LongHaul Posted April 24, 2014 Posted April 24, 2014 Buffett is a great investor and a great person - so I am nitpicking here, but I still think it is important. I disagree with Buffett abstaining from voting against Coke's compensation plan. Buffett clearly didn't agree with the plan and thought it was excessive. I think it is a weak argument that because he didn't want express disapproval of mgmt he didn't vote against a potentially highly dilutive/excessive plan. It is a bad precedent and lacks courage. Three key virtues are wisdom, justice and courage. If you lack courage, then wisdom and justice will not be implemented . Thoughts? Here are his key comments from the CNBC transcript. "BECKY: That was 83 percent for the votes that were cast. Why— why did you abstain? BUFFETT: Well, we abstained because— we didn't agree with the plan. We thought it was excessive. And— I love Coke. I love the management, I love the directors. But— so I didn't want to vote no. It's kind of un-American to vote no at a Coke meeting. So (LAUGH) that's— but we— I didn't want to express any disapproval of management. But we did disapprove of— of the plan. The plan— compared to past plans was a significant change. And— there's already a 9 percent or so overhang in terms of options outstanding relative to the amount of sh— shares outstanding, 8 percent— 8 percent— 8 percent to 9 percent. And— this authorization of another 500 million shares. Not all of which would've gone on options. But that's another 11 percent of the company. And— and— I thought it was too much. And— I talked to my partner Charlie Munger, and he thought it was too much. So we abstained."
Grenville Posted April 24, 2014 Posted April 24, 2014 It is a bit puzzling, but I do appreciate the fact that Becky questioned him about it and he expressed his disapproval on television for Coke management & BOD to hear. Ultimately the votes are not binding when it comes to compensation. Coke does know that he's not happy. Even if he voted against it, would that have changed the vote…The approval level would be a bit lower. I think Buffett hints in the interview that he doesn't want to alienate the board and I'm sure to him he cares more about keeping Muhtar focused on growing Coke than having him kicked out over compensation. Buffett's been around the block and he took the Dale Carnegie courses. Buffett doesn't want to sell any coke ever, so he cares more about the business being managed well versus causing a big stink on compensation. I would have preferred him voicing his opinion before the vote, but I think he didn't want to alienate management. He wants them to continue talking to him and not do something stupid with the business like the folks at Kraft. He was vocal about Kraft and he voted with his feet.
Kraven Posted April 24, 2014 Posted April 24, 2014 I'll say what no one else wants to. It's amazingly self serving and hypocritical and if wasn't Buffett, but just a "well respected business leader" who did this the wrath of value investmentdom would reign down.
Guest wellmont Posted April 24, 2014 Posted April 24, 2014 look at it this way. he sends the same message as voting no. plus he gets to also say how great the company and management is. he gets the best of both worlds doing it this way. message has been sent!
peter1234 Posted April 24, 2014 Posted April 24, 2014 Interesting that Howard Buffett is on the board and voted in favor.
dcollon Posted April 24, 2014 Posted April 24, 2014 I would like to hear what Charlie really had to say about it.
boilermaker75 Posted April 24, 2014 Posted April 24, 2014 I am disappointed with all shareholders who voted for, or abstained from voting. All the executives at KO have to do for KO to continue to be successful is to not do anything too stupid.
Grenville Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 7:15 PM, dcollon said: I would like to hear what Charlie really had to say about it. I hope someone does ask him…maybe at the BRK AGM!
LongHaul Posted April 24, 2014 Author Posted April 24, 2014 "Ultimately the votes are not binding when it comes to compensation. Coke does know that he's not happy. Even if he voted against it, would that have changed the vote…The approval level would be a bit lower." Actually, the vote to approve Executive Comp is just advisory (non-binding), but the votes for the equity plan (to issue more options and shares) must have shareholder approval to get issued. And I think if Buffett took a public stand before the vote, there is a decent chance he could have affected the outcome. From Coke's recent 8-K just filed. Item 2. Advisory Vote to Approve Executive Compensation. Votes regarding the advisory vote to approve executive compensation were as follows: Item 3. Approval of The Coca-Cola Company 2014 Equity Plan. Votes to approve The Coca-Cola Company 2014 Equity Plan were as follows:
CassiusKing1 Posted April 24, 2014 Posted April 24, 2014 Was going to come here and post my disappointment as well. Absolutely nothing to gain by withholding his vote and not voting against it.
