Coca-Cola faces renewed pressure over executive pay

[NEW YORK/BOSTON] Coca-Cola Co faces renewed pressure over its executive pay from large proxy advisory firms ahead of a shareholder meeting on Wednesday and at least two major pension funds disclosed they voted against the company's compensation.

Institutional Shareholder Services, which advises pension funds, mutual funds and other money managers, has recommended investors cast advisory votes against the pay of the Atlanta beverage company's top leaders, including chairman and chief executive Muhtar Kent, who earned US$25.2 million in 2014.

Another proxy adviser, Glass Lewis & Co, is recommending investors support the pay, but said in a report it is concerned that bonus limits at the company are too high.

The tough reviews from the advisers come despite changes Coke made to its equity plan last fall, adopting new guidelines that would be less heavily weighted toward stock options. The company said it revamped its plan based on shareholder feedback.

While it called those changes positive, ISS said in a recent report that "it remains to be seen whether they will lead to concrete performance improvement." Meanwhile, two large pension fund overseers, the California State Teachers' Retirement System and the Canada Pension Plan Investment Board, which each hold less than 1 per cent of Coke shares, have already voted against the pay detailed in Coke's proxy released in March, according to disclosures on their websites.

While the result of the shareholder vote on pay will not be binding on Coke, weak support would likely lead to more criticism after the company faced an investor revolt over its executive pay last year.

At the time one of its largest investors, Warren Buffett, abstained from voting for the company's 2014 equity plan and called it excessive.

Spokespeople for CalSTRS and Canada Pension declined to comment on their latest votes. In October, a CalSTRS spokesman had called Coke's new equity guidelines a positive move.

Coke said while it respects CalSTRS' vote, "we are seeing support from a number of investors on executive compensation through ongoing shareowner engagement," the company said in a statement on Tuesday. "Our executive compensation is tied to the performance of the company and linked to the long-term interests of shareowners."

Michael McCauley, governance officer for the Florida State Board of Administration, which has Coke shares, said it supported Coke's executive pay in this year's advisory vote because of the changes the company made last fall.

REUTERS