IRVING, TEXAS — Eight executives at Hostess Brands Inc. who received pay raises of up to 80% in July 2011 have agreed to cut their annual salaries, according to The Wall Street Journal.
Four of the company’s top executives — Gary Wandschneider, head of operations; John Stewart, chief financial officer; David Loeser, head of human resources; and Richard Seban, head of sales — have agreed to cut their annual salaries to $1 until the company emerges from bankruptcy or Dec. 31, whichever comes first, while four other executives volunteered to go back to the same salaries they had before the pay raise.
None of the executives is being asked to return any money.
Gregory F. Rayburn, who took over as president and chief executive officer of Hostess in early March, told The Wall Street Journal that the salary cuts were “the right thing to do.” When word of the raises was disclosed by the creditors committee on April 3 it had caused “a high level of internal strife in the organization and certainly external strife,” Mr. Rayburn said.
Word of the raises also rankled the Teamsters Union, which represents more than 7,500 route sales representatives, drivers and other employees at Hostess.
“If this is true, Hostess executives have violated their agreement with the Teamsters that all parties, including management, would share equally in concessions that would help keep this company alive,” Ken Hall, general secretary-treasurer of the Teamsters Union, said on April 4. “It would be outrageous for the board of directors, which included secured lenders, to approve executive salary increases of up to 300% for a company that has filed for bankruptcy twice in four years.”
Hostess is a privately held company based in Irving, Texas. The company filed for Chapter 11 bankruptcy in January, nearly three years after its predecessor emerged from bankruptcy proceedings.