Hostess executives allegedly looted the company while demanding "shared sacrifice" by workers, according to the Dow Jones news service. Dow Jones got hold of a legal document that contained the explosive allegations by the company's unsecured creditors committee.According to Dow Jones,
Unsecured creditors suspect that Hostess Brands Inc. may have "manipulated" its executives' pay--sending its former chief executive's salary, in particular, skyrocketing- in the months leading up to its Chapter 11 filing, in an effort to dodge the Bankruptcy Code's compensation requirements, according to a redacted court filing reviewed by Dow Jones.
The Teamsters' response was fast and furious. According to the press release,The official committee representing Hostess's unsecured creditors wants to launch a formal investigation in the bankruptcy case, hoping to dig deeper into the bakery company's senior executive compensation. The information the group has already gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to guaranteed 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.
The Teamsters Union expressed outrage today over revelations uncovered by Dow Jones Newswires that Hostess Brands Inc. executives cheated the company and lined their own pockets while at the same time demanding drastic wage and benefit cuts by workers and failing to pay pension obligations during the run-up to bankruptcy.
“The Dow Jones article suggests that management broke the law, looted the company and then told workers to suck it up and sacrifice,” said Ken Hall, General Secretary-Treasurer of the Teamsters Union, which represents more than 7,500 route sales representatives, drivers and other employees at Hostess.Funny, we had just been commenting that executive pay destroys companies and kills the economy.
“If this is true, Hostess executives have violated their agreement with the Teamsters that all parties, including management, would share equally in concessions that would help keep this company alive,” Hall said.
“It would be outrageous for the board of directors, which included secured lenders, to approve executive salary increases of up to 300 percent for a company that has filed for bankruptcy twice in four years,” he said.
The committee representing the company’s unsecured creditors, which includes the Teamsters Union, is calling for a formal investigation into Hostess management’s potential violation of bankruptcy law.
