Business

Winters Gets New Ally In Fight With Coca-Cola

by Mark Melin

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.

Winters Gets New Ally In Fight With Coca-Cola

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.

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.

“Unfathomable” compensation

“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.

Author: Mark MelinMark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies.