Let Us Look at Worker Salaries Versus Executive Salaries at Hostess

By Bernie on 26 Nov 2012

Hostesss Shrugged
Photo Credit: iOwnTheWorld

Union apologist Mark E Andersen in a Daily Kos article (1) alleges that the idea that the unions killed Hostess is just another right wing myth and that it is the obscene executive salaries that are to blame.

This ridiculous assertion is based on a press release posted by the Confectionery, Tobacco Workers & Grain Millers International Union:

The Sacramento Bee, 13 Nov 2012, Hostess Continues Pattern Of Misinformation

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.

So the question is, did increased executive salaries cause the downfall of Hostess? If you hurry to say Yes, you will be overlooking two things:

  1. The total compensation for these ten executives, even after the salary increases, amount to less than $7.6 million dollars (from an April 2012 Wall Street Journal Report:

    Salary Increases at Hostess

    Brian Driscoll, CEO, around $750,000 to $2,550,000
    Gary Wandschneider, EVP, $500,000 to $900,000
    John Stewart, EVP, $400,000 to $700,000
    David Loeser, EVP, $375,000 to $656,256
    Kent Magill, EVP, $375,000 to $656,256
    Richard Seban, EVP, $375,000 to $656,256
    John Akeson, SVP, $300,000 to $480,000
    Steven Birgfeld, SVP, $240,000 to $360,000
    Martha Ross, SVP, $240,000 to $360,000
    Rob Kissick, SVP, $182,000 to $273,008

    while the total pay and benefits for workers amounted to more than a billion dollars (average salary $43,000 plus benefits (2)). We see, therefor, that executive salaries are insignificant compared to those of the workers. The executives could have paid themselves ten million bucks each and it still would have had a piddling affect on the company's bottom line.

  2. More importantly, the purported executives increases were not only rescinded, the total executive compensation in some cases went down to $1 per year (3), (4).

So yes, the executives tried to give themselves big raises but after the dust settled, the big issue that leftist bloggers tried to raise about those attempted salary increases was not only overblown, but is now moot as well.

Since the increases never came about and even if they had, the effect would have been negligible anyway, only a liberal idiot would still maintain that the unions and their work rules and thuggery were not the real reason Hostess closed down.



Daily Kos, The unions killed Hostess…another right wing myth.

Today it has been announced that Hostess along with Wonder Bread is going out of business. Of course the right-wingers are foaming at the mouth claiming that it is the unions' fault what with their ridiculous demands of fair compensation for work given to the company.

Of course none of those on the right will acknowledge the CEO at Hostess got a 300 percent raise from $750,000 to $2,250,000.

Now, I find $750,000 to be an outrageous amount of money for anyone to make ... $2.2 million is beyond outrageous and a 300 percent raise is well into the territory of obscene greed.

The average employee salary for Hostess employees is approximately $43,000 a year. The CEO makes $2.2 million, and management is asking for further wage and benefits concession, seriously?



Snopes, Hostess with the Mostest

... days after that article was published, the Wall Street Journal reported that Hostess' new CEO, Gregory F. Rayburn, had announced he was slashing executive compensation, and that the company's top four executives had temporarily agreed to cut their annual salaries to $1 while four other executives had agreed to return to their previous salary levels.


ThinkProgress, Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay

The pay increase was given to Brad Driscoll, Hostess’ former CEO, in July 2011, before the company filed for bankruptcy. The salary was later cut from $2.5 million to $1.5 million, according to a Hostess spokesperson. The new CEO reduced the salaries of four senior executives to $1 until the company emerges from bankruptcy, and four junior executives who received raises had their salaries reduced to pre-raise levels

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