CEO Shuts Down Hostess

[saxitoxin]

Wait - but what if a company that's imploding sells partially depreciated property for a gain? Wouldn't they have to plan for capital gains at EOY? By which I mean, couldn't you sell a delivery truck now, use the money from the sale to pay the electricity bill in the hope your situation will turn around in 8 months, then when it doesn't - and you owe capital gains - expropriate part of the pension allocation to pay that? Maybe I misunderstand, though ... in the words of Symm -

I don't pretend expertise on this.

You can also borrow money to buy a delivery truck, depreciate it, then sell the delivery truck now, use the money from the delivery truck depreciation and following sale to pay the executive bonuses (or pay out juicy stock dividends) and at the end of the year have to come up with the money to pay the loan on the delivery truck as well as the capital gains; and expropriate part of the pension allocation to pay that.

I just did a CTRL+F search of the article the OP's article sourced (http://finance.yahoo.com/news/hostess-m ... 00720.html) and didn't find the word "bonus" or "dividend" in it. Do you have another source about pensions being diverted to bonuses? I bing-dot-commed it and found a number of other stories, such as this - http://941theedge.com/blogs/post/span.e ... d-bonuses/ - but it just links back to AlterNet, which links to the WSJ article which doesn't contain the word "bonus."

The previously reported issue of executive bonuses at Hostess and the currently reported issue of pension diversions at Hostess seem to be two different issues that you've mixed together in your mind, with the help of some creatively worded click-farming summaries of a Wall Street Journal article.

[thegreekdog]

is, as the article claims, the same tactics Mitt Romney initiated with his Bain Capital company (which is why Romney did not get my vote after all.)

Yeah, so... that's actually not true at all. In fact it's 100% false.

Nope, not false.

You live in a dream world my dear. Even without doing a simple search, I can tell you, logically, that an investment company would have no interest in bankrupting a company that it just purchased. That is just bad business. You're just reinforcing your preconceived judgment about Mitt Romney and Bain Capital. I don't care if you dislike Romney or if you voted for Obama, but you keep trotting out this absolute, utter, ridiculous bullshit idea that you were spoon fed by liberal pundits that the purpose of Bain Capital is to liquidate a failing company. It's not true. At all.

[thegreekdog]

Wait - but what if a company that's imploding sells partially depreciated property for a gain? Wouldn't they have to plan for capital gains at EOY? By which I mean, couldn't you sell a delivery truck now, use the money from the sale to pay the electricity bill in the hope your situation will turn around in 8 months, then when it doesn't - and you owe capital gains - expropriate part of the pension allocation to pay that? Maybe I misunderstand, though ... in the words of Symm -

I don't pretend expertise on this.

You can also borrow money to buy a delivery truck, depreciate it, then sell the delivery truck now, use the money from the delivery truck depreciation and following sale to pay the executive bonuses (or pay out juicy stock dividends) and at the end of the year have to come up with the money to pay the loan on the delivery truck as well as the capital gains; and expropriate part of the pension allocation to pay that.

Then claim bankruptcy because the money's gone, and ask the judge to award some bonus money to the execs who "stay on to help with the bankruptcy filing."

For financial statement purposes, you can't actually do this. There is no "bonus depreciation" in the context of financials. That is a tax concept only. If you borrowed money to purchase a delivery truck, you could depreciate it over the useful life of the vehicle, which may be upwards of 20 years. Then you can sell the delivery truck, I suppose, but guess what? Depreciation reduces the "basis" (i.e. worth) of the delivery truck. So if you purchased the truck for $100, depreciated it over 10 years at $5 a year, you now have a truck worth $50. If you sell it for $60, you now have a gain of $10.

For tax purposes, you could do this I suppose. I represent a number of companies for tax purposes and literally none of them do it. You know why? Because for financial statement purposes it is not workable. Further, there is more value in depreciating the asset than there is in selling an asset where the value goes down immediately upon purchase.

Your judgments as to how companies work, how financial statements work, and how taxes work are so over-the-top incorrect that I think you need remedial help. You don't understand depreciation (for financial statements or tax purposes), you don't understand tax planning or tax compliance, you don't understand debt (which I didn't even address above), and you don't understand executive compensation. There are numerous threads on science in this forum. I don't post in them. You know why? Because I don't know what I'm talking about. Perhaps you should use the same tactic when it comes to this sort of thing. Otherwise you just look foolish.

[Symmetry]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

[fadedpsychosis]

ok, so I'll admit to being as far from expert in economics as you can get (read: your numbers confuse me sir) but I have to ask the question based on the few solid facts I CAN understand...
1. Company is going bankrupt
2. Pensions for workers go bye-bye to pay for... well, something
3. CEOs get big monies for doing... something

question: why are CEOs getting big monies when workers are getting screwed?

it's like the joke about the gold miner getting a divorce. he and his wife split the mine thusly: she gets the gold, he gets the shaft...

