As a Christian and a vegetarian I have ethical objections to eating the rich.
So when I read that a CEO from Hostess admitted that, after driving the company into the ground, executives took employee pensions and applied it to their own salaries, I laid down my knife and fork and decided I needed to understand these poor rich people. When my hamster ate her young, I didn’t punish her. Why should I hold these human beings to a higher standard than my beloved rodent? After all, had I not enjoyed Twinkies and their secret cream filling? Perhaps I needed to give these poor CEO’s a chance.
As I read on, I realized that my hamster’s cannibalism was relatively benign compared to the good folks at Hostess. My hamster ate its future because it was hungry, these folk ate other people’s future. Here’s how it all went down:
In classic Enron style, back in 2005 Hostess sent out a letter saying they’d just had a very, very profitable quarter. Their stock jumped up. The CEO, Charles Sullivan, and many of the senior executives sold chunks of their stock. The CEO and senior executives were making out big, and the workers were making a decent living.
At that time, one of the hostess workers – Mike Hummel, blogging as bluebarnstormer over at Daily Kos – noted that he was making $48,000 a year, a bit over the US median household income, and had insurance and a pension.
Then, a few weeks later in 2005, came the letter saying that, oops, all of that profit had really been just an accounting error – the company was actually in trouble. Although the CEO and the top guys had all made a nice killing selling the stock when it was high, and paying a maximum income tax on it of 15 percent because they used the Capital Gains loophole that Mitt Romney used to become a multimillionaire, they now wanted the workers to take a big pay cut.
Hummel notes that the “oops” letter became the justification for asking the workers to take a pay cut, which they agreed to, and his pay dropped from $48,000 a year in 2005 to $38,000 a year last year. But every year, $3 an hour of his compensation showed up in the worker’s pension fund instead of his paycheck. Year after year. With 18,000-plus workers, it was millions and millions of dollars. Dollars that the workers had paid in, at the rate of $3 per hour.
Then came the Bain-style takedown. In order to strip the company down to its individual brands and sell them off, piece by piece, the company needed to bust the union. The union said, “No,” so the company went to bankruptcy court – a method Bain and other vulture capitalists often use to kill off unions.
In the meantime, the CEO and senior executives were paying themselves handsome salaries and big bonuses. And where was that money coming from? -Tom Hartmann, Alternet
Where indeed? It is expected that hostess products will re-emerge with new owners. And Twinkies will re-emerge like a mother hamster fattened by stolen the pensions of workers. How’s that for a secret cream filling?