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Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay

December 11, 2012 |

Twinkie-maker Hostess continues to screw over its workers. The company is in the process of complete liquidation and 18,000 unionized workers are set to lose their jobs. More troubling – they could lose their pensions.

According to a report by the Wall Street Journal , Hostess’ CEO, Gregory Rayburn, essentially admitted that his company stole employee pension money and put it toward CEO and senior executive pay (aka “operations”). While this isn't technically illegal, it's another sleazy theft by Hostess executives - who've paid themselves handsomely while running their company into the ground. Just last month, a judge agreed to let Hostess executives suck another $1.8 million out of the bankrupt company to pay bonuses to CEOs.

If there's no way to recover the money for the Hostess pension plans for workers, then we the taxpayers - through the Pension Benefit Guaranty Corp. - will have to foot the bill to make sure workers get the retirement money they paid in.

Hostess shows us clearly what Bain-style predatory capitalism is all about: big bucks for the very few rich executives, layoffs and poverty for the workers and their communities.

And don’t mourn the loss of Hostess brands – they’ll be back, as the company is currently negotiating with over 100 potential buyers right now to bring Twinkies, Wonder Bread, and Ding Dongs back into the marketplace.

The Hostess story has nothing to do with unions, and everything to do with the Enron-ization and Bain-ization of the American economy.

In classic Enron style, back in 2005 Hostess sent out a letter saying they’d just had a very, very profitable quarter. Their stock jumped up. The CEO, Charles Sullivan, and many of the senior executives sold chunks of their stock. The CEO and senior executives were making out big, and the workers were making a decent living.

At that time, one of the hostess workers – Mike Hummel, blogging as bluebarnstormer over at Daily Kos – noted that he was making $48,000 a year, a bit over the US median household income, and had insurance and a pension.

Then, a few weeks later in 2005, came the letter saying that, oops, all of that profit had really been just an accounting error – the company was actually in trouble. Although the CEO and the top guys had all made a nice killing selling the stock when it was high, and paying a maximum income tax on it of 15 percent because they used the Capital Gains loophole that Mitt Romney used to become a multimillionaire, they now wanted the workers to take a big pay cut.

Hummel notes that the “oops” letter became the justification for asking the workers to take a pay cut, which they agreed to, and his pay dropped from $48,000 a year in 2005 to $38,000 a year last year. But every year, $3 an hour of his compensation showed up in the worker’s pension fund instead of his paycheck. Year after year. With 18,000-plus workers, it was millions and millions of dollars. Dollars that the workers had paid in, at the rate of $3 per hour.

Then came the Bain-style takedown. In order to strip the company down to its individual brands and sell them off, piece by piece, the company needed to bust the union. The union said, “No,” so the company went to bankruptcy court – a method Bain and other vulture capitalists often use to kill off unions.

In the meantime, the CEO and senior executives were paying themselves handsome salaries and big bonuses. And where was that money coming from?

(More at link)

by Anonymousreply 212/12/2012

Here's your FREE MARKET in action you fucking libertarian/anarchist wingnuts.

by Anonymousreply 112/12/2012

This is what happened to me on a smaller scale.

I was the CFO for a software company doing business with a national retail chain. In order to gain a bonus for TWO of the executives at said retail chain, they switched to a less reliable software, one that provides no support to the retail employees.

I was laid off, along with 75% of the 300 employees. The company I used to work for is limping along, with the owner installing his mistress as the CEO. I have moved on, but it took some time.

by Anonymousreply 212/12/2012
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