Coca-Cola Co. announced Wednesday it is backtracking somewhat from its executive equity plan approved in a shareholder vote in April that received opposition from some major pension funds, which called it excessive.
Maria Elena Lagomasino, chairwoman of the Coca-Cola board’s compensation committee, said in a statement the revision makes terms of the plan less generous.
The “key point” in the revision of the equity plan “is that, starting in 2015, we will be using substantially fewer shares for long-term equity awards overall,” Ms. Lagomasino said in the statement. “We will also be significantly reducing the use of stock options.”
Michael McCauley, senior officer-investment programs and governance, at the $179.1 billion Florida State Board of Administration, Tallahassee, said in an e-mail: “We've talked with the company a couple of times since the vote.”
“I believe the changes to Coke’s plan are very responsive to investors’ prior concerns and address the major structural issues highlighted by Wintergreen (Advisers) and others,” Mr. McCauley said. “We’re pleased to see the increase in performance-based vehicles (caps on the annual rate it issues awards) and the variety of improved disclosures. We look forward to continued engagement with the company as they refine the specific performance metrics and award thresholds used within the plan.”
FSBA voted against the plan along with the C$226.8 billion ($202.8 billion) Canada Pension Plan Investment Board, Toronto, the C$140.8 billion Ontario Teachers’ Pension Plan, Toronto, and the $104.1 billion State of Wisconsin Investment Board, Madison.
Berkshire Hathaway Inc., whose CEO is Warren Buffett and which is Coca-Cola’s largest shareholder with 9.06% of the shares, abstained from voting on the issue, although Mr. Buffett called the plan excessive.
Coca-Cola won 83% of the shareholder vote in favor of the equity plan. The $294.2 billion California Public Employees’ Retirement System, Sacramento, and $188.3 billion California State Teachers’ Retirement System, West Sacramento, both voted in support of the plan.
Ms. Lagomasino noted in the statement that “even after it was approved at our annual meeting of shareowners, we heard many points of view. We heard positive feedback, not so positive feedback, and everything in between.”
David Winters, CEO of Wintergreen Advisers, who led a campaign to oppose the plan, said Wednesday in a statement: "Coca-Cola has finally conceded that the equity compensation plan it put to a vote of shareholders in April was outrageously excessive and inconsistent with past plans. … Today’s statement by Coca-Cola only calls into question the competence and leadership of the board of directors and management. Much more work has to be done to revitalize Coca-Cola and restore trust in the company.”