Per media reports, Wintergreen Advisers, an investment fund,
The Coca-Cola Company
) proposed 2014 management pay package as unreasonably high at a
time when the company is seeing slowing revenues and profits.
David Winters, chief executive and founder of the investment
fund, which owns a significant equity stake in the company, sent
a letter to the board. The letter noted that the cola giant's
proposed equity plan would transfer an unreasonable amount of
wealth to its senior managers, leaving a "raw deal" for
investors. The letter was also sent to fellow shareholders and
investor, Warren Buffet, CEO of
Berkshire Hathaway, Inc.
) - the largest shareholder of the Coca-Cola Company.
Buffet has reportedly been urged to vote against the 2014 plan
at the company's annual meeting next month.
Reportedly, the equity plan would transfer roughly $13 billion
to members of management over the next four years in the form of
stock options and shares, leading to significant dilution of
Winters believes the dilution would add to shareholders' woes
at a time when the company is seeing slowing growth.
The Coca-Cola Company has seen slowing revenues for the last
few quarters due to muted volume trends of its carbonated soft
drinks (CSD) like Coke and Fanta, and challenging consumer
spending environment. Growing health consciousness, rising
obesity concerns, possible new taxes on sugar-sweetened beverages
and growing regulatory pressures are affecting CSD volumes of
beverage makers like Coca-Cola,
Dr Pepper Snapple Group, Inc.
). Coca-Cola has increased marketing investments and is driving
package and product innovation to boost its CSD business.
However, such investments shoot up marketing costs of the company
in turn, putting pressure on profits.
Coca-Cola has reportedly shot back saying that Winters is
"misinformed" and his statements "do not reflect the facts".
Currently, Coca-Cola has a Zacks Rank #4 (Sell).
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