Seeking Alpha

Coca-Cola defends its compensation plan

  • Coca-Cola (KO) says Wintergreen Advisers misunderstands how the company's executive compensation plan works. The comp is tied to specific business goals and isn't a systematic transer of wealth from shareholders to management, says the beverage giant.
  • Wintergreen took some hard shots at Coca-Cola in a letter sent to the board and the Oracle of Omaha.
  • KO +0.1% premarket
Comments (18)
  • John Rhodes
    , contributor
    Comments (873) | Send Message
     
    Anyone have a link to the proposed KO compensation plan? I have looked and I cannot find it.
    24 Mar 2014, 09:29 AM Reply Like
  • 1627
    , contributor
    Comments (91) | Send Message
     
    Too too damn much !!!!!!!!!!!!!!!!!!!!
    give some $$ to shareholders !!!!!!!!!!!!!!!!!!!!!!
    those board members are treated like GODS or DIETY.
    They forget the shareholders and just take care of themselves......for years and years now
    24 Mar 2014, 09:41 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (2678) | Send Message
     
    This is the hedge fund era of "we know better than management of any company we choose to attack".

     

    The compensation is based on management production which means stock & dividend appreciation.

     

    If Wintergreen doesn't like it then sell their 2.5mm shares and go on to something else. KO doesn't need ya !

     

    Everyone wants to be an Icahn and get their name in print! They figure the bigger the company name they attack, the louder their voice, and the better the publicity.

     

    This too shall pass
    24 Mar 2014, 09:46 AM Reply Like
  • Willow Street Investments
    , contributor
    Comments (1195) | Send Message
     
    Issuing 300 million shares to pay executives...almost 10% of the float is not "nothing".
    24 Mar 2014, 01:17 PM Reply Like
  • John Rhodes
    , contributor
    Comments (873) | Send Message
     
    There are about 151K employees. KO says that 6,400 were eligible for this compensation in 2013. So, just over 4% of all KO employees were eligible.

     

    Is that good? Is that bad? I don't know.

     

    Per CNBC, KO states, "Share repurchases in 2013 totaled $4.8 billion, and in 2012, $4.5 billion, of these amounts $1.3 billion and $1.4 billion, respectively, were related to equity plan activity."

     

    So, if I look at this in caveman simple way, about 25% of all share repurchases are used to 'pay off' the stock options being granted.

     

    Is that good? Is that bad? I don't know.

     

    I also need to look into how this all looks historically. Anyone have any good articles or references on that? Is this 25% buyback for performance equity in line with KO's history?
    25 Mar 2014, 11:58 AM Reply Like
  • acesfull
    , contributor
    Comments (364) | Send Message
     
    Its not in line with the indigestion I got when I read the article. My simple mind says that type of compensation out of common shareholder's pocket book is gross. Maybe even legally criminal, if there is such a thing. Come on, John. Makes the lotto look penny ante.
    27 Mar 2014, 01:54 PM Reply Like
  • Always Coca-Cola
    , contributor
    Comments (25) | Send Message
     
    Makes me cringe, if true…

     

    http://cnb.cx/ORRbXx%257cShareholder+takes...

     

    Are these shares and dilution numbers really correct?
    24 Mar 2014, 11:47 AM Reply Like
  • glf4mny
    , contributor
    Comments (417) | Send Message
     
    Here a link to the plan, all 24 pages of it.
    http://bit.ly/1nU8pDq
    24 Mar 2014, 12:08 PM Reply Like
  • nomorehomes
    , contributor
    Comments (110) | Send Message
     
    KO management are the pigs. PEP has been giving themselves too much money in the form of stock lately also. It is pathetic. Shareholders need to wake up. I voted against KO's executive compensation plan and you should too. Just say NO. A monkey could run a company like KO and sooner or later a monkey will run it. Maybe Kent is a monkey. Who knows. But I am tired of management pickpocketing my money.
    24 Mar 2014, 12:16 PM Reply Like
  • tsa_geo
    , contributor
    Comments (22) | Send Message
     
    I believe the same happens with Wells Fargo as well....
    24 Mar 2014, 01:29 PM Reply Like
  • siempre1
    , contributor
    Comments (27) | Send Message
     
    I don't follow. Aren't these stock options? Wouldn't we want these folks to have stock options? I mean, they won't make any money if they don't raise the stock price. I would think that kind of incentive would be a very good thing for other stock holders.

     

    Also, if these are stock options then the rest of the stocks are hardly diluted that much. Those stocks aren't going to be sold unless the price goes way up. In which case every stock holder benefits. Yes, it might slow down the stock price expansion at some point but it's not like the majority of the money from the sell of those stocks won't be going back into the company. Plus, the company still has the option of using that money for buybacks, etc.

     

    Or, am I just misunderstanding all of this?
    24 Mar 2014, 03:17 PM Reply Like
  • Willow Street Investments
    , contributor
    Comments (1195) | Send Message
     
    300 million shares...almost 10% of the company are being issued. What's not to understand? Dilutive or not...that's alot of shares for a company that has moved sideways for 20 years about.
    24 Mar 2014, 03:22 PM Reply Like
  • siempre1
    , contributor
    Comments (27) | Send Message
     
    I still don't see this as being much of a problem. KO has consistently retired shares. In the past 10 years I think there was only one year they didn't. And even that year didn't show a gain.

     

    So, odds are that the company will rebuy any of these 300 million shares that are sold... and simply retire them.

     

    And even if they don't, these 300 million shares won't dilute the other shares UNLESS they are sold. And most aren't going to be sold until the stock goes up a decent amount.

     

    So, if you are a short term investor then KO employees struggling to get the stock to perform that way more quickly helps you. If you are a long term investor then why would you care as long as you are getting your VERY consistently increasing dividends?
    25 Mar 2014, 02:23 AM Reply Like
  • DavidHart
    , contributor
    Comments (37) | Send Message
     
    You're last statement is actually how this will dilute shareholder value even if the shares are not sold on the open market immediately. With more shares outstanding, dividends and dividend increases will be less per shareholder. So, there is a dilution effect no matter what happens.
    25 Mar 2014, 11:58 AM Reply Like
  • acesfull
    , contributor
    Comments (364) | Send Message
     
    Siempre, you're giving me a headache.
    27 Mar 2014, 01:58 PM Reply Like
  • Uain53
    , contributor
    Comments (1596) | Send Message
     
    Thanks glf4 for the link.

     

    I read it over and it looks like a pretty standard plan to me.
    For those confused about stock option plans....

     

    1.) please look at page 12 as to what outcomes merit the stock options/ units.
    - as a real stock holder, I want these outcomes rewarded

     

    2.) Today most companies give most employees some grant of stock options.. they are not just for executives.

     

    3.) What investor wants to own a stock where employees and exec are NOT invcentivized to deliver?

     

    Long (KO) foir the cash flow from growing dividends
    24 Mar 2014, 10:12 PM Reply Like
  • acesfull
    , contributor
    Comments (364) | Send Message
     
    Uain, lets triple the compensation. That way, you'll like the plan three times as much. Now that's what I call an incentive. Keep the cash flow flowing.
    27 Mar 2014, 02:01 PM Reply Like
  • Uain53
    , contributor
    Comments (1596) | Send Message
     
    I wonder if the snarks at Wintergreen publish their employee incentive plans?

     

    - just wonderin'
    24 Mar 2014, 10:15 PM Reply Like
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