Warren Buffett thinks Coca Cola Exec’s are paid too much
In an interview after a shareholders meeting in NYC on Wednesday, 04/23/14, Buffett, whose company, Berkshire Hathaway is Coca-Cola’s largest shareholder with 400 million shares, said that the latest proposed executive pay plan was “excessive”.
And it wasn’t just Buffett who complained.
Another shareholder, David Winters, CEO of Wintergreen Advisors said that transferring roughly $13 Billion in compensation over the next four years to management amounted to a “raw deal” for shareholders. Winters was one of the 17 percent who voted against the plan, and he urged Buffett to vote against it also.
At the end of the day, the executive pay plan passed, and when he was asked why he didn’t vote against the plan if he disapproved of it, Buffett responded that it was “kind of un-American to vote no at a Coke meeting.”
According to news reports, for 2013, Coca-Cola CEO Muhtar Kent earned a compensation package worth $18.2 million. This was a decrease from 2012, when his compensation was $21.6 million, primarily because the performance metrics established for the company were not in line with the long term goals for growth. In 2012-13, the 128 year-old company with a market cap of $180 billion, generated $48 billion in revenue, with profits of over $9 billion, for a relatively hefty profit margin of 18.8%.
I always find it interesting when someone as immensely wealthy as Mr. Buffett, speaks so staunchly about “pay for performance,” particularly considering that he is a big time Obama supporter. Not only is Warren Buffett the 2nd wealthiest person in America, and the 3rd wealthiest person in the world, but according to 2013 issue of the annual Forbes 400 ranking of wealthiest Americans, his net-worth actually grew by $12.5 Billion. To help put that in perspective, only 30 people America, and 86 people in the world, have a net-worth greater than his single year increased.
Maybe Coca Cola execs are paid too much, but it just looks hypocritical for those words to come out of the mouth of someone like Mr. Buffett.