• "It increasingly appears to us that there are substantial conflicts of interests, extensive governance issues and perhaps plans to take Coca-Cola private."
    David Winters, 6/17/2014, letter to Coca-Cola Board of Directors
  • “Good corporate governance also helps to remind the company’s directors that they work for the company’s shareholders, not for themselves, and certainly not for management.”

    Luis A. Aguilar, SEC Commissioner, 4/21/14, Emory University School of Law
  • "Instituting good corporate governance is difficult, if not impossible, at a company that ignores its shareholders."

    David Winters, 5/7/2014, letter to Coca-Cola Board of Directors
  • "As investment adviser with a fiduciary duty to our longtime shareholders, we are deeply concerned that Coca-Cola is becoming known not for great products but for excessive management compensation, the trampling of shareholders’ interests and a willful disregard for the valid concerns of its largest shareholder."
    David Winters, 5/1/2014, letter to Coca-Cola Board of Directors
  • “Although Coca-Cola claims that its corporate governance is ‘Best in Class,’ there has been no progress to withdraw the 2014 Equity Plan which in our opinion reflects a failure of corporate governance and which could massively dilute shareholders while rewarding the top 5% of management for mediocre performance.”

    David Winters, 7/22/14, comments following Coca-Cola's second quarter earnings
  • "Coca-Cola and Berkshire shareholders, and in reality all of America, are counting on you to demand that shareholders be treated as partners instead of piggy banks."
    David Winters, 4/16/2014, letter to Warren Buffett
  • “Some major institutional investors that supported the plan might have reconsidered had they known other pension funds opposed it and known Warren Buffet thought the plan was 'quite excessive.'”

    Pensions & Investments , 5/12/14, “Winning Over Proxy Voters”
  • “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 .”

    Warren Buffett, CEO of Berkshire Hathaway, 4/23/14, CNBC
  • “I told him (Muhtar Kent) ahead‐of‐time what we were going to do, sure. He knew if I abstained that I obviously wasn't for the plan.”

    Warren Buffett, CEO of Berkshire Hathaway, 4/23/14, Bloomberg TV
  • "Events over the past few months, leading up to and after the annual meeting of Coca-Cola shareholders, have given rise to grave concerns at Wintergreen Advisers regarding potential conflicts of interests at Coca-Cola."
    David Winters, 6/17/2014, letter to Coca-Cola Board of Directors
  • “If there is significant opposition to the proposed equity plan, we believe the Coca-Cola board should consider whether it has a sufficient mandate from shareholders to fully implement the plan."
    David Winters, 4/22/2014, letter to Coca-Cola Shareholders
  • “This plan actually is very much in line with the plans that we have put forward to shareowners in the past, and that have had shareowner approval.”

    Gloria Bowden, Associate General Counsel and Secretary of The Coca-Cola Company, 4/4/14, CNBC
  • “The plan—compared to past plans was a significant change.”

    Warren Buffett, CEO of Berkshire Hathaway, 4/23/14, CNBC

Wintergreen Advisers Issues Analysis of Coca-Cola


Coca-Cola’s Fizzy Math:
How Bad Performance, Excessive Pay and Weak Governance are Harming Shareholders

Wintergreen Advisers today issued a report on the Coca-Cola Company (NYSE:KO) and called for forceful action to revitalize the company.

David J. Winters, CEO of Wintergreen Advisers, said: “Coca-Cola has serious problems but we believe they can be fixed. With the right management and a commitment to serving shareholders, we think Coca-Cola can thrive again.”

The report includes the following conclusions by Wintergreen:

  • Pay for Coke’s top management has been excessive in light of the company’s performance. Annual equity grants to top management have risen steadily over the past four years while Coke’s profit growth has stalled.
  • Rather than putting a brake on pay, Coca-Cola’s equity stewardship guidelines could continue to reward Coke’s top managers unjustly, and the guidelines’ emphasis on cash bonuses could cost shareholders as much as $10.20 of per-share value.
  • Coke has been routinely outspending its cash flow in recent years and funding the gap with debt. Additional spending on executive bonuses and severance charges threatens to make this problem even worse. We believe excessive pay practices combined with slowing profit growth could threaten Coke’s 50-year record of dividend increases. Even today, Coke has a dividend-coverage ratio of just 1.4x, compared to an average of 5.0x for its peers in the S&P 500.
  • The strategic investments made by CEO Muhtar Kent have destroyed shareholder value. His blunders on failed acquisitions alone have cost shareholders $16.3 billion. He is incapable of leading Coke’s turnaround and should be replaced.
  • The recent election of two new directors to the Coca-Cola Board is a welcome sign of progress, yet we believe more needs to be done. Indeed, Coca-Cola’s Board has Directors who, in our view, have served for too long. Three members of the board have served for a combined 102 years. We believe such long tenures can make the board an insular club rather than a vigilant protector of shareholders’ interests.
Wintergreen estimates that the discount placed on Coke’s shares because of these issues is between $30 and $38 per share. Removing these discounts would put Coke’s share price at $74 to $82 per share, in line with the $90 per share Nomura Securities analyst Ian Shackleton believes Coke shares could be worth in an LBO scenario.1

Wintergreen believes resolving Coke’s issues is relatively easy and straightforward – get rid of bad compensation plans, bring in new and more capable management, get expenses and overhead under control, and replace the board with a shareholder-focused board.

1 Source: Nomura Securities, October 29, 2014 report


Coca-Cola’s Fizzy Math:
How Bad Performance, Excessive Pay and Weak Governance are Harming Shareholders

About Wintergreen Advisers

Established in 2005, Wintergreen is an independent global money manager that employs a research-driven value style in managing global securities. As of September 30, 2014, Wintergreen Advisers had approximately $2.0 billion under management on behalf of individuals and institutions through its mutual fund and other clients, and is based in Mountain Lakes, New Jersey.  Wintergreen’s clients own over 2.5 million shares of The Coca-Cola Company, and have owned Coca-Cola shares for over five years.

For further information on Wintergreen Advisers, please call 973-263-4500 or visit www.wintergreenadvisers.com.  Additional information regarding what we view as the issues at The Coca-Cola Company may be found at www.FixBigSoda.com.  For information, forms and documents regarding our U.S. mutual fund, please visit www.wintergreenfund.com.