1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Canadian Value
Canadian Value
Articles (4624) 

David Winters' Letter to the Coca-Cola Board Concerning Warren Buffett's Displeasure with Compensation Levels

May 01, 2014 | About:

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

April 30, 2014

Dear Coca-Cola (NYSE:KO) Board Members,

Warren Buffett (Trades, Portfolio) 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 (Trades, Portfolio)’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 (Trades, Portfolio) 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 (Trades, Portfolio)

About the author:

Canadian Value

Rating: 0.0/5 (0 votes)


Please leave your comment:

GuruFocus has detected 8 Warning Signs with Coca-Cola Co $KO.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Canadian Value

User Generated Screeners

stewloewySL-Default Template
rmaluskiOE + Div Growth Hold List
pbarker4638 Profitable Quarters
vvalsecchiGuru Screen
pbarker4610 profitable years, 0% Yield
jont017Low Ebitda/EV
pbarker46PB & PS
jjcarlin99Utilities - non-regulated
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)