Grenville Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 7:28 PM, LongHaul said: "Ultimately the votes are not binding when it comes to compensation. Coke does know that he's not happy. Even if he voted against it, would that have changed the vote…The approval level would be a bit lower." Actually, the vote to approve Executive Comp is just advisory (non-binding), but the votes for the equity plan (to issue more options and shares) must have shareholder approval to get issued. And I think if Buffett took a public stand before the vote, there is a decent chance he could have affected the outcome. From Coke's recent 8-K just filed. Item 2. Advisory Vote to Approve Executive Compensation. Votes regarding the advisory vote to approve executive compensation were as follows: Item 3. Approval of The Coca-Cola Company 2014 Equity Plan. Votes to approve The Coca-Cola Company 2014 Equity Plan were as follows: You are right regarding the equity plan. You need votes for it to pass. I should have remembered that based on the interview with Buffett and Becky. update: just looked at the 8K results http://www.sec.gov/Archives/edgar/data/21344/000130817914000200/lcocacola_8k.htm Buffett approved executive comp but abstained on the equity plan. Yeah, it does change my opinion against Buffett given that he could have voted against the equity plan and been vocal that he want's fewer shares authorized and released over a longer time period. If he did this openly, Coke could have fixed the plan. Instead we have what I'm sure are compensation consultants driving important decisions regarding the company. He can also be quite clear that he's ok with executive compensation just not the equity plan as structured.
Guest deepValue Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 6:52 PM, Kraven said: I'll say what no one else wants to. It's amazingly self serving and hypocritical and if wasn't Buffett, but just a "well respected business leader" who did this the wrath of value investmentdom would reign down. Self-serving? Hypocritical? It's not like Buffett's getting paid -- he's a shareholder! It's weak, but Buffett avoids direct confrontation at all costs. Not surprising in the least.
Grenville Posted April 24, 2014 Posted April 24, 2014 More color from Warren. Interview with Betty Liu http://www.bloomberg.com/video/buffett-coke-plan-was-excessive-not-buying-cubs-CAeczBTITbOgXrh5odr67w.html
Guest wellmont Posted April 24, 2014 Posted April 24, 2014 there is a good chance Coke alters the plan voluntarily, quietly on a friday afternoon with an 8k. :)
Grenville Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 8:08 PM, wellmont said: there is a good chance Coke alters the plan voluntarily, quietly on a friday afternoon with an 8k. :) +1 I hope you're right. I'm glad the media isn't letting this one go. Should add pressure on KO. I don't know if they have to revote if they want to reduce the numbers and lengthen out the time.
CassiusKing1 Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 8:01 PM, Grenville said: More color from Warren. Interview with Betty Liu http://www.bloomberg.com/video/buffett-coke-plan-was-excessive-not-buying-cubs-CAeczBTITbOgXrh5odr67w.html Thanks for posting. I could barely sit through some of those ridiculous questions. Surprised WEB has as much patience as he has.
CorpRaider Posted April 24, 2014 Posted April 24, 2014 On 4/24/2014 at 6:52 PM, Kraven said: I'll say what no one else wants to. It's amazingly self serving and hypocritical and if wasn't Buffett, but just a "well respected business leader" who did this the wrath of value investmentdom would reign down. Agreed. At least he admitted that he abstained and sort of called them out on TV. He will probably get them to where he wants to go just through the media pressure he commands, but uncle Carl would have used a 2x4 and we would all have been better for that. I mean, he could have just let Charlie be the bad guy.
captkerosene Posted April 24, 2014 Posted April 24, 2014 The message has been sent. His vote will affect KO in the future without any public trauma. Well done WEB.
Gamecock-YT Posted April 24, 2014 Posted April 24, 2014 Yeah kind of a passive-aggressive way of dealing with it. I wonder how it was decided he was going to be on TV then, just coincidence?
thefatbaboon Posted April 25, 2014 Posted April 25, 2014 My 2 cents. I think Buffett's handling of this was very clever.
Guest longinvestor Posted April 25, 2014 Posted April 25, 2014 The subject of excessive compensation in the form of excessive CEO pay, options largesse, etc. as well as questionable accounting treatment of options goes on in what, 498 of the 500 S&P companies, all at the expense of shareholders. All of that is treated as the norm and cost of doing business, while we obsess over how WEB expresses his disagreement with the KO move. Hmm. Seems to me that the world is looking for inconsistencies in WEB's words, while we need to call out the consistency of the pervasively wrong behavior in the rest of the world
Palantir Posted April 26, 2014 Posted April 26, 2014 I don't understand why people are justifying WEB's abstention, or calling it clever. Why didn't he just vote "no", and call them out publicly on it? I think it's fairly straightforward...
Guest deepValue Posted April 26, 2014 Posted April 26, 2014 On 4/26/2014 at 4:53 AM, Palantir said: I don't understand why people are justifying WEB's abstention, or calling it clever. Why didn't he just vote "no", and call them out publicly on it? I think it's fairly straightforward... He's friends with the CEO and various board members. It's easy for us to say he should've rebuked them...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now