Ding dong! Twinkies are gone! Unions Strike Again!

[FMCoug]

I have no sympathy for a company where the CEO is getting huge raises and bonuses as they continue to cut worker wage/benefits. If both sides decide that they want to be selfish and burn the thing to the ground, I blame the leadership on both sides. Even a anti-union writer agrees on this ground.

http://www.texasgopvote.com/issues/s...estment-004842

So when a CEO fails at a turnaround, the Board should try to find a kind-hearted one to replace him at the same pay, no bonus, etc.?

[byu71]

So when a CEO fails at a turnaround, the Board should try to find a kind-hearted one to replace him at the same pay, no bonus, etc.?

And this is the problem with Capitalism. Most competent CEO's are interested in being highly compensated, just like high profile athletes, entertainers and liberal journalists.

Not enough competent CEO's have being highly compensated as their 5th priority.

Perhaps more labor union bosses should become CEO's. They aren't highly compensated and are in it for the good of their union members.

[il Padrino Ute]

And this is the problem with Capitalism. Most competent CEO's are interested in being highly compensated, just like high profile athletes, entertainers and liberal journalists.

Not enough competent CEO's have being highly compensated as their 5th priority.

Perhaps more labor union bosses should become CEO's. They aren't highly compensated and are in it for the good of their union members.

I disagree with your last paragraph. Union leadership is very well compensated and don't give a rat's hiney about union members.

[ewth8tr]

So when a CEO fails at a turnaround, the Board should try to find a kind-hearted one to replace him at the same pay, no bonus, etc.?

You realize that the CEO raise was for the previous CEO that was replaced by the current CEO earlier this year during bankruptcy proceedings, right? The issue about excessive raises for 9 executives was originally brought up by creditors, not the union, in April as an illegal attempt to sidestep bankruptcy law. These were all executives that had ran the company into the ground, not new ones being enticed to join the company to save it.

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[U-Ute]

So when a CEO fails at a turnaround, the Board should try to find a kind-hearted one to replace him at the same pay, no bonus, etc.?

I have no problem for paying for a highly effective CEO. Pay for performance. But, just like the rest of us, he has to perform first.

One of the problems is that CEO pay isn't tied to performance. In reality, it is a tool for the company to take advantage of tax loopholes:

From the Executive Excess 2012 edition:

One key reason why: Our nation’s tax code has become a powerful enabler of bloated CEO pay. Some tax rules on the books today essentially encourage corporations to compensate their executives at unconscionably higher multiples of what their average workers are paid.

Other rules let executives who run major corporations routinely reduce their corporate tax bills. The fewer dollars these corporations pay in taxes, the more robust their eventual earnings and the higher the “performance-based” pay for the CEOs who produce them.

In effect, we’re rewarding corporate executives for gaming the tax system. Our tax code is helping the CEOs of our nation’s most prosperous corporations pick Uncle Sam’s pocket.

Another problem is that executive bonuses are generally tied to stock prices. You can raise the value of a company one of two ways: increase revenue or cut expenses. Guess which one is the easier of the two.

[byu71]

I have no problem for paying for a highly effective CEO. Pay for performance. But, just like the rest of us, he has to perform first.

One of the problems is that CEO pay isn't tied to performance. In reality, it is a tool for the company to take advantage of tax loopholes:

From the Executive Excess 2012 edition:



Another problem is that executive bonuses are generally tied to stock prices. You can raise the value of a company one of two ways: increase revenue or cut expenses. Guess which one is the easier of the two.

I will agree with you here. There are some really stupid things Board of Directors let CEO's get away with. However, I think the monitoring of this is on the Stockholders. Often there are large pension funds and yes union money who has ownership of shares. They should wield their power to handle executive pay through their ownership not as employee's.

Right or wrong, tripling the Hostess CEO's salary is peanuts when it comes to what caused this companies problem.

[U-Ute]

I will agree with you here. There are some really stupid things Board of Directors let CEO's get away with. However, I think the monitoring of this is on the Stockholders. Often there are large pension funds and yes union money who has ownership of shares. They should wield their power to handle executive pay through their ownership not as employee's.

I don't know much about the union that is squabbling with Hostess right now. It says that they are "BCTGM" or the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. That doesn't sound like a union that is specific to Hostess, so I don't know how many shares the union ownership has. It probably is insignificant compared to the hedge funds and VC's right now.

Right or wrong, tripling the Hostess CEO's salary is peanuts when it comes to what caused this companies problem.

I seem to remember reading an article this summer about how it was mostly a healthcare cost issue. It sticks with me because I couldn't help but notice the irony of the situation.

EDIT: Ran across this article. Apprently the union had no representation on the board.

For all these reasons, Hostess (then known as Interstate) initially entered bankruptcy in 2004, with uncomfortably close to half a billion dollars in debt. Sixty percent of the debt was owned by hedge funds Silver Point Capital and Monarch Alternative Capital, the rest by an assortment of other lenders. No one who was paying attention to the company’s fortunes was surprised by the move. During the nearly five years of its initial bankruptcy, the company accrued even more debt.

As these conditions lingered the workforce agreed to massive pay and benefit cuts in an attempt to keep the company afloat. One 14-year veteran of the company describes the $150 million annual givebacks the union agreed to: “In 2005, before concessions I made $48,000, last year I made $34,000.” Pensions and healthcare were cut as well, with labor’s total loss equaling $110 million annually.

Following these massive givebacks, a private equity company called Ripplewood Holdings brought the company out of bankruptcy in 2009 for $130 million and rechristened it Hostess Brands. The hedge funds and other lenders forgave some old debt and extended some new debt. Ripplewood convinced the other stakeholders that it could turn the company around and, apparently, convinced them so completely that only Hostess Management and Ripplewood had seats on the board. Neither the unions nor the hedge funds acquired voting seats as part of the deals struck to keep the company afloat. They just trusted Ripplewood to turn things around, implement new technologies, introduce new products, and rebuild aging infrastructure.

[byu71]

I don't know much about the union that is squabbling with Hostess right now. It says that they are "BCTGM" or the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. That doesn't sound like a union that is specific to Hostess, so I don't know how many shares the union ownership has. It probably is insignificant compared to the hedge funds and VC's right now.



I seem to remember reading an article this summer about how it was mostly a healthcare cost issue. It sticks with me because I couldn't help but notice the irony of the situation.

EDIT: Ran across this article. Apprently the union had no representation on the board.

So hedge fund guys are as dumb as the unions. No surprise.

WHOOPS. I mean SOME hedge funds. I realize others are awesome.

[U-Ute]

So hedge fund guys are as dumb as the unions. No surprise.

WHOOPS. I mean SOME hedge funds. I realize others are awesome.

And yet you guys were real quick to blame the union for all of this when they were just responding to poor management.