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Hostess Seeks Approval for Executive Bonuses of $1.8 Million
According to Hostess, the company has begun discussions with over 110 potential buyers of its company. The Associated Press reported on Thursday that the potential list of buyers now includes supermarkets. Joshua Scherer, from Perella Weinberg Partners, said that the company has not been able to make calls to buyers it previously wished to do business with because the process has been “so fast and furious. Not only are these buyers serious, but they are expecting to spend substantial sums,” he said.
CNBC tweeted earlier in the day Thursday that a judge approved the bonus plan from Hostess. The tweet said, “BREAKING: Judge approves Hostess bonus payout plan; 19 Hostess senior executives in line for up to $1.8M in bonuses.”
Hostess was asking for $1.8 million for its top executives in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, New York. Hostess claims that the bonuses for the top executives are needed in order to retain them as the liquidation process plays out for the company. The process could last for one year.
Hostess said that two of the executives would also be eligible for added rewards depending on how efficiently the liquidation process is carried out. Those bonuses would be added onto their regular compensation. A Hostess spokesperson also said that the executives will have to meet goals in order to receive the bonuses. Hostess also said that CEO Gregory Rayburn will not be eligible for those bonuses. He was added to the company earlier in 2012 as a restructuring expert. He receives a monthly compensation package of $125,000 per month.
Last week, the closing process for Hostess was approved on an interim basis. The bakers’ union, the second-largest for Hostess, has asked a judge to appoint an independent trustee to oversee the liquidation. The union said that the management at the company currently “has been woefully unsuccessful in its reorganization attempts.”
“The longer these brands are off the shelves, the less they’re going to be valued,” Scherer said in a court Thursday. Scherer said last week that it is a “once-in-a-lifetime opportunity” for potential buyers to grab iconic brands without the issue of debt and high labor contracts that would be included in purchasing a company such as Hostess.
Close to 18,000 jobs will be lost when Hostess shuts down but will need 3,200 employees to start the closing process. Hostess said that 237employees would be needed during the process at the executive level. A Hostess attorney said in court on Thursday that Hostess cannot pay retiree benefits any longer. They cost around $1.1 million per month.