| LOS ANGELES, April 3
LOS ANGELES, April 3 Wintergreen Advisers, which
says it owns more than 2.5 million shares of Coca-Cola Co
on behalf of clients, on Thursday intensified its critique of
the proposed 2014 equity compensation plan of the world's
biggest soda maker.
David Winters, the chief executive officer of Wintergreen,
outlined his concerns with the compensation plan late last month
in letters to Coca-Cola's directors and investors, including
Warren Buffett, CEO of Berkshire Hathaway Inc, which is
Coca-Cola's largest shareholder.
In those letters, Winters characterized the plan as "an
unnecessarily large transfer of wealth from Coca-Cola's
shareholders to members of the company's management team."
He is urging the company's board to yank the plan and
replace it with a different one.
On Thursday, Winters took his argument to CNBC, saying that
the company's stock-buyback program aimed at improving investor
returns "has been hijacked by the company."
Coca-Cola said on Thursday that the proposed equity
compensation plan is not just for senior management. About 6,400
employees participate in the plan globally.
Winters "continues to overstate the dilutive impact of the
plan," Coca-Cola said in an emailed statement.
The skirmish comes after Coca-Cola reported 2013 volume and
revenue that fell short of internal expectations. U.S. soda
sales fell for the ninth straight year in 2013.
PERFORMANCE PAY VS PROFITS
At the heart of the dispute is a compensation plan that
would include 500 million shares, including stock options and
performance share units.
Stock options would account for 300 million of those shares
and 40 million would be so-called performance share units, or
PSUs, which are only awarded if certain profit and other
financial goals are met. Each PSU would count as five shares
under the plan.
Winters said that the new plan, when combined with equity
awards from existing plans, could result in dilution of 14.2
percent or more.
On Thursday, he told CNBC that Coca-Cola also moved its
performance targets down.
Winters has dubbed the plan "grossly outsized for a company
with earnings growth in the single digits" and "a bad precedent
for corporate America."
In its proxy filed in early March, Coca-Cola disclosed that
the plan's potential dilution could be 14.2 percent if
performance targets were met and all awards were earned.
In that filing, Coca-Cola also said that the decrease in its
targets for the 2012 through 2014 PSU award and the 2013 through
2015 PSU award was due to the projected negative impact of
currency exchange and the expectation of a more challenging
macroeconomic environment over the three-year performance
"If the company does not perform, no compensation is
realized," Coca-Cola said in its statement.
All PSUs for the 2011 through 2013 period were forfeited
because the company did not meet its targets and PSUs for 2012
through 2014 are not on track to be paid out, Coca-Cola said.
"Actual dilution related to existing equity plans over the
last three years has been less than 1 percent per year and is
expected to be in this range going forward," the company said.
(Edited by Ronald Grover and Jan Paschal)