As Hostess Brand Inc. descended into economic ruin, executives at the company made sure to give themselves six-figure raises. The company filed paperwork to liquidate its assets late last week, and will attend a hearing in front of a bankruptcy judge in New York, Monday (Nov. 19), yet gave its big wigs up to 300 percent salary increases.
According to a union claim, a large portion of revenue loss that resulted the firing of more than 18,000 workers, went to raises.
Greg Rayburn, who was later promoted to CEO, reportedly received a salary bump from $750,000 a year to well over $2 million. However a spokesperson for the company maintains that Rayburn’s salary was only $100,000 a month. Roughly nine other executives were given raises, including a pay increase from $500,000 to $900,000, and another from $375,000 to $656,256.
In April creditors accused Hostess of executive pay raise manipulation in an effort to get around paying their debts. In response to the outcry, Rayburn announced that he and the other executives would have their pay dropped to $1, until the end of they year, or whenever the company moved out of the red.
With a reported a $300 million loss, the fall of Hostess is blamed less on lack of consumer interest, and more on shady business practices. “The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” said Frank Hurt, president of the International Brotherhood of Teamsters which works with Hostess. “The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset – its workers.”
Hostess has been able to settle discrepancies with IBT, but has yet to reach an agreement with Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, all of whom went on strike nearly two weeks ago.
Meanwhile, the reaction to an impending Twinkie, Ho Hos, and Ding Dong shortage has driven people to insanity. Even though the treats aren’t expected to go anywhere, the public has resorted to buying massive quantities of what they believe to be the last of the Hostess Brand items. Some consumers have even flocked to eBay to profit off their precious finds. No matter their lack of any nutritional value, and the ability to never expire, Twinkies have been put up for sale for as much as $500, to a ridiculous $200,000 a box.
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Photo: Chicago Tribune
