Vote represents victory for board after months-long activist campaigns
Coca-Cola has overcome objections by activist investors and won approval for its plan to award executives with stock at its annual shareholder meeting.
About 83 percent of the votes were cast in favor of a plan that, on top of plans already in effect, could transfer $29.8 bn to senior managers, the company says in a note to investors. A separate advisory vote on executive compensation won 90 percent approval.
‘The Coca-Cola Company board is pleased that our shareowners strongly supported all of the proposals put forth by management at today’s annual meeting, including the 2014 equity plan,’ the company states. ‘The company’s compensation programs are performance-based and the equity plan is fair, competitive and consistent with shareowners’ interests and our pay-for-performance philosophy.’
Calvert Investments, the Ontario Teachers’ Pension Plan and other investors campaigned for months against the pay plan, calling it excessive and saying it would dilute existing shareholdings. Billionaire investor Warren Buffet, whose son Howard Buffet serves on Coca-Cola’s board of directors, abstained from the vote in disapproval of the pay package; Howard Buffet voted in favor.
In a note to shareholders shortly before the proxy vote, David Winters, CEO of Wintergreen Advisers, said the compensation plan was ‘bad for Coca‐Cola, the vast majority of Coca‐Cola employees and, above all, bad for shareholders.’
Winters estimates the plan could dilute shareholdings by as much as 16.6 percent and result in the issuance of 340 mn shares and options over the next four years, representing an increase of about 21 percent on the previous plan.
‘We do not believe it is in shareholders’ best interests to have their investment diluted so that the top 5 percent of Coca‐Cola’s most highly compensated employees can be gifted with equity to this extent, above and beyond their cash compensation and other benefits,’ Winters wrote.
