Buffett pressures Coke privately on compensation plan after publicly
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[May 01, 2014]
(Reuters) — The Coca-Cola Co <KO.N> is likely to revise its
controversial equity compensation plan for executives before it goes
into effect in 2015, following pressure from Warren Buffett, the
Wall Street Journal reported, citing people familiar with the
Buffett, chairman of conglomerate Berkshire Hathaway <BRKa.N>, made
his reservations about the plan known privately in recent weeks to
Coca-Cola's Chief Executive Muhtar Kent in three conversations, the
Journal quoted sources as saying.
As of February 24, Berkshire owned 400 million shares of the
company, just over 9 percent of the shares outstanding, according to
Thomson Reuters data
Buffett said last week that he thought Coca-Cola's controversial
equity compensation plan was excessive, but Berkshire Hathaway
abstained in the shareholders vote.
Buffett, in an interview with CNBC, said he and partner Charlie
Munger did not want to vote against the plan because he did not want
to show disapproval of Coca-Cola's management.
On Tuesday, Buffett said that he had spoken to Kent "multiple times"
and to his son Howard Buffett "very briefly" in reference to the
equity compensation plan, adding that his son served Coca-Cola
shareholders and not Berkshire on the beverage maker's board.
Buffett's pressure adds to that from critics, most notably activist
investor David Winters, who said the plan would dilute the holdings
of current shareholders too much.
Coca-Cola had said last week that 83 percent of shareholders
approved the plan. Spokesman Petro Kacur said in an emailed
statement to Reuters that "no changes are being made to the plan at
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The expected changes include awarding fewer options per staffer each
year, so the pool of options in the new plan lasts longer, the
Journal said, quoting a source.
Another choice could be a longer vesting period for options than the
four years the plan calls for. A third move would involve flipping
the 60-40 percent split between stock options and performance units,
the Journal said.
(Reporting by Sampad Patnaik in Bangalore and Lisa Baertlein in Los
Angeles; editing by Ken Wills)
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