NEW YORK (AP) -- Hostess Brands Inc. said Monday that eight executives who received pay hikes of up to 80 percent last summer before the company filed for Chapter 11 bankruptcy reorganization have agreed to sharp reductions in their salaries.
The maker of Ding Dongs and Twinkies said the top four top executives under new CEO Greg Rayburn have agreed to reduce their salaries to $1 a year until the company emerges from bankruptcy or Dec. 31, whichever comes first.
The other four volunteered to go back to the same salaries they had before last year's pay hike. None of the executives is being asked to return any money to the company, however.
Rayburn said 11 executives received pay hikes that were made by the board of directors in a bid to "stabilize" the management team. Three of those executives, including the general counsel and former CEO Brian Driscoll, have since left the company.
"In hindsight, it didn't stabilize the team because we lost three people," Rayburn said in an interview with The Associated Press.
The top four executives who agreed to a $1 salary with no bonus are John Stewart, chief financial officer; Gary Wandschneider, head of operations; David Loeser, head of human resources; and Richard Seban, head of sales.
Rayburn said all four quickly and wholeheartedly agreed to the pay cuts when he learned of the situation from a reporter last week.
Rayburn, a restructuring expert named last month to steer Hostess through its bankruptcy process, said it was "the right thing to do considering the challenges we face to restore Hostess Brands." Rayburn's firm charges $120,000 a month for his services.
Hostess is a privately held company based in Irving, Texas. It filed for Chapter 11 bankruptcy in January, nearly three years after its predecessor emerged from bankruptcy proceedings.
That company, called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004 and changed its name to Hostess Brands upon emerging from bankruptcy proceedings.
But Hostess has continued to struggle with increased competition and rising labor costs. The company has 19,000 employees. All but 3,100 of the employees are unionized, meaning Hostess has higher pension and medical benefit costs than its competitors whose employees are not unionized.
After word of the pay hikes surfaced last week, the Teamsters Union said that that if 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."