David Winters is not giving up.
When the founder of Wintergreen Advisors initially waged a campaign against The Coca-Cola Company (NYSE:KO)’s compensation plan, as reported in ValueWalk institutional investors were whispering behind the scenes that Winters was correct, but few publically announced their support for Winters. We now know that major institutions voted against Coke management, contrary to the company’s public comments.
Emboldened by institutional support to take on Coke management, Winters today is renewing his his call on Coke to abandon its 2014 executive compensation plan.
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“When large shareholders reject your plan, a responsible company should take pause,” Winters said in a statement released today.
Wintergreen’s David Winters: Institutional shareholders voting against the proposal
In his statement Winters refers to a New York Times Dealbook article by Andrew Ross Sorkin that noted strong institutional support for Winters point of view. Based on regulatory filings, Sorkin notes major institutional shareholders voting against the proposal included Deutsche Bank AG (NYSE:DB) (ETR:DBK), Massachusetts Financial Serivces Company, as well pension funds Florida State Board of Administration, the State of Wisconsin Investment Board, Ontario Municipal Employees Retirement System, Canada Pension Plan and Ontario Teachers’ Pension Plan.
“In our view, The Coca-Cola Company (NYSE:KO)’s plan does not have sufficient investor support to justify its implementation, and the board should do the right thing and set it aside without further delay,” Winters said in a statement, noting this is potentially a “High Noon” moment for the board of directors. “This is a test of whether the Coca-Cola board truly is prepared to act in the interests of shareholders. If it is not, the board should be replaced.”
During the dispute Coke management was quick to claim institutional support for their plan, but Sorkin points out the math might not match with reality on the situation. “We are pleased that we are seeing broad-based investor support for this plan,”Maria Elena Lagomasino, chairwoman of the company’s compensation committee, proudly declared at Coke’s annual meeting.
Warren Buffett’s reservations on the Coke compensation plan
Sorkin points out that Coke touted at 83 percent approval of shareholders, but this is “misleading,” he writes. While Coke followed SEC guidelines in reporting the percentage of those who voted yes and no, the real issue is those who abstained, including Coke’s largest shareholder, Warren Buffett, who later revealed he had reservations on the Coke compensation plan but did not express these concerns before the vote.
When abstentions are considered, Coke only received 49 percent yes vote support. Compare this to Coke’s 2008 Equity Plan, which received 66 percent support, and the growing dissatisfaction is clear.
In light of the recent public disclosures of major institutional investors not supporting the plan, Winters has problems with Coke claiming it had “broadbased support.”
“While the public is only now learning of these votes, the The Coca-Cola Company (NYSE:KO) board has known about the level of opposition to the plan for months,” Winters said. “These new proxy voting disclosures – taken with the decision by Coca-Cola’s largest shareholder, Berkshire Hathaway (NYSE: BRK.A, BRK.B), to abstain from voting – suggest the Chairwoman of Coca-Cola’s compensation committee should never have said the plan had ‘broadbased investor support.’”
Coca-Cola’s shareholders oppose the Equity plan full press release below
Move comes as several leading fund managers disclose votes against the plan
New York, NY – (Business Wire) – Wintergreen Advisers today renewed its call for The Coca-Cola Company (NYSE:KO) to withdraw its 2014 Equity Plan in light of new disclosures about significant shareholder opposition to the plan.
As recently reported in the media, several of Coca-Cola’s largest shareholders did not support the plan, according to proxy?voting records filed with the SEC. Those filings show that funds managed by State Street, Fidelity and Capital Group voted against the Plan. Opposition by these funds is in addition to public pension funds that also voted against the plan, including the Florida State Board of Administration, State of Wisconsin Investment Board, Ontario Municipal Employees’ Retirement System, Ontario Teachers’ Pension Plan, and Canada Pension Plan Investment Board.
Wintergreen’s David Winters on shareholders rejection
David Winters, CEO of Wintergreen Advisers, said: “When large shareholders reject your plan, a responsible company should take pause. And while the public is only now learning of these votes, the Coca?Cola board has known about the level of opposition to the plan for months. These new proxy voting disclosures – taken with the decision by Coca-Cola’s largest shareholder, Berkshire Hathaway (NYSE: BRK.A, BRK.B), to abstain from voting – suggest the Chairwoman of Coca-Cola’s compensation committee should never have said the plan had ‘broad based investor support.’
“In our view, The Coca-Cola Company (NYSE:KO)’s plan does not have sufficient investor support to justify its implementation, and the board should do the right thing and set it aside without further delay. This is a test of whether the Coca-Cola board truly is prepared to act in the interests of shareholders. If it is not, the board should be replaced.” While the Coca-Cola 2014 Equity Plan was approved by a majority of the votes cast, fewer than half of Coca-Cola’s total outstanding shares (2.19 billion out of 4.41 billion) were voted in favor of the plan. By contrast, 66% of the total outstanding shares were voted in favor of Coca-Cola’s previous equity plan in 2008.
Wintergreen Advisers, LLC
David J. Winters, 973?263?4500
Bryant Park Financial Communications