Green King Posted March 29, 2014 Share Posted March 29, 2014 1% seems very high for management given that this company will probably last upwards of 100 years and compound along the way. All compensation should be cash based or less options. Link to comment Share on other sites More sharing options...
LC Posted March 29, 2014 Share Posted March 29, 2014 I agree, especially since it was hard work done by previous forms of management that really built the brand machine that current management is benefiting so well from... Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 1, 2014 Share Posted April 1, 2014 The Diet Soda Business Is in Freefall Low-Cal Carbonated Drinks Sank in 2013; Overall Soda Volumes Down 3% http://online.wsj.com/news/articles/SB10001424052702304157204579473772336022200?mod=WSJ_hp_LEFTWhatsNewsCollection&mg=reno64-wsj Link to comment Share on other sites More sharing options...
usdtor05 Posted April 1, 2014 Share Posted April 1, 2014 Strangest part of their reply is using their share repurchase plan to justify the issuace of stock. Buffett likes to explain things by taking them to their extremes (like stock options). If they were to issue the fulll $4.5B worth that they repurchase would this still be appropriate. They are right, there would be theoretically no dilution however the intrinsic value of the business would be far less (same as it is when issuing the amount they currently issue). Using share buy-backs to jusify option issuances is definitely not something you'd expect from KO, especially given their track record (one of the first to adopt stock option expensing if I recall). You never know, Buffett may be moving in the background, he doesn't do this publically. Link to comment Share on other sites More sharing options...
arbcon Posted April 1, 2014 Share Posted April 1, 2014 This will be a good test of whether Warren still cares about his positions or not.ie., has he retired. Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted April 1, 2014 Share Posted April 1, 2014 Of course he hasn't retired and of course he cares. Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 1, 2014 Share Posted April 1, 2014 This will be a good test of whether Warren still cares about his positions or not.ie., has he retired. If I have to speculate, He probably supports management. Link to comment Share on other sites More sharing options...
HJ Posted April 1, 2014 Share Posted April 1, 2014 1% seems very high for management given that this company will probably last upwards of 100 years and compound along the way. All compensation should be cash based or less options. One interesting mental exercise: 1% dilution per year over 100 years means over 100 years, the original owners will own 0.99^100 = 36.6% of the company, whereas various management along the way wind up owning 64% of the company. Is this a truly egregious outcome? To manage the company through the past 100 years, where you went through wars and inflation and recessions, I'm not sure how bad it is. (if instead of KO, we are talking about BMW managed through WWII, for example, as a defeated nation) But the issue is also, of course, that during tough times, when company is in tough situation, you may in fact get much greater dilution than just 1%. 2% dilution, on the other hand, implies that over 100 years, original owners will only own 13.3% of the company. I think it's pretty easy to agree that it would be too much. Link to comment Share on other sites More sharing options...
Munger_Disciple Posted April 1, 2014 Share Posted April 1, 2014 I agree that 1% is too much for a huge company like Coke. In addition, why do they need to pay more than 6000 managers with options and restricted stock? It is a perverse incentive. Most of these mid tier managers have no impact on capital allocation decisions. They should instead be incentivized with a well crafted bonus plan. It seems to me that a sensible stock plan should cover no more than 10 people at headquarters. Link to comment Share on other sites More sharing options...
Liberty Posted April 2, 2014 Share Posted April 2, 2014 http://brooklyninvestor.blogspot.ca/2014/04/24-billion-wealth-transfer.html Link to comment Share on other sites More sharing options...
sleepydragon Posted April 3, 2014 Share Posted April 3, 2014 1% of mktcap per year is not small. over 10 years that's 10% of mktcap. using net earning, i think the prior post says it's 10% ? that's still high. This is not hedge fund business, that you get 2/20 :) Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 3, 2014 Share Posted April 3, 2014 David Winters discusses his opposition to Coca-Cola's compensation plan with Maria Bartiromo https://www.youtube.com/watch?v=ywqaujKgiO4 Link to comment Share on other sites More sharing options...
