It's quite a record of achievement Hostess execs have racked up recently. Twice in the past decade they've driven the company so badly into the dirt that they've had to seek bankruptcy protection.
In neither occasion did it seemingly occur to them that Twinkies, Ding Dongs and Ho Hos, the brands upon which the company was based, might not be the best bets for a health-conscious age.
PepsiCo, Coca Cola and Unilever could all look ahead and see in order to survive they needed to come up with something other than sugar-laden goods with no nutritional value. But not Hostess, apparently. And so in fiscal 2012, the company lost US$1.1 billion on sales of US$2.5 billion. More than 18,000 workers will now lose their jobs.
What will all of this mean for the execs? Turns out they've asked their bankruptcy judge to sign off on US$1.8-million in bonuses, to be split between 19 of them. If all received an equal share that would mean almost US$100,000 each, of course. But since $100K isn't much of a bonus these days, not for leading a billion-dollar business, two of the execs want to be eligible for additional rewards. None of this includes the new CEO, Gregory Rayburn, who's been brought in at US$125,000-a-month to dismantle operations. Nor do any of the extra monies include salaries, perks or benefits.
This is a company that says it can no longer afford retiree benefits, and which stopped contributing to union pension plans last year, leaving $111-million in unfunded obligations.
Labour tensions were becoming an increasing concern at Hostess, which saw its biggest union go on strike earlier this month. At the beginning of the year, management blamed labour costs as a key contributor to its financial woes.
Considerably fewer fingers were pointed towards the company's failure in updating the product line, or how amassing huge amounts of debt -- loaded on by private equity firm Ripplewood Holdings when it pulled Hostesss out of bankruptcy -- would play out in the end.
Despite the labour issues, the 10-digit losses and the current insolvency, all is not sunk for Ripplewood. There are reportedly more than 80 bids now on the table for Hostess' brands and assets, which are estimated to be worth up to $1 billion. Indeed, it is a delicate art to wind down those assets, including the company's 37 factories, as well as safeguard all of those Twinkies, Ho Hos and Ding Dongs that necessitates the company's execs being paid extra just to stick around and finish the job.