Coke under fire over excessive management rewards

It must be a tough job to keep Coke’s management motivated. Hence the company is planning to award stock worth about USD 13 billion (EUR 9.5 billion) to its senior managers over the next four years, based on the company’s current stock price. When combined with awards from previously approved compensation plans, this figure rises to USD 24 billion. That’s according to estimates by Wintergreen Advisors, a long-time Coke shareholder.

Wintergreen’s CEO David Winters was so stunned when he came across the passage detailing the rewards in Coke’s recent annual report that he sent a letter, released publicly on 21 March 2014, to Coca-Cola’s shareholders and its board. Here’s the link: www.businesswire.com/news/home/20140321005785/en#.Uz6fgVfyLpu.

Coca-Cola has disputed some of his calculations, but Mr Winters still thinks the plan excessive.

“We can find no reasonable basis for gifting management 14.2 percent of the share capital of Coca-Cola, worth USD 24 billion at today’s share price. No matter how well a management team performs, it is unfathomable that they would require such astronomical sums of money to provide motivation,” he wrote and concluded: “This compensation plan appears to place the economic well-being of management far ahead of the interests of the company’s owners.”

Mr Winters also sent a separate letter to one of Coke’s biggest and most influential shareholders, Warren Buffett, who controls 9.1 percent of the stock through his Berkshire Hathaway holdings.

The compensation plan requires shareholder approval, so the company’s annual meeting on 23 April 2014 in Atlanta could become interesting.