Florida State Board of Administration, Tallahassee, will vote against Coca-Cola Co.'s executive equity compensation plan and against the re-election of two directors, including former Labor Secretary Alexis M. Herman.
FSBA considers the equity plan's potential shareholder dilution excessive, said Jacob Williams, FSBA corporate governance manager.
Coca-Cola estimates the potential dilution from option and stock awards at 14.2%, while FSBA's “guidelines raise concern” when the potential dilution is as little as 6% to 10%, said Dennis D. MacKee, FSBA director of communications.
FSBA, which oversees a total of $177.9 billion, including the $145.1 billion in defined benefit assets of the Florida Retirement System, will vote 7.4 million shares it owns. Its shares are valued at $301 million.
In addition to Ms. Herman, FSBA will vote against the re-election of Barry Diller to the company's board of directors.
FSBA is concerned about Ms. Herman and Mr. Diller “overboarding,” or serving on too many boards in addition to each “being employed full time” running a business, Mr. MacKee said. Ms. Herman is chairwoman and CEO of New Ventures LLC, and Mr. Diller is chairman and senior executive of IAC/InterActiveCorp. In addition to Coca-Cola, Ms. Herman and Mr. Diller each serve on the boards of three other public companies.
FSBA will vote in support of the executive compensation package for Muhtar Kent, Coca-Cola's chairman and CEO.
Coca-Cola “made some improvements” in the executive pay package, including “increasing disclosure of performance metrics and adding performance targets relative to peer groups more so than in the past,” Mr. Williams said. “It looks like the structure is more aligned with performance.”
FSBA voted against the company's pay package last year, Mr. Williams said. “In the past, we've seen (Coca-Cola make) overpayment relative to performance.”
In addition, in this year's proxy voting, FSBA will vote in favor of a shareholder proposal for an independent chairman.
Separately, Wintergreen Advisers sent a letter to Warren E. Buffett, chairman and CEO of Berkshire Hathaway, calling on him to oppose Coca-Cola's equity plan. Berkshire Hathaway is Coca-Cola's largest shareholder, holding 400 million shares or 9.08% of the company's shares. They are valued at $16.2 billion. It is the second letter Wintergreen has sent to Mr. Buffett; the first was part of its outreach to large institutional investors calling on them to vote against the equity plan. Mr. Buffett couldn't be reached for comment.
Wintergreen holds 2.4 million Coca-Cola shares, according to a Wintergreen SEC filing. They are valued at $97.6 million.
Coca-Cola's annual meeting is Wednesday.
