The issue of executive pay hike at Coca-Cola Company (NYSE:KO) when the company’s performance seems to be waning is something that shareholders want to be thoroughly addressed. At the recent annual meeting, shareholders voted to pass a 2014 executive pay plan, but also ended up sending a clear warning to the management of the company that they are not happy with some developments. Total pay for Coca-Cola’s CEO, Muhtar Kent, jumped to $25.2 million in 2014 compared to $20.4 million in the prior year.
Coca-Cola holders give their nod to executive pay package, one of the controversial issues that came up on the ballot at the company’s annual meeting. Shareholders also almost backed a proposal that would have given them leeway in nominating directors.
Of the total votes cast at the recent annual meeting, 80.4% of the votes favored the remuneration packages for CEO, Muhtar Kent and other top executives at Coca-Cola Company (NYSE:KO).
Shareholders had been advised to vote against the 2014 executive compensation package because it looked misaligned with the performance of the company. Institutional Investor Services (ISS), a prominent proxy adviser, highlighted Kent’s huge pay among peers and Coca-Cola’s tepid performance in the recent times.
Following the more than 80% shareholder backing for the executive compensation plan, Coca-Cola Company (NYSE:KO) said after the vote that the company enjoys strong support from its shareholders.
Call for pay reforms
Given that the 80.4% support obtained at the recent vote was lower than nearly 90.9% last year, some investors believe that the development will serve as a wakeup call for Coke executives to reform how they handle pay issues as well as the overall Coke business. David Winters of Wintergreen Advisers, which owns 2.5 million shares in Coke, is one of those hoping that the vote sent a clear message to Coke management on pay practice.
Meanwhile, the management of Coca-Cola Company (NYSE:KO) is warning about continued performance weakness. The company is battling poor sales of soda, especially in the development market. The focus has turned to stringent cost management with $3 billion being targeted in cost-cuts by 2019 to bolster profits.