[thegreekdog]

ok, so I'll admit to being as far from expert in economics as you can get (read: your numbers confuse me sir) but I have to ask the question based on the few solid facts I CAN understand...
1. Company is going bankrupt
2. Pensions for workers go bye-bye to pay for... well, something
3. CEOs get big monies for doing... something

question: why are CEOs getting big monies when workers are getting screwed?

it's like the joke about the gold miner getting a divorce. he and his wife split the mine thusly: she gets the gold, he gets the shaft...

The contracts between the CEO and the company and the contracts between the workers/unions and the company are different, I suppose. I'm not a bankruptcy expert though, so take that for what it's worth.

[Timminz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

[AAFitz]

Unless it's a fixed asset, and then any profit (or loss) from the sale is amortized onto the consolidated statements over the remaining expected useful life of the asset.

But, you're right. None of this has anything to do with cash. I was initially making a joke about what Saxi wrote. A joke, that only you, and maybe a couple other posters here, might get. There was really no point in carrying it further than the initial post.

Ah... I probably should have gotten the joke. Sorry about that.

That was fun to watch though.

[Symmetry]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

I'm guessing he might just mean; "couldn't they just have deducted the full amount the first year, and thereby not lost all the subsequent years of depreciation on assets that they would not receive tax benefit from." The answer to that is of course that there are absolute limits on what you can deduct, and they probably were already at that limit regardless, so taking a deduction on assets purchased wasn't so much a choice, as their only option...minus the option of not purchasing the assets in the first place.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes, they chose poorly. It just has nothing to do with depreciation, which is just a tax term. If you meant investment, just say investment.

[AAFitz]

Wait - but what if a company that's imploding sells partially depreciated property for a gain? Wouldn't they have to plan for capital gains at EOY? By which I mean, couldn't you sell a delivery truck now, use the money from the sale to pay the electricity bill in the hope your situation will turn around in 8 months, then when it doesn't - and you owe capital gains - expropriate part of the pension allocation to pay that? Maybe I misunderstand, though ... in the words of Symm -

I don't pretend expertise on this.

You can also borrow money to buy a delivery truck, depreciate it, then sell the delivery truck now, use the money from the delivery truck depreciation and following sale to pay the executive bonuses (or pay out juicy stock dividends) and at the end of the year have to come up with the money to pay the loan on the delivery truck as well as the capital gains; and expropriate part of the pension allocation to pay that.

Then claim bankruptcy because the money's gone, and ask the judge to award some bonus money to the execs who "stay on to help with the bankruptcy filing."

For financial statement purposes, you can't actually do this. There is no "bonus depreciation" in the context of financials. That is a tax concept only. If you borrowed money to purchase a delivery truck, you could depreciate it over the useful life of the vehicle, which may be upwards of 20 years. Then you can sell the delivery truck, I suppose, but guess what? Depreciation reduces the "basis" (i.e. worth) of the delivery truck. So if you purchased the truck for $100, depreciated it over 10 years at $5 a year, you now have a truck worth $50. If you sell it for $60, you now have a gain of $10.

For tax purposes, you could do this I suppose. I represent a number of companies for tax purposes and literally none of them do it. You know why? Because for financial statement purposes it is not workable. Further, there is more value in depreciating the asset than there is in selling an asset where the value goes down immediately upon purchase.

Your judgments as to how companies work, how financial statements work, and how taxes work are so over-the-top incorrect that I think you need remedial help. You don't understand depreciation (for financial statements or tax purposes), you don't understand tax planning or tax compliance, you don't understand debt (which I didn't even address above), and you don't understand executive compensation. There are numerous threads on science in this forum. I don't post in them. You know why? Because I don't know what I'm talking about. Perhaps you should use the same tactic when it comes to this sort of thing. Otherwise you just look foolish.

I dont think that is her point. I think the tax part is just messing her up. I think what she is saying is they are buying the truck for $100, only paying off $90, going bankrupt, not paying the $90 to the bank, but now paying themselves to organize the bankruptcy with that $90 which would maybe be $40 or $50, but still, its theirs now, instead of the bank, or provider of the asset.

Depreciation has nothing to do with it, but the balance of the loans written off and their effect on cash flow certainly could. How it affected the corporations taxes are irrelevant to them, since its not them paying them.

[Timminz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit (20/20 hindsight, and all that). Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

[Timminz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

True. Interestingly, depreciation amounts for tax purposes can be different from those amounts reported on a company's financial statements (at least, here in Canada). Regardless, you can be sure that any company worth half a shit will be using the maximum allowable depreciation for tax purposes.

[Symmetry]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

The company did go bust, twice. I'm not sure if that constitutes idiocy or not though.

[thegreekdog]

That is not to say that Hostess, and companies like it, did not lobby heavily for increased depreciation deductions for tax purposes.

[AAFitz]

That is not to say that Hostess, and companies like it, did not lobby heavily for increased depreciation deductions for tax purposes.

Well, one could argue that at least that may have actually have been for Hostess's benefit.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

The company did go bust, twice. I'm not sure if that constitutes idiocy or not though.

That is hard to say in all reality. It was a company whose entire product line was being phased out, and while its possible they could have seen it coming and tried to offer some wholesome, non-pure-poison snacks...they certainly would have had a difficult time, given the company had done such a good job, making Hostess represent, and be famous, for exactly what it was.

