How I Voted: Coca-Cola Company (KO) – Proxy Score 55%

Coca-Cola ($KO) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/24/2013. had collected the votes of five funds when I checked on 4/21/2013.  I voted with management 55% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by publiccompanies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third-world.

KO’s SummaryCompensation Table shows CEO/Chair Muhtar Kent was the highest paid named executive officer (NEO) at about $21.6M in 2012. I’m using Yahoo! Finance to determine market cap ($190B) and Wikipedia’s rule of thumb regarding classification. KO is a large-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9 & 10), using data from Equilar, the median CEO compensation at mid-cap corporations was $10.8 million in 2010.

Even factoring inflation, KO’s pay is above median. I voted against the compensation plan, the stock plan, and would have voted against all members of the compensation committee: Maria Elena Lagomasino, Chair, Ronald W. Allen, Alexis M. Herman, and James D. Robinson III. I also voted against Barry Diller, and Jacob Wallenberg, who each sit on five or more boards. That’s too many to do the job right.

I voted in favor of the Board’s proposal to all special meetings to be called by 25% of shares. While I think it is too high (10% would be better), it sure beats total denial, which is what we currently have.  I also voted in favor of the board committee on human rights proposed by William C. Wardlaw III, c/o Harrington Investments. This is a low-cost item with potentially high returns. Good reputation insurance and also the right thing to do. How I voted (CorpGov) below:


1.1Elect Director Herbert A. AllenForForForAgainstForFor
1.2Elect Director Ronald W. AllenForAgainstAgainstAgainstAgainstAgainst
1.3Elect Director Howard G. BuffettForForForForForFor
1.4Elect Director Richard M. DaleyForForForForForFor
1.5Elect Director Barry DillerForAgainstAgainstAgainstForFor
1.6Elect Director Helene D. GayleForForForForForFor
1.7Elect Director Evan G. GreenbergForForForForForFor
1.8Elect Director Alexis M. HermanForAgainstForForForFor
1.9Elect Director Muhtar KentForForForAgainstAgainstFor
1.10Elect Director Robert A. KotickForForForForForFor
1.11Elect Director Maria Elena LagomasinoForAgainstForForForFor
1.12Elect Director Donald F. McHenryForForForAgainstForFor
1.13Elect Director Sam NunnForForForAgainstForFor
1.14Elect Director James D. Robinson, IIIForAgainstForAgainstForFor
1.15Elect Director Peter V. UeberrothForForForAgainstForFor
1.16Elect Director Jacob WallenbergForAgainstAgainstAgainstForFor
2Ratify AuditorsForForForAgainstForAgainst
3NEO CompensationForAgainstAgainstAgainstAgainstAgainst
4Right to Call Special MeetingForForForForForFor
5Board Committee on Human RightsAgainstForForForForFor

Get ready for 2014.

A proposal for action to be presented by any shareowner at the 2014 Annual Meeting of Shareowners will be acted upon only:

  • if the proposal is to be included in the proxy statement, pursuant to Rule 14a-8 under the 1934 Act, the proposal is received at the Office of the Secretary on or before November 11, 2013;
  • if the proposal is not to be included in the proxy statement, pursuant to our By-Laws, the proposal is submitted in writing to the Office of the Secretary on or before December 25, 2013, and such proposal is, under Delaware General Corporation Law (“Delaware Law”), an appropriate subject for shareowner action.

 Looking at, NCR has a classified board. Hopefully, that will be taken care of this year. Written consent can only be taken by a unanimous vote. Special meetings can only be called by shareholders holding not less than 50.1% of the voting power.  Supermajority vote requirement (66.67%) to approve mergers (default Maryland state statute). Supermajority vote requirement (80%) to amend certain charter and certain bylaw provisions.

NCR Corp.’s ISS Governance QuickScore as of Apr 1, 2013 is 7. The pillar scores are Audit: 10; Board: 5; Shareholder Rights: 9; Compensation: 3. Brought to you by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are bsased on specific company disclosure. ISS, so far, has provided no detail on the relative distribution of the scores. Again, I see the board’s poor rating as further support for a proxy access proposal. Additionally, in 2012 more than 17% of shares were voted against two directors.

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