The judge approved Hostess' bonus plan, according to a tweet from CNBC:
BREAKING: Judge approves Hostess bonus payout plan; 19 Hostess senior executives in line for up to $1.8M in bonuses
29 Nov 12
The update on the sale of the company's brands comes as Hostess seeks approval in U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. to give its top executives bonuses totaling up to $1.8 million as part of its wind-down plans. The company says the incentive pay is needed to retain the 19 corporate officers and "high-level managers" during the liquidation process, which could take about a year.
Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The bonuses would be in addition to their regular pay. A spokesman for Hostess noted executives will need to meet certain goals to get the bonuses.
More info from the article:
The bonuses do not include pay for CEO Gregory Rayburn, who was brought on as a restructuring expert earlier this year. Rayburn is being paid $125,000 a month.I am a big time capitalist. But I find these kind of terms so unseemly. It seems like the execs get away with everything. If I left my company without taking care of wrapping up my project in an organized manner , guess what, I will not get a good reference and that could potentially hurt me with getting a lucrative offer down the road if I have more than one of these kind of references. Why don't execs have to bear the same burden of responsibility of wrapping things up responsibly without having to get paid obscene amounts to wrap up the problems they created?
Hostess is also seeking final approval for its wind-down, which was approved on an interim basis last week. But the bakers union, Hostess' second-largest union, is asking the judge to appoint an independent trustee to oversee the liquidation, saying that the current management "has been woefully unsuccessful in its reorganization attempts."
Thoughts from people in the industry? How much power does the bankruptcy judge really have to put pressure to reduce these bonuses? Was it a mere formality and the judge had only so much room?
The same thought occurs to me when you see judges approve legal costs and obscene hourly rates for lawyers regardless of the market for that grade of lawyer in cases where the losing party has to pay legal costs. It';s like they all aspire to the highest possible rate as the reference point.