- Hostess said it would give bonuses of $1,250 to all of its 1,036 hourly bakery and corporate employees as a result of the recent tax cut, according to a company press release. The bonus will be broken down into a $750 cash payment, and a $500 contribution to each worker’s 401k plan.
- In addition, employees will be treated to a year of free snacks. A representative from each bakery location will pick a ‘product of the week.’ Employees will have the option to take home one multi-pack of that week’s selection.
- In a letter to employees, executive chairman C. Dean Metropoulos said: “The recent tax reform changes have given us the opportunity to review our benefit and compensation structure with an eye toward further investing in our workforce. …As we have done in the past, the company’s management and board take great pleasure in sharing the company’s success with our employees.”
The recently enacted tax legislation is slashing the corporate and individual income rates. Some companies are choosing to share the windfall with employees. Walmart is raising its starting wage to $11, offering bonuses to some employees and expanding maternity and paternal leave benefits. Starbucks also is boosting worker pay, offering company stock and expanding benefits to the tune of about $250 million. Now, Hostess is the latest company to share its tax savings with employees.
It would appear the baked goods company is the only one in the food space so far to reinvest money saved from the new tax law back into its workforce. In all fairness, other food manufacturers may have plans they have yet to announce. In addition, some companies made be hurting financially or decide it's best to hang onto the extra cash.
Hostess, though, is in a unique position to give back to its workers. Its size certainly has helped. With 1,036 employees each receiving $1,250, Hostess is looking at a price tag of just under $1.3 million. If it had its old workforce of about 8,000, the baker would have a price tag of more than $8 million with the current rate, which may be harder to justify to shareholders or its bottom line.
The maker of Twinkies hasn’t always been in the position where it could give out more than $1 million dollars in bonuses and survive. Hostess filed for bankruptcy in 2012 and closed its doors, putting thousands of employees out of work. Since it was bought by Apollo Global Management and C. Dean Metropoulos & Co. in 2013, the company has exceeded expectations and flourished behind clever promotions and creative new products.
Perhaps handing out bonuses and free snacks is Hostess’s way of saying "thank you’ to employees, many of whom have shared the highs and lows of the company’s financial roller coaster ride.
But is giving back to workers the best use of this new capitol? Critics may argue it could be put to better use by purchasing new equipment, and investing in R&D. Workers would likely disagree. This is "found money" that the company likely did not include in its current fiscal year budget. If Hostess is in a position to share in its good fortune, it would appear they made the right call by investing in its employees and not a new Ding Dong flavor.