Activist investor David Winters’ fight with The Coca-Cola Company (NYSE:KO)’s board of directors over management compensation just received a new ally in the Ontario Teachers Pension Plan.
Pension plan to oppose Coke’s management compensation plan
The pension plan, which manages $140 billion for 180,000 public school teachers, owns 2.8 million shares of Coke, a 0.02% stake, and said it plans to oppose the company’s 2014 executive equity compensation plan.
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
Winters, fund manager of Wintergreen Advisors, had called the Coca-Cola’s executive compensation plan an “outrageous grab,” saying the company buyback program has been “hijacked” by management. “The amount of money being transferred from the company to management is mind-boggling.” Defenders of the plan claim the compensation is in line with other corporate compensation programs and is required to motivate the executives.
Taking 16% of company value based on one year performance
Winters argues the equity compensation plan to would give $28 billion, or 16.6% of the company’s outstanding shares, to management if they meet their 2014 performance targets. The plan is being put before shareholders at The Coca-Cola Company (NYSE:KO)’s April 23 annual meeting.
“We can find no reasonable basis for gifting management 14.2% of the share capital of The Coca-Cola Company (NYSE:KO), worth $24 billion at today’s share price,” Winters said in a statement last week. “No matter how well a management team performs, it is unfathomable that they would require such astronomical sums of money to provide motivation. Twenty-four billion dollars is a lot of money, by anybody’s standard.”
“The 2014 Equity Plan incorporates a number of ‘best practice’ and shareowner-friendly provisions, such as no re-pricing of stock options, no liberal share counting and ‘double-trigger’ change in control vesting,” Coca-Cola had responded.
Winters claims that The Coca-Cola Company (NYSE:KO) is engaged in an “informational shell game,” while Coca-Cola says Winters is taking their statements out of context.