Does Muhtar Kent need fact checking on claims he made on CNBC?
Muhtar Kent on Coca-Cola’s shareholder returns
When being interviewed by CNBC’s Andrew Ross Sorkin, Muhtar Kent claimed that The Coca-Cola Company (NYSE:KO) had returned $100 billion to shareholders during his reign, a claim being disputed as inaccurate by David Winters, founder of Wintergreen Advisors and a critic of Coca-Cola’s recently passed enhanced management compensation plan.
CNBC appears to have since edited the interview and it no longer shows Muhtar Kent making such claims, but rather cuts the interview off after a brief introduction. CNBC did not respond by press time when asked for comment. (CNBC did post the comment in this print interview: http://www.cnbc.com/id/101853338)
In the CNBC original interview, Kent bragged about delivering dividends and buybacks. As Wintergreen points out, Muhtar Kent said in the interview “since middle of 2008, we’ve returned over $100 billion dollars to our shareholders.” He was responding to a question from Sorkin about conversations he had had with investor Warren Buffett.
It is this claim that is being accused as being false and misleading. This is also the part of the interview that has been removed.
Muhtar Kent’s false information regarding Coca-Cola’s shareholder returns
To back up his claim that Muhtar Kent delivered false information regarding $100 billion being returned to shareholders under his reign, Wintergreen turned to Bloomberg Data that shows that even under the most generous of circumstances Coke returned $49.3 billion under Kent’s reign.
The calculation commonly used to determine “return to shareholder value” includes simple arithmetic by adding dividends and buybacks. If you include all of 2008, dividends returned to Coke shareholders as of numbers available last week, totals $27.941 billion. Including all of 2008, stock buybacks total $21.415 billion.
This brings the total returned to shareholders, using common calculations, $49.356 billion
If share issuance is added to the equation, normally subtracted from shareholder value, this brings “return to shareholders” at $41.406 billion since 2008.
When contacted by ValueWalk last week, Coke did not return comment on the calculation or Muhtar Kent’s claim of returning $100 billion to shareholders.
Muhtar Kent’s career
Muhtar Kent is a long-time The Coca-Cola Company (NYSE:KO) employee, having started at the company selling the carbonated beverage product from a truck in 1978. He was promoted to general manager of Central Asia and Turkey, but later was moved to manage European Operations. He returned to Coke in 2005 and was named to the top post in 2008.
As the popularity of carbonated beverages wan, critics such as Winters have said Coke management needs to properly navigate this new environment before it is awarded what top Coke shareholder Warren Buffett has publically acknowledged is a rich and some say excessive compensation package. Winters fought against this compensation package, which was approved by the Coke board in 2014 amid slowing sales and no apparent plan to tackle the new market environment.
The link to the apparently edited video is here: