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Coca-Cola shareholder claims execs will be overpaid through equity plan

The CEO of Wintergreen Advisers is pushing shareholders to fight back on Coca-Cola’s proposed 2014 equity investment plan

A dispute has arisen between the shareholders of The Coca Cola Company and the company’s executives regarding executive pay and an equity plan that one specific shareholder and investor claims is injurious to shareholders.

CNBC reports that David Winters, investor and fund manager, and CEO and founder of Wintergreen Advisors claims that Coca-Cola has concocted a plan to dilute the value of the company’s shares to deliver more money into executives’ pockets by way of an equity compensation plan.

Winters is quoted — by way of his letters to shareholders and the Coca-Cola board — as saying that the company’s proposed 2014 equity plan “will significantly erode the per-share value of Coca-Cola shares…If approved, this plan in conjunction with previous equity compensation plans, will dilute existing shareholders by a company estimated 14.2 percent.” To which Coca-Cola obviously responds that Winters’ claims are baseless and not rooted in fact.

Winters claims that the equity investment plan — which will award a mix of 60 percent options and 40 percent full value shares — will result in shareholders handing over the equivalent of $13 billion to Coca-Cola’s executives over the next four years. But the company’s statement responded:

"The 2014 Equity Plan incorporates a number of 'best practice' and shareowner-friendly provisions, such as no re-pricing of stock options, no liberal share counting and 'double-trigger' change in control vesting…The long-term equity compensation program is tied directly to the achievement of specific business goals and the financial health of the company…Therefore, if the company does not meet these goals, these awards are not earned. This pay-for-performance philosophy has been a consistent cornerstone of the program through the years and remains unchanged.”

This is not the only dispute going on this week over executive compensation; on a much more local level, an Indianapolis water company is now being probed by the city’s utility regulatory commission for overpaying its executives, and raising water rates on citizens to do so.

 

Further reading:

Is Intel’s executive compensation shift really a ‘cultural change’?

CEO pay growth has slowed, finds survey

Directors, investors in alignment on executive compensation, board performance

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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