Home Value Investing David Winters Questions Board Actions in Coca-Cola Equity Plan Vote

David Winters Questions Board Actions in Coca-Cola Equity Plan Vote

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Wintergreen Advisers’ David Winters today released the following letter, which was sent to The Coca-Cola Company (NYSE:KO) Board of Directors and Warren E. Buffett at approximately 2:00pm ET yesterday, April 30, 2014. The letter raises questions about the actions of Coca-Cola Chairman and CEO Muhtar Kent, Director Howard Buffett and Director Maria Elena Lagomasino, and statements made by the company in connection with the shareholder vote on the Coca-Cola 2014 equity plan.


Board of Directors
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, GA

April 30, 2014

Dear Coca-Cola Board Members,

Warren Buffett has publicly stated that he spoke with The Coca-Cola Company (NYSE:KO) Chairman and CEO Muhtar Kent multiple times leading up to Coca-Cola’s annual shareholder meeting and expressed his lack of support for the 2014 Equity Plan. Mr. Buffett has also said that he spoke with his son Howard Buffett, who serves as a director of Coca-Cola, regarding the 2014 Equity Plan. In an interview with CNBC hours after the shareholder meeting, Mr. Buffett stated that the plan “really struck me as quite excessive.” We would like to know whether Mr. Muhtar Kent or Mr. Howard Buffett made the Compensation Committee or the full Board of Directors aware of Mr. Warren Buffett’s views on the 2014 Equity Plan. Did Mr. Buffett speak with any other Coca-Cola directors regarding his views of the 2014 Equity Plan, and if so, when?

In particular, we would like to know whether, as head of the Compensation Committee, Ms. Lagomasino was informed of Mr. Buffett’s views? If so, we question how Coca-Cola could be comfortable with the statement “We are really pleased that we are seeing broad-based investor support for this plan.” Further, we would like to know whether Coca-Cola reached out to institutional investors before the shareholder meeting to drum up support, even after it knew that its largest shareholder opposed the plan. If Coca-Cola did reach out to investors, did it state or imply that it had received generally positive feedback from other investors?

Regarding the 2014 Equity Plan itself, we do not believe there is a reasonable basis for Ms. Lagomasino’s statement at the shareholder meeting that “the new plan is not any more dilutive than historical plans and programs.” This is demonstrably false. The simple math is clear – the 2014 plan calls for more awards than previous plans, distributed in fewer years than previous plans. This is undeniably more dilution. Warren Buffett made this clear in his April 23rd interview on CNBC, stating “the plan – compared to past plans was a significant change…I thought it was too much.”

As investment adviser with a fiduciary duty to our longtime shareholders, we are deeply concerned that The Coca-Cola Company (NYSE:KO) is becoming known not for great products but for excessive management compensation, the trampling of shareholders’ interests and a willful disregard for the valid concerns of its largest shareholder.

We look forward to the board’s response to these urgent questions.


David J. Winters

Cc: Warren Buffett


Wintergreen Advisers, LLC

David J. Winters, 973-263-4500
[email protected]


Bryant Park Financial Communications
Richard Mahony, 212-719-7535
[email protected]


Claire Currie, 212-719-7535
[email protected]

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