mranski Posted April 9, 2014 Share Posted April 9, 2014 Teachers Pension opposed. http://www.valuewalk.com/2014/04/david-winters-fight-with-coca-cola/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 10, 2014 Share Posted April 10, 2014 Coke Sticks to Its Strategy While Soda Sales Slide Beverage Maker Boosts Advertising Rather Than Move From Sugary Drinks http://online.wsj.com/news/articles/SB10001424052702303910404579485442244343248?mod=WSJ_LatestHeadlines&mg=reno64-wsj Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 23, 2014 Share Posted April 23, 2014 Buffett Pay Principles Tested by Coca-Cola, Winters Says http://www.bloomberg.com/news/2014-04-23/buffett-pay-principles-tested-by-coca-cola-winters-says.html Link to comment Share on other sites More sharing options...
CorpRaider Posted April 23, 2014 Share Posted April 23, 2014 Did i hear that he abstained from the the vote on the compensation plan? Wow, mgmt better listen up or they will become pariahs. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted April 24, 2014 Share Posted April 24, 2014 Yes he did Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 2, 2014 Share Posted May 2, 2014 'Stunned' by Coca-Cola compensation plan: David Winters http://www.cnbc.com/id/101636397 Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted May 28, 2014 Share Posted May 28, 2014 I just finished reading Dream Big - the story of the guys at 3G. I thought it was ok, but could have drilled a little further into the specific business moves that they made. I guess the book would have lost a lot of readers if it had got too detailed. One thing I found quite interesting is that right at the end it speculates about 3G and Buffett taking control of Coca Cola. In some ways it would make sense, given that that 3G thrive on driving efficiencies out of great consumer companies that may have become complacent. Given Buffett exhorted Coca Cola not to become complacent when he appeared at the AGM, this is something that may be on his mind. Recent events around management compensation are also indicative of a company that has lost a little focus. The last line of the book is says that when asked: "Buffett leaned his head back and laughed: "You won't get anything out of me about that right now"". Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 17, 2014 Share Posted June 17, 2014 Warren Buffett: Absolutely no chance of taking Coca-Cola private http://www.cnbc.com/id/101762390?trknav=homestack:topnews:2 Link to comment Share on other sites More sharing options...
Guest deepValue Posted June 17, 2014 Share Posted June 17, 2014 Warren Buffett: Absolutely no chance of taking Coca-Cola private http://www.cnbc.com/id/101762390?trknav=homestack:topnews:2 LOL no kidding. David Winters is making a fool of himself. Link to comment Share on other sites More sharing options...
loganc Posted June 17, 2014 Share Posted June 17, 2014 But Buffett’s partnership with 3G surprised investors like hedge fund manager Whitney Tilson, who noted that Heinz grew its Ebitda (earnings before interest, taxes, depreciation, and amortization) by 50% in the year after the acquisition — growth generally unheard of for a mature business, Tilson said. And he thinks Buffett won’t stop there: “I think that Warren Buffett and 3G will team up again to buy Coke,” he said. “Anything that shakes up corporate boards is a good thing, because there are a lot of companies that are just fat and poorly run. Take Heinz.” http://fortune.com/2014/05/03/warren-buffett-activist-investor/ So, one of the primary pieces of evidence that Winters has is an off-the-cuff quote from Tilson in a Fortune article. This is awesome. Link to comment Share on other sites More sharing options...
CorpRaider Posted June 17, 2014 Share Posted June 17, 2014 Warren Buffett: Absolutely no chance of taking Coca-Cola private http://www.cnbc.com/id/101762390?trknav=homestack:topnews:2 LOL no kidding. David Winters is making a fool of himself. Truth. Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted June 17, 2014 Share Posted June 17, 2014 Read "Dream Big", the book about the guys that now run 3G. Final page. I don't have the book in front of me but Coca Cola is discussed and WEB says something like "I don't want to talk about that right now". Link to comment Share on other sites More sharing options...
Liberty Posted June 17, 2014 Share Posted June 17, 2014 Here's a theory: http://brooklyninvestor.blogspot.ca/2014/06/big-dream-anheuser-busch-inbev-bud-coca.html Link to comment Share on other sites More sharing options...
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