The Coca-Cola Co (NYSE:KO)‘s CEO Muhtar Kent refused to take $2.5 million bonus, a decision he deemed fit under the circumstances where the world’s largest beverage maker reported lower profits. The company made a filing yesterday stating that as the company takes strategic action to revive growth, Kent foregoes his eligible pay in the best interest of the company.
Cash skip did not change things
However, Kent’s gesture failed to convey the message appropriately in light of growing concerns that The Coca-Cola Co (NYSE:KO)’s compensation plan is ‘excessive’. In fact, Warren Buffet too has criticized the beverage maker for paying excessively to its executives. These concerns appear true as Kent’s overall compensation remains unchanged as against the 2013 payout. Had Kent accepted the $2.5 million cash bonus then his pay package would have been higher in 2014 due to rise in stock and option awards paid out to him.
Off late, The Coca-Cola Co (NYSE:KO) has been battling mounting challenges of sluggish international growth. The consumption of the company’s beverages is hit in the U.S. as people are switching to healthier drinks and cutting the soda intake, which is seen as a main culprit of obesity. Among the strategic plans, the company announced $3 billion a year costs cut over and above 1,800 job cuts earlier this year. Coca-Cola also reduced the compensation terms for its top officers following the objections raised by its investors. However, the change will take effect from this year and hence; last year’s pay packages remain unaffected.
During the last year, Kent drew a salary of $1.6 million along with stock awards worth $6.5 million and options of $9.3 million. Apart from this, other emoluments including security, company plane and retirement fund totaled $719,900. Though the company has raised some eyebrows over how it pays its top officials, but its stock has been performing good on the exchange, which was up by 2.01% and closed at $40.57.