Hostess Seeks Court Approval For Executive Bonuses During Shutdown

  on November 29 2012 1:44 PM

Hostess Brands has presented a liquidation plan in court that seeks to dole out $1.8 million in bonuses to top executives, the Associated Press reports.

The pastry maker asked to pay the bonuses to 19 corporate officers and high-level managers in order to retain them during the brand's dismantling. All bonuses would be given on top of management's regular salaries. Additionally, two executives would be eligible for additional pay depending on how efficiently they carry out the liquidation.

 

That structure does not include payments to CEO Gregory Rayburn, who was brought in earlier this year to restructure Hostess. Rayburn makes $125,000 per month.

 

Hostess' liquidation plan was approved on an interim basis by the court last week. While the brand seeks final approval, the bakers union is asking a judge to appoint an independent trustee to monitor the shutdown, claiming that the current management "has been woefully unsuccessful in its reorganization attempts."

 

Hostess Brands, which include Twinkies, Ding Dongs and Ho Hos, announced its intention to shut down earlier this month after it failed to reach an agreement with the bakers union. A strike by those employees crippled production, Hostess claims. As a result of the shuttering, 18,000 jobs were lost.

 

Trouble for the famed brand is nothing new, however. In January, Hostess filed for Chapter 11 bankruptcy, citing heavy costs brought about by its unionized work force. Before that, management turmoil racked the company, and employees complained about a lack of innovation. Despite Hostess' struggles, it managed to accumulate a $2.4 billion profit last year.

 

While top management is scheduled to receive liquidation bonuses, Hostess employees are no longer able to receive retirement benefits, the company said in court. It also stopped contributing to union pension plans more than a year ago.

 

Hostess' liquidation process is expected to take up to a year to complete. The company says it has received a flood of interest from big-box retailers, international companies and national packaged food makers who all expressed desire to acquire its famed brands.

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