The Rapacious Maw of Unionism Devours its Own Yet Again

[_Gadianton]

Because inflation, at least at substantial levels, makes the money a creditor receives in the future worth less than the money he initially invested.

You're right, but yet you're wrong. Unanticipated inflation at any level is bad for a creditor. But the main issue is you've got the creditor/debtor/investor relationships all confused. When a bank loans money to someone, we don't commonly speak of this as an "investment", we consider this a loan, and then the party taking out the loan who buys capital is making the investment.

While a loan seems like an investment, hey, you're investing in the person taking out the loan, right? It isn't. It isn't at all, and it's very confusing and not in the practice of any school of economics to speak as if it is. The fact that it's not practice to speak of a loan as an investment alone is enough reason for you not to redefine words for your own private agenda that people have a hard enough time understanding anyway. But there is a strong conceptual reason that drives this distinction, which further shows gaps in your understanding, gaps that, if filled, will lead you not to make this mistake in the future.

If you're observant, you might call me out for my statement earlier, where I said that a country creating inflation is robbing it's citizens, who are its creditors, so did I not make the same mistake you did? Aren't the creditors of the US government "investors" of a sort?

Five points to the person who can explain why I spoke correctly and Droopy's statement quoted above is at the very least, anachronistic.

[_Kevin Graham]

http://thinkprogress.org/economy/2012/1 ... -downfall/

Today, Hostess Brands inc. — the company famed for its sickly sweet desert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.

But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.

At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while scorning employee contracts during a bankruptcy reflects a lack of good managerial judgement.

It also follows a trend of rising CEO pay in times of economic difficulty. At the manufacturing company Caterpillar, for example, they froze workers’ pay while boosting their CEO’s pay to $17 million. And at Citigroup, CEO Vikram Pandit received $6.7 million for crashing his company, walking off with $260 million after the business lost 88 percent of its value.

[_subgenius]

18,500 employees now out of work because of a 5,000 member union.
And who do the Unions blame? Wall Street of course...somehow the investors (ehem...Bain) who finally got tired of pumping cash into Hostess and decided to "move on" are responsible?

[_EAllusion]

I'm pretty sure the unions are blaming executives for mismanagment and raiding the company.

e.g.

http://www.teamster.org/content/dow-jon ... 0%99-execs

DJ Creditors Say Hostess May Have 'Manipulated' Executive Pay

By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW

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 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.

"As such, the debtors' continued payment of the executives' salaries in these increased amounts may violate the Bankruptcy Code," the unsecured creditors said in documents that were filed with the U.S. Bankruptcy Court in White Plains, N.Y., but largely redacted. Dow Jones was able to view those details because when the papers were saved to a word-processing program, the redactions disappeared.

A spokesman for Hostess dismissed the creditors' allegations.

"We do not believe their theory has any basis in law," he said. "Nevertheless, we are working cooperatively with the committee to address their concerns and expect to resolve this amicably."

In court papers, the creditors say testimony from Hostess's executive vice president of human resources indicates that "in the run-up to bankruptcy"--when Hostess had already hired bankruptcy attorneys--it was also working to shift its compensation structure. Hostess slashed bonuses payable only if certain performance goals were met and, on July 26, the company's compensation committee signed off on "substantial salary increases for numerous senior executives," the creditors said, calling the jumps "dramatic."

Hostess's then-CEO, Brian Driscoll, saw his salary rise to $2.55 million from $750,000--a 300% increase.

"Other executives' salaries were increased by from 35% to 80%," the creditors said.

While Driscoll--who abruptly abandoned his post at Hostess's helm last month, leaving a restructuring expert to take his place--ultimately refused a portion of the salary bump, others seem to have kept the funds, the creditors said. They noted that the company continues to pay the prebankruptcy salary increases, no piece of which was "made contingent upon any aspect of the debtors' business performance or operations."

Hostess's own compensation consultant noted "that the increased salaries were not incentive compensation at all," the creditors said, and urged the company to tie the payments to company performance and wrap them into an incentive plan once Hostess filed for bankruptcy. But Hostess "disregarded" the suggestion, the creditors said, and also failed to disclose that it had tweaked the executives' pay in the six months leading up to the bankruptcy. The creditors only learned of the changes during a February deposition of the human resources executive.

"The committee viewed this testimony with grave concern," the creditor group said. It sought more information, but Hostess "refused to cooperate."

