There was a bonus cut decision taken by Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE)’s Chief Executive Officer recently. He took this decision in a hope that it would help the company in paying critic winters, but things don’t seem to go that way. As per the reports, Coke can face a lot more problems concerning compensation just ahead of shareholders’ meeting.
Insights On Matter:
Muhtar Kent, Chairman and Chief Executive Officer of Coca-Cola were offered a huge bonus of $2.5 million, but he declined that in order to help the company fulfilling its expectations. However, the company enhanced the value of his share in company’s stock to offset his loss. The information was revealed by none other than David Winter, whose Wintergreen Advisers has as many as 2.5 million shares of Coca-Cola. While interviewing to a prominent business daily, Winter said that Kent and Coca-Cola represented his act of declining the bonus in such a way that it looked like he took a major hit in shareholders’ favor. But it was nothing like that. Winter is a prominent fund manager whose Wintergreen Fund is worth $1.3 billion.
If one take into consideration Coca-Cola’s payout disclosures, then it can be seen that Kent took $18.1 million compensation in 2014, same as the year before. A minor change in the value of his pension has been excluded from this financial arrangement. When this issue hit, the media and reporters started asking Coca-Cola management to clarify their stand, one of their spokesmen Petro Kacur came ahead and spoke. According to him, Kent’s stock and option award will be cut down by 50%, from $15.8 million to $7.7 million.
The announcement has come after Coca-Cola’s last year’s performance. Company could generate only 5.25% return for its shareholders as compared to 13.69% return of the benchmark S&P 500 Index. The next shareholders’ meeting is on April 29, 2015, and it will be good to see as how Coca-Cola defends itself.