Monthly Archives: May 2014

May 1, 2014

Coke May Revise Comp Plan After Warren Buffett Discloses He Didn’t Vote For It

Last week, I blogged about a wide-ranging interview with Warren Buffett on CBNC that covered many topics including his decision to abstain in a vote on Coca-Cola’s controversial equity compensation plan, even though he thought it was “excessive.” Here is a transcript of that interview. Warren sat on Coke’s compensation committee for many years – but he left Coke’s board in 2006. Now his son Howard sits on Coke’s board (but not its comp committee).

As reported in this WSJ article yesterday (and here’s a Reuters article), Coke likely will revise its compensation plan before it goes into effect next year, primarily due to Warren’s sentiments. This is pretty remarkable given that the plan received 83% support from shareholders at Coke’s annual meeting last week. Here is an excerpt from the WSJ article:

Mr. Buffett aired his reservations about the plan privately in recent weeks to Coke Chief Executive Muhtar Kent in three conversations, including at a dinner in Mr. Buffett’s hometown of Omaha, Neb., according to some of the people familiar with the matter. Mr. Buffett’s conglomerate, Berkshire Hathaway Inc., is Coke’s largest holder of stock in the company, owning 9% of the beverage giant’s shares.

Mr. Buffett has frequently expressed his distaste for pay plans that rely heavily on stock options, calling them “lottery tickets” for executives that often generate outsize rewards. Such options give the recipient the right to purchase shares at a later date for a set price. On Wednesday, Mr. Buffett said he has been clear with Coke management from the outset that he thought the plan was excessive. “I’m against the plan, and they know it,” Mr. Buffett said in an interview with The Wall Street Journal.

Cap’n Cashbags: Passing on Stock Tips

In this 30-second video, Cap’n Cashbags – a CEO – passing on a stock tip to earn a little extra money. The digested napkin parrots the fact pattern from a recent SEC enforcement action against a broker and law firm clerk (here’s the SEC’s complaint against them):

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– Broc Romanek