Hostess Used Workers' Pension Contributions to Fund Day-to-Day Twinkie-Making

Categories: Biz, Dish

DeadTwinkie.jpg
geekosystem.com
Despite considerable evidence to the contrary, the unions-killed-the-Twinkie trope is still very much alive.

Never mind that Hostess completely failed to adapt to changing tastes or update its brand, that it went through seven CEOs in a decade, that it had already obtained deep concessions from workers while its top executives received pay increases and bonuses, and so on. If only the union workers hadn't selfishly refused to agree to draconian pay and benefit cuts, the company would still be afloat.

Over the weekend, the Wall Street Journal reported on yet another example of Hostess workers' shameless greed: they expected the money they had contributed to their pensions to actually go to their pensions. (h/t Dallas Business Journal via CultureMap)

That didn't happen. Hostess' $125,000-per-month CEO Gregory Rayburn, who wasn't around at the time, admitted to the Journal that the snack maker had taken pension contributions -- those deducted from Bakery & Confectionary Union & Industry International workers' wages, not added by the company as matching funds -- and used them to fund day-to-day operations as the company slid into bankruptcy.

"I think it's like a lot of things in this case," Rayburn told the paper. "It's not a good situation to have."

The workers with the Bakery & Confectionary Union & Industry International would surely agree.


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11 comments
MikeWestEast
MikeWestEast

Another reason to put a stake in defined benefit plans. In defined contribution plans, the money in the account belongs to a separate entity. Company cannot bring it back or lower its contribution based on unrealistic rates of return. It can stop its contributions if allowed by contract, but that does not affect previous funds or the income from those funds. Additionally when the company fails, the accounts are not part of the legal review.

PerryMoore
PerryMoore

God, I hate it when the Big Gorilla takes "retirement" funds out of my paycheck and spends them on someone else.

CitzenKim
CitzenKim

Is it legal to redirect contributions stated as being for a pension fund into general operations?  If the pay statement says "pension contribution," isn't this fraud?

rob_rothe
rob_rothe

@Dallas_Observer this tells me the company should have already been out of business years ago. The union was lucky they had jobs at all

everlastingphelps
everlastingphelps topcommenter

Who the fuck does Hostess think it is, Congress?

DOCensors
DOCensors

Do receive union donations or something? 

ScottsMerkin
ScottsMerkin topcommenter

@CitzenKim yes it is, but it doesnt matter now bc the company doesnt exist and the money is gone.  Everyone but the CEO got fucked

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@ScottsMerkin @CitzenKim There may be a clawback in court as the submitted financials are not correct.  Think of diverting tax withholdings.  If the PGBC is picking up the tab, they will be first in line.  If not the PGBC, then the trustees would have an action against the executives who approved the transfers.

Now then, if the transfers were structured as  loan ....

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