Behind the financial maneuvering at Hostess
nytimes.com
Behind the financial maneuvering at Hostess
1–10 of 36 posts
Re: Behind the financial maneuvering at Hostess
#2So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished this but it seems like only in the tech industry is it assumed that the people doing the work deserve some of the rewards. As events like this are more common it should be just as common for non-knowledge workers to be able to benefit from turn around a like this.
Re: Behind the financial maneuvering at Hostess
#3So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished…
> only in the tech industry is it assumed that the people doing the work deserve some of the rewards
That's only because the supply/demand situation of tech laborers gives us bargaining power at the moment. It won't last forever.
Re: Behind the financial maneuvering at Hostess
#4So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished…
Tech companies don't give options to employees because they "deserve some of the rewards". They do it because it's difficult to attract and retain top talent, especially for speculative start-ups. That's not the case for blue-collar jobs.
Re: Behind the financial maneuvering at Hostess
#5So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished…
A theory: The ability to capture the rewards depends to a large extent on political power within the organization (i.e. rather than merit and market value). Management has great political power, naturally; that's why in some organizations even failing managers get massive bonuses, golden parachutes, etc.. For workers to have power they need to organize themselves, and that is what unions are: Political power for workers.
People complain that unions are corrupt, which of course some are and to different degrees. That's also true of managers and anyone else with political power.
Re: Behind the financial maneuvering at Hostess
#6So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished…
> only in the tech industry is it assumed that the people doing the work deserve some of the rewards That's only because the supply/demand situation of tech laborers gives us bargaining power at the moment. It won't last forever.
> That's only because the supply/demand situation of tech laborers gives us bargaining power at the moment. It won't last forever.
Tech is unique in the job market in that it's much easier to move up the value chain relative to other types of jobs. There is very much a tech underclass of easily-replaced workers. As time goes on, more and more of these sectors become commodified. IT workers used to be really highly paid, now they're replaceable. PHP was once in high demand, now it's only a little better than being a IT worker.
The question here is whether there will always be a sector for tech workers to move to where they can easily leverage themselves a seat at the table. I find it hard to believe that it'll suddenly go away anytime soon.
Re: Behind the financial maneuvering at Hostess
#7I'm a bit confused to why leveraging up companies this badly, without commercial need, isn't a violation of fiduciary duty of company leadership. I'm pretty sure that it'd be in several countries, e.g. Germany. You might not get into trouble without a bankruptcy, but there were one, you'd likely be personally liable to some degree.
EDIT: grammar
Re: Behind the financial maneuvering at Hostess
#8I'm a bit confused to why leveraging up companies this badly, without commercial need, isn't a violation of fiduciary duty of company leadership. I'm pretty sure that it'd be in several countries, e.g. Germany. You might not get into trouble without a bankruptcy, but there were one, you'd likely be personally liable to some degree. EDIT: grammar
Fiduciary duty to who? The banks making the loans?
Re: Behind the financial maneuvering at Hostess
#9I'm a bit confused to why leveraging up companies this badly, without commercial need, isn't a violation of fiduciary duty of company leadership. I'm pretty sure that it'd be in several countries, e.g. Germany. You might not get into trouble without a bankruptcy, but there were one, you'd likely be personally liable to some degree. EDIT: grammar
They are the owners of the company. The leverage is just a technique to move future cashflows in to the present so they can pay their investors and move on to the next company. Would it be better to just allow the company to go completely out of business?
Re: Behind the financial maneuvering at Hostess
#10So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished…
I used to have a boss who grew up and lived most of his life in Russia. Many times he would say to me: "that's capitalism, baby." I think it's a quote from a movie, he often spoke in movie quotes.