Surely given time the Hostess organic line of health foods may have caught on...but....really...I kind of doubt it. They all-ined on sugar and fat, and rode the wave, which eventually had to crash.

Theres a reason massive corporations make so many different lines with different names on them...one wont necessarily bring down the other. P&G can offer poison with one line, and the antidote with the other, and many would never even realize it. I use those terms loosely, but one could argue, that's exactly what they do, to some degree.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

The company did go bust, twice. I'm not sure if that constitutes idiocy or not though.

They got paid for it with bonuses. I think it depends upon your definition of idiocy.

[AAFitz]

I think the big problem here seems to be that depreciation only works if the company survives into the next financial year. If I'm understanding correctly, any depreciation that Hostess underwent in the year before they went bust was as waste of money.

Depreciation is only successful if there's a payoff.

Would that be an accurate take?

Depreciation is just the process of recognizing the expense of fixed assets over their entire useful life, rather than only in the period in which is was purchased.

Take TGD's truck example: A company buys a truck for $100. They will use that truck as part of their operations (to help them earn money) for 10 years. Instead of writing off the entire $100 expense when they buy the truck, they will recognize $10 per year over the entire 10-year life of the truck. Regardless of how, or when they depreciate that asset (the truck), they have already spent the money.

Depreciation doesn't cost money. Buying trucks costs money.

Look, i get this, but if it doesn't have a pay off because the company goes bust, any form of long term investment is essentially a cost as there's no benefit.

Yes. When a company fails, many of the long-term investments they made, end up being for no net benefit. Although often times, they're still worth something on liquidation, and so the proceeds from selling them will go to covering outstanding liabilities, with any remaining cash going to shareholders.

Depreciation has nothing to do with this.

One could technically argue that depreciation decisions could have led to better tax decisions, and meant more cash flow, and less tax liabilities, and a stronger financial position, but as I said in another post...they were almost certainly at their limit anyways, so unless they were complete idiots, they were taking the most deduction they could...and depreciation amounts were more decided by the law and not them....not to say they may not have been complete idiots...

True. Interestingly, depreciation amounts for tax purposes can be different from those amounts reported on a company's financial statements (at least, here in Canada). Regardless, you can be sure that any company worth half a shit will be using the maximum allowable depreciation for tax purposes.

Except perhaps in founding years, when they might be experiencing a loss anyways, knowing that profit will increase in following years, when the depreciation deduction would not be wasted, but I think we are on the same page here. Clearly some just confused the word depreciation with investment and perhaps loan repayment.

[AAFitz]

ok, so I'll admit to being as far from expert in economics as you can get (read: your numbers confuse me sir) but I have to ask the question based on the few solid facts I CAN understand...
1. Company is going bankrupt
2. Pensions for workers go bye-bye to pay for... well, something
3. CEOs get big monies for doing... something

question: why are CEOs getting big monies when workers are getting screwed?

it's like the joke about the gold miner getting a divorce. he and his wife split the mine thusly: she gets the gold, he gets the shaft...

The contracts between the CEO and the company and the contracts between the workers/unions and the company are different, I suppose. I'm not a bankruptcy expert though, so take that for what it's worth.

Workers getting paid for their time is right at the top of the list of who gets paid first. The workers salaries possibly even above those of the officers of the company, but the pensions are investments, and handled completely differently. The officers are getting paid for the work they are doing. Bonuses I sure are handled differently, but that is why the officers still get paid, just as the workers no doubt got paid for their time, if there were funds to do so. Its just that the officers are making much larger salaries, which makes it look like the lottery compared to the average wage earner in the company. And, really, the stockholders are to blame for this perhaps more than the officers themselves, theoretically.

[thegreekdog]

ok, so I'll admit to being as far from expert in economics as you can get (read: your numbers confuse me sir) but I have to ask the question based on the few solid facts I CAN understand...
1. Company is going bankrupt
2. Pensions for workers go bye-bye to pay for... well, something
3. CEOs get big monies for doing... something

question: why are CEOs getting big monies when workers are getting screwed?

it's like the joke about the gold miner getting a divorce. he and his wife split the mine thusly: she gets the gold, he gets the shaft...

The contracts between the CEO and the company and the contracts between the workers/unions and the company are different, I suppose. I'm not a bankruptcy expert though, so take that for what it's worth.

Workers getting paid for their time is right at the top of the list of who gets paid first. The workers salaries possibly even above those of the officers of the company, but the pensions are investments, and handled completely differently. The officers are getting paid for the work they are doing. Bonuses I sure are handled differently, but that is why the officers still get paid, just as the workers no doubt got paid for their time, if there were funds to do so. Its just that the officers are making much larger salaries, which makes it look like the lottery compared to the average wage earner in the company. And, really, the stockholders are to blame for this perhaps more than the officers themselves, theoretically.

The stockholders are certainly to blame. I wonder what their investment return is now that the company is bankrupt. I've never been involved in that process (and hope to never be) except at the end (when we're talking taxes).