ISS Opposes Coca-Cola CEO's Pay Package
April 06 2017 - 8:47PM
Dow Jones News
By Jennifer Maloney and Joann S. Lublin
The biggest proxy adviser is challenging the $17.6 million pay
package given last year to Coca-Cola Co.'s outgoing chief
executive.
Institutional Shareholder Services Inc. said it opposes Chief
Executive Muhtar Kent's 2016 package because his total compensation
increased from $14.6 million in 2015 despite weaker financial
performance and unmet financial goals. Mr. Kent is set to hand the
reins on May 1 to Chief Operating Officer James Quincey; Mr. Kent
will remain chairman of the board.
The proxy adviser took issue with the board's use of
discretionary pay tied to qualitative assessments of Mr. Kent's
performance. It urged Coke shareholders to vote "no" on its
nonbinding resolution about executive-pay practices. The
shareholder meeting is scheduled for April 26.
"Discretionary assessments have led to overall pay increases
amid a period of flagging share price and underwhelming financial
performance," ISS said. The firm noted that most performance
measures declined for Coke in 2016, including shareholder return,
revenue and net income.
"The fundamental principle of our compensation programs is that
they should pay for performance and compensate leaders for
delivering results, " a Coke spokesman said. Under Mr. Kent's
leadership, the company "delivered its profit target for the full
year," expanded its global market share and diversified its
beverage portfolio, the spokesman said.
"We continue to see support for our executive compensation
programs through our ongoing direct engagement with shareowners,"
he added.
Recommendations by ISS are taken into account by some large
shareholders. Glass Lewis & Co., the second-biggest proxy
advisory firm, recommended earlier this week that shareholders vote
"yes" on Coke's pay practices.
In 2014, Coke overhauled its executive-compensation plan,
scaling back stock options and shifting to more cash-based
performance awards, following criticism from billionaire investor
Warren Buffett and other shareholders who called the equity plan
excessive.
Mr. Kent in 2016 received $1.41 million for "individual
performance" -- close to the maximum potential payout for this
component. Coke said he received this pay for accomplishments such
as diversifying the company's beverage portfolio, overseeing an
orderly CEO transition and leading an effort to divest its bottling
operations.
In a proxy statement filed March 9, Coke's board compensation
committee wrote that while the majority of incentive pay should be
based on financial metrics, "progress toward non-financial goals
that are critical to our business, including our sustainability
focus areas, also adds value for our shareowners."
Write to Jennifer Maloney at jennifer.maloney@wsj.com and Joann
S. Lublin at joann.lublin@wsj.com
(END) Dow Jones Newswires
April 06, 2017 20:32 ET (00:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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