04-05-2014, 09:39 AM
What is everyone's take on the recent story out about a wealth management firm taking on Coke's management in regards to their stock based compensation. According to the article below, they are diluting shareholders about .7% per year to pay mostly executives. Is this normal for "blue chips"? IMO all stock based comp should be option based, in that if the stock does not perform, no stock is paid out. And in Coke's case it has not been anything special the last 2 years, while the S&P has returned 20 or 30%. Thoughts?
From David Winters of Wintergreen advisors
"Wintergreen Advisers, LLC on behalf of its clients expresses its deep disappointment with Coca-Cola's proposed 2014 Equity Plan. As further detailed in the attached letters to the Coca-Cola board of directors and Berkshire Hathaway CEO Warren Buffett, Wintergreen Advisers believes this plan to be an unnecessarily large transfer of wealth from Coca-Cola's shareholders to members of the Company's management team. We can find no reasonable basis for gifting management 14.2% of the share capital of Coca-Cola, worth $24 billion at today's share price. No matter how well a management team performs, it is unfathomable that they would require such astronomical sums of money to provide motivation. As representatives of the shareholders, it is the number one priority of the board to look after the owners' interests. This compensation plan appears to place the economic well-being of management far ahead of the interests of the Company's owners.
Although the Company has a "robust" share repurchase plan, we believe that a large portion of those repurchased shares will likely be allocated to satisfying the issuance demands of the proposed Plan."
From David Winters of Wintergreen advisors
"Wintergreen Advisers, LLC on behalf of its clients expresses its deep disappointment with Coca-Cola's proposed 2014 Equity Plan. As further detailed in the attached letters to the Coca-Cola board of directors and Berkshire Hathaway CEO Warren Buffett, Wintergreen Advisers believes this plan to be an unnecessarily large transfer of wealth from Coca-Cola's shareholders to members of the Company's management team. We can find no reasonable basis for gifting management 14.2% of the share capital of Coca-Cola, worth $24 billion at today's share price. No matter how well a management team performs, it is unfathomable that they would require such astronomical sums of money to provide motivation. As representatives of the shareholders, it is the number one priority of the board to look after the owners' interests. This compensation plan appears to place the economic well-being of management far ahead of the interests of the Company's owners.
Although the Company has a "robust" share repurchase plan, we believe that a large portion of those repurchased shares will likely be allocated to satisfying the issuance demands of the proposed Plan."