Nabisco unilaterally implements its terms on union workers

By Don McIntosh

As of today, Mondelēz is unilaterally implementing parts of its final union contract offer at Nabisco bakeries around the United States. The move comes after a two-year standoff during which no negotiations have taken place — and three days after the expiration of a company ultimatum. Mondelēz asked its roughly 2,000 union workers to agree to let it worsen their health benefits and withdraw from the union-sponsored pension plan in exchange for a one-time $15,000 contract ratification bonus, pay raises, and a new 401(k); the company said the bonus offer would be valid through May 20 only. Bakery, Confectionery, Tobacco and Grain Millers (BCTGM) rejected the company’s request that union members vote on that offer.

Then the company notified BCTGM May 22 that it intended to implement two aspects of its offer — wage and retirement — and laid out the details in a May 23 letter to workers.

“It’s another cutesy move by the company,” said Ron Baker, BCTGM International Strategic Campaign Coordinator. “We’re certainly not done with them.”

As spelled out in the letter, workers will get a set of pay increases retroactive to the March 1, 2016 expiration of their previous union contract. That means they’ll get back pay checks equal to what they would have made if they’d gotten the company’s proposed 2.25 percent annual wage increases on March 1 of 2016, 2017, and 2018. For full-time workers whose pay has been frozen at about $26 an hour, the back pay amounts to about $4,000 before taxes.

The company is also halting contributions to the Bakery and Confectionery Union and Industry International Pension Fund effective May 23, and instead will begin to contribute to a 401(k)-type retirement savings account managed by Fidelity Investments. The contributions will range from 26 cents to $4.73 an hour, depending on employee age, with the oldest employees getting the biggest hourly contributions.

Notably, Mondelēz is not yet implementing other parts of its final offer, including less generous health insurance terms. Mondelēz proposed that workers pay deductibles of $200/$400 (for single/family coverage) and face out-of-pocket maximums of $1500/$3000, while for the first time paying $28 to $68 a month toward the insurance premium.

The moves by Mondelēz to hold the line on wages, pension and health care costs for its union member workers comes at the same time the company is paying executives such astronomic salaries that even shareholders are objecting. At the company’s May 16 annual meeting, shareholders passed a non-binding advisory resolution by 55 percent that rejects last year’s outsized compensation to Mondelēz’ outgoing and income CEOs.

Mondelēz paid its longtime CEO Irene Rosenfeld $17.3 million last year; she left the company in November after five years as CEO. Then Mondelēz paid her successor Dirk Van de Put $42.4 million. That included $30 million in stock awards, a $10 million cash bonus, $975,000 in stock options, a $1 million incentive-plan payout, $268,000 in other compensation, and a base salary of just under $163,000 for the 41 days of work he performed in 2017. Some $38 million of the total was supposedly a “make whole” package compensating him for what he would have made if he stayed at his previous employer, privately-held frozen french fry maker McCain Foods.

Mondelēz also gave raises totaling $8 million to its chief financial officer and “chief growth officer.”

And as Crain’s Chicago Business newspaper pointed out, this was while the company’s stock dropped 3.45 percent in value, even as the S&P 500 index for equivalent companies rose 10.46 percent.