manipulated executive pay by approving large salary increases for top executives (in place of performance-based bonuses) in order to skirt bankruptcy rules:
The committee representing Hostess's unsecured creditors alleges that information it has gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to salary, "at least in part to sidestep" rules designed to ensure that companies in bankruptcy aren't enticing their employees to stay on board with the promise of cash, according to documents filed with the U.S. Bankruptcy Court in White Plains, N.Y.
A spokesman for Hostess said the company doesn't believe the creditors' "theory has any basis in law." He said the executives' salaries were increased at a routine compensation review "to align them with industry standards and because the executives were being asked to take on significant additional responsibilities associated with trying to restructure the company outside of bankruptcy proceedings."
Brian Driscoll, CEO, around $750,000 to $2,550,000
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008
Five days after that article was published, the Wall Street Journal reported that Hostess' new CEO,
Gregory F. Rayburn, a restructuring expert who took the helm at Hostess last month, said in an interview that the top four executives working under him had agreed to cut their annual salaries to $1 until the company emerges from bankruptcy or
Further down the totem pole at the Twinkie maker, four additional executives agreed to return to the salaries they were receiving before the July increase.
The news comes after the maker of Ho Ho's, Ding Dongs and Wonder Bread moved to liquidate and sell off its assets in bankruptcy court. Hostess cited a crippling strike started on
"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
Choi, Candice. "Twinkies Maker Hostess Lives at Least Another Day." USA Today. 19 November 2012. Feintzeig, Rachel. "Creditors Say Hostess Pay Is Questionable." The Wall Street Journal 4 April 2012. Feintzeig, Rachel. "Hostess Rolls Back Some Executive Pay Raises." The Wall Street Journal 9 April 2012.