ATLANTA-- Coca-Cola Co. shareholders backed a controversial
executive pay package Wednesday and nearly approved a "proxy
access" proposal that would have made it easier for investors to
nominate directors.
But billionaire investor Warren Buffett generated the most buzz
at the beverage giant's annual shareholder meeting by singing
Coke's praises while strumming a ukulele.
In a closely watched vote, 80.4% of votes cast by shareholders
were in favor of last year's compensation package for Chief
Executive Muhtar Kent and other senior Coke managers. That was down
from 90.9% at Coke last year. The average vote result at U.S.
companies this year is about 92%, according to proxy adviser
Institutional Shareholder Services Inc.
While such "say on pay" votes aren't binding, they serve as a
barometer for shareholder sentiment on company performance and
management pay in particular.
ISS, the proxy adviser, had recommended investors cast advisory
votes against 2014 compensation packages for Coke executives. The
firm, whose opinions can help sway some investors, cited "concern
that pay opportunities are misaligned with company performance." It
calculated Mr. Kent's pay package to be the highest among peer
companies each of the last three years, even though Coke's
shareholder returns lagged behind the S&P500 stock index over
the same period.
Coke's board of directors scrambled to modify the compensation
plan last year after it was called "excessive" by Mr. Buffett,
whose Berkshire Hathaway Inc. is Coke's largest shareholder, with a
9% stake. Last autumn the board said it would issue fewer shares to
management overall and replace equity awards for lower-level
executives with cash bonuses, a change Mr. Buffett praised.
In a statement after Wednesday's vote, Coke said the result
"reflects support for the enhancements made in the past year." The
company enjoys "strong support from our shareowners, including a
number of our largest, for the company's compensation plans."
But David Winters, CEO of Wintergreen Advisers, which had 2.5
million Coke shares, or about 0.06% of Coke's shares outstanding,
saw it differently. The result "should pressure the Coca-Cola board
to not only reform pay practices but to move faster on fixing
Coca-Cola's business," he said in a statement. Mr. Winters has been
campaigning against Coke pay since early last year.
Mr. Kent's total pay package last year was valued at $25.2
million, up from $20.4 million. The increase was fueled by pension
benefits, which rose to $7.1 million from $2.2 million.
Mr. Kent has warned Coke likely will miss growth targets for a
third straight year, hurt by slowing soda sales in many parts of
the world. The company has promised to cut $3 billion in costs by
2019 to boost profits.
Write to Mike Esterl at mike.esterl@wsj.com
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