The creditors are now turning to the bankruptcy court for help, seeking a judge's clearance to launch a formal probe. They want access to documents regarding the compensation changes, minutes of meetings of the board of directors and the compensation committee and documents from the outside compensation consultant brought on by Hostess, among other information.

Hostess's Chapter 11 case has been stalled for the last several weeks as the company and its unions continue to negotiate behind closed doors and both sides prepare for an April 17 trial over the company's request to shed its collective bargaining agreements in bankruptcy.

On Tuesday, the company filed a request for more time to propose a bankruptcy-exit plan, saying it couldn't move forward with a Chapter 11 proposal until it makes headway with regards to its labor issues and attempt to nab new capital. The company noted that it has launched a "parallel process" to pursue a sale of its assets "as a failsafe," should Hostess not obtain the changes it wants to its union deals.

The maker of Twinkies and Wonder Bread, which filed for bankruptcy in January, had long said it was actively searching for potential new investors and buyers but had resisted calls from creditors to launch a full-blown sale process before it dealt with its union issues.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

[_subgenius]

I'm pretty sure the unions are blaming executives for mismanagment and raiding the company.

e.g.

http://www.teamster.org/content/dow-jon ... 0%99-execs


DJ Creditors Say Hostess May Have 'Manipulated' Executive Pay

By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW....

Love your citation from the teamsters....nice unbiased resource of thugs.

So, aside from the obvious ignorance of how bankruptcy works...is it your position that the salary increases were a money grab or a calculated scheme to prevent the Unions form raiding the coffers? (which they were obviously trying to do and failed).
You are familiar with how the payment plan works when bankruptcy occurs, correct? (hint: wage-earner plan)
So, all we are really seeing is that the greedy Union is now content with demonizing the guys who got to the cash register first. Are you really so naïve to think that these union leaders care about sugar cream injectors (ehem... "Bakers").
The sour grapes of the Union simply underscores their uselessness.
At a bakery like Hostess, Union dues can run upwards to $6k per year for a Baker...or $30 million per year for the 5,000 workers....wow, nice return on their investment - unemployed. Idiots reap what they sow.

http://www.forbes.com/sites/realspin/20 ... nvestment/
"In 2008, labor unions spent $75 million in political donations, with 92 percent of it going to Democrats. In 2010, over 93 percent of union political support went to Democrats, even though 42 percent of union households voted Republican, according to exit-polling data."

[Guest]

I'm pretty sure the unions are blaming executives for mismanagment and raiding the company.

e.g.

http://www.teamster.org/content/dow-jon ... 0%99-execs

DJ Creditors Say Hostess May Have 'Manipulated' Executive Pay

By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW

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 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.

I feel like Captain Renault when he found out gambling was going on at Rick's Place:
"SHOCKED, SIMPLY SHOCKED".

[_Droopy]

Love your citation from the teamsters....nice unbiased resource of thugs.

Standard around here (like when Graham cites Federal Reserve officers, or Tim Geithner himself, in defense of the stimulus or quantitative easing policy).

But look, this is a board where Bill Ayers can receive a sturdy defense and rehabilitation on any given Sunday and where Ho Chi Minh will be defended as a democratic, agrarian reformer on a par with Thomas Jefferson.

I'm been waiting a long time for a full court press rehabilitation of Adolf Hitler here, of the kind one normally expects from these kinds of people regarding Castro, Guavara, Allende, Lumumba, Lenin, Ayers, the Black Panthers etc., but it hasn't materialized as of yet (probably because comrade Hitler was one of those nasty "right wingers," I guess )

[_EAllusion]

Love your citation from the teamsters....nice unbiased resource of thugs.

The story is actually from that notorious leftwing source Dow Jones News. But's entirely beside the point. When wondering what the unions are saying, quoting what the unions actually are saying (or blaming in this case) is a perfectly appropriate source. This is so obvious that I think missing the point could only be caused by a special kind of blindness or mental incompetence.

[_Bob Loblaw]

The story is actually from that notorious leftwing source Dow Jones News. But's entirely beside the point. What wondering what the unions are saying, quoting what the unions actually are saying (or blaming in this case) is a perfectly appropriate source. This is so obvious that I think missing the point could only be caused by a special kind of blindness or mental incompetence.

Dow Jones? That is just another of the biased liberal media. WorldNetDaily and FrontPage, now those are some objective resources.