Coca-Cola Co. Chairman and Chief Executive Muhtar Kent and other
senior executives face heightened scrutiny over pay ahead of the
beverage giant's annual shareholder meeting Wednesday.
Proxy adviser Institutional Shareholder Services Inc. is
recommending that investors cast advisory votes against last year's
compensation packages for Coke's senior executive officers, citing
"concern that pay opportunities are misaligned with company
performance."
Such "say on pay" votes aren't binding. Two other proxy
advisers, Glass, Lewis & Co. and Egan-Jones Ratings Co., are
recommending shareholders cast votes in favor of the compensation
packages. Coke also appears to have the backing of many big
shareholders.
Still, a large number of votes against executive compensation,
if it were to happen, would be embarrassing for Coke's management
and its board of directors. Directors scrambled last year to modify
the plan after billionaire shareholder Warren Buffett called it
excessive.
The referendum comes at a sensitive time for Mr. Kent, who has
warned that Coke likely will miss its long-term growth targets for
a third straight year as soda consumption slows in many parts of
the world. C oke announced a $3 billion cost-cutting plan last
year, including layoffs.
Bowing to pressure from Mr. Buffett and other investors, Coke
said last autumn it would scale back its executive-compensation
plan by issuing fewer shares to management overall and replacing
equity awards for lower-level executives with cash bonuses.
ISS, whose opinions can help sway some shareholders, wrote in
its report to clients that Coke has made "several positive changes"
to its compensation program since last year but that it was still
too early to say "whether pay-for-performance alignment will
substantially improve."
The proxy adviser said Mr. Kent's pay package was the highest
among peer companies each of the last three years, even though Coke
shareholder returns lagged behind the S&P 500 stock index over
the same period.
In a statement Tuesday, Coke said: "We are seeing support from
many of our investors, including a number of our largest, on
executive compensation through ongoing shareowner engagement. Our
executive compensation is tied to the performance of the company
and linked to the long-term interests of shareowners."
Mr. Kent's total pay package last year was valued at $25.2
million, up from $20.4 million, as his pension benefits rose to
$7.1 million from $2.2 million.
Coke estimated in its March proxy that the grant date fair value
of Mr. Kent's 2015 long-term equity incentive award would decline
to $7.7 million, down from $15.8 million last year. The 2015
incentive is tied to 2014 performance but won't be included in Mr.
Kent's total compensation calculation until the 2016 proxy
statement.
Write to Mike Esterl at mike.esterl@wsj.com
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