By Mike Esterl
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.
A shareholder proposal to make it easier for large investors to
nominate directors almost secured a majority with 40.6% of votes
cast in favor.
The proxy access proposal would have required Coke to include
shareholder-nominated board candidates in proxy materials ahead of
votes. To nominate a director under the proposal, a shareholder
would need to have owned at least 3% of Coke's stock for at least
three years.
Coke directors had recommended shareholders vote against the
proposal, saying more deliberation was needed about the best way to
increase proxy access. "It is important that we strike an
appropriate balance between ensuring this important right is
actually useable by shareowners, while minimizing the potential for
abuse and disruption," the board argued in Coke's proxy
materials.
More than a dozen major U.S. companies, including General
Electric Co. and Bank of America Corp., have agreed in recent
months to support letting shareholders nominate their own directors
for corporate ballots. The concessions follow rising pressure to
give investors greater influence over companies' strategy and
finances.
Average support for 10 proxy access proposals tracked by ISS was
50.8% of votes cast. Four of the proposals passed and another three
received more than 45% support, according to the proxy adviser.
Mr. Buffett, of Berkshire Hathaway, took to the stage during the
company's meeting and argued Coke continues to be a great
investment.
"As long as you can bring a smile to people's faces, it's a
great business," said Mr. Buffett, seated next to Mr. Kent. Both
men wore Coke-red ties. Another key for success is to continue to
make Coke "extremely convenient to buy" and to keep prices
reasonable, he added.
Mr. Buffett told the audience that a quarter of the calories
he's consumed over the past 30 years came from Coca-Cola. "I've
gotta tell you, I feel healthy," he said, adding that he drinks
regular Coca-Cola at his office and Cherry Coke at home.
The legendary investor also appeared in a video playing a
ukulele and singing "I'd like to buy the world a Coke," trying to
stay on key with the company's famous 1971 jingle.
"Of course I could buy the world a Coke, but I'm not sure my
shareholders would go for that," added Mr. Buffett before putting
down the ukulele and drinking a Coke.
Write to Mike Esterl at mike.esterl@wsj.com
Access Investor Kit for Berkshire Hathaway, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0846701086
Access Investor Kit for Berkshire Hathaway, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0846707026
Access Investor Kit for The Coca-Cola Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US1912161007
Subscribe to WSJ: http://online.wsj.com?mod=djnwires