Hostess Brands Sweetens the Tax Cut Largesse

In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Hidden Gems Canada's David Kretzmann consider the latest announcement by a well-known corporation that it's going to trickle down a bit of its corporate tax cut with a one-time bonus for its workers: Twinkie king Hostess Brands (TWNK) is handing employees $750 apiece now and adding $500 to their 401(k)s -- plus an extra that only a snack company could pull off.

A full transcript follows the video.

This video was recorded on Feb. 2 2018.

Chris Hill: In the wake of the new tax laws, some companies have been handing out $1,000 bonuses to their employees. This week, Hostess Brands raised the bar. Hostess announced the following one-time bonuses for employees: $750 in cash, a $500 contribution to their 401(k) plan, and wait for it, a year's supply of snacks.

Matt Argersinger: Yes!

David Kretzmann: There you go.

Hill: Every week this year, a representative from one of the company's bakeries will choose a different product which employees will take home in multi-packs. Let's put the snacks aside for a second. Those first two, that's fantastic, and I personally love the way that they did it, where it's like, "Here's some cash," and just the encouragement of a 401(k) contribution. I love that!

Jason Moser: I was reading that article and I was really impressed by that, as well. I haven't noticed in any of these other bonus press releases that companies were doing that. Over the course of the last week, I was thinking, you know what would be cool? If companies would offer a choice between a cash bonus or maybe even a little bit more of an attractive restricted stock award that vests over two, three, or four years. And you could really encourage people to think maybe a bit more long-term, and think a little bit more about accumulating wealth, as opposed to a bonus that more than likely just leaves the checking account faster than it got in there.

Kretzmann: Part of me just wonders, if you're working at Hostess, especially if you're on the Twinkies assembly line or whatever they have, aren't you already snagging some of those when nobody's looking? "I'm just going to grab one of these." So, I don't know how much of a bonus this really is.

Hill: I thought you were more ethical than that, if that's your mindset.

Kretzmann: I mean, let's be realistic, it's a temptation going right by you all day.

Hill: So, I love the way they're doing the snack part of this. It's not just, "Here's your allotment, take whatever you want." They have a bunch of different snacks. It's like, "This week, it's Twinkies. Take your multi-bag. This week, it's Ho Hos." Are you up for that, Matty?

Argersinger: You know, if they were going to make a comparable contribution to my healthcare benefits, maybe I would be interested in that. I wonder if they're taking that into account.

Moser: Free cholesterol test along with the snacks.

Hill: Let's go to our man behind the glass, Steve Broido, to get him to weigh in on this one. Steve, you're an experienced investor. Surely you applaud the way Hostess is doing the financial contributions here.

Steve Broido: Absolutely! And all I can say is, Zingers.

Hill: That leads to my second question. So, you're just saying, "Oh, it's Twinkies this week? No, thanks."

Broido: I'll take the Zingers. That's what I'm saying, I'll take the Zingers each week.

Hill: Don't you think this raises the very real prospect of a secondary market? Because Steve's not the only one who has a certain preference. There can't be, every employee at the Hostess Brands company loves every snack. They have their preferences. So, doesn't it lead to a black-market style trading?

Argersinger: No, even better, Chris. It leads to a crypto market.

Kretzmann: The blockchain.

Argersinger: We're going to have Zinger coins, Ho Ho coins.

Moser: Ding Dong coins.

Argersinger: Tokens, Hostess tokens.

Hill: Steve's going Zingers. I'm going Ho Hos. What about you, Jason?

Moser: It's Ding Dongs all day.

Argersinger: Twinkie?

Moser: Come on, man! Ding Dongs, the cupcake with the cream in it? Chocolate?

Hill: Is it worth even asking the healthiest person in this room, David Kretzmann, what his preference is on Hostess snack cakes?

Kretzmann: Well, I can't even eat gluten because I have celiac disease, so --

Argersinger: I was going to say, does Hostess actually make anything that you could possibly eat?

Kretzmann: It's pretty much packaged poison for me. I'll go with Twinkies, because if I'm dying and I want to try one of their products, which I haven't done at this point, I'll go with the Twinkie.

Hill: Go with Twinkies and sell them to Matty.

Argersinger: There you go. Can't go wrong.