Shareholder takes aim at Coca-Cola execs' pay

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Value investor David Winters, CEO and founder of Wintergreen Advisers, has sent letters to Coca-Cola 's shareholders, its board, and shareholder Warren Buffett, criticizing the company's compensation plans for this year.

The letters protest Coke's proposed 2014 equity plan, which Wintergreen said "will significantly erode the per-share value of Coca-Cola shares."

"If approved, this plan in conjunction with previous equity compensation plans, will dilute existing shareholders by a company estimated 14.2 percent," Winters wrote.

"The company expects that the 2014 plan will award a mix of 60 percent options, 40 percent full value shares, resulting in the issuance of 340,000,000 Coca-Cola shares," he continued. "At the current share price, these shares would be worth approximately $13 billion. In effect, the board is asking shareholders for approval to transfer approximately $13 billion from all of our pockets to the company's management over the next four years."

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However, Coke disputes this characterization.

"The recent statement by Mr. Winters about our 2014 equity plan is misinformed and does not reflect the facts," Coke said in a written statement to CNBC. "The long-term equity compensation program is tied directly to the achievement of specific business goals and the financial health of the company. Therefore, if the company does not meet these goals, these awards are not earned. This pay-for-performance philosophy has been a consistent cornerstone of the program through the years and remains unchanged."

Coke added the equity plan is not a change in the company's long-term equity compensation practices. "The plan is not limited to senior executives, but extends to a large group of employees and is important for incentive and retention," the company said. "Approximately 6,400 were eligible in 2013. The amount of long-term equity compensation awards granted each year are within industry norms."

According to the latest 13F filing with the Securities and Exchange Commission, Wintergreen owned about 2.5 million Coke shares at the end of last year, and has building its position in Coke in recent quarters. Wintergreen also is a large shareholder in Buffett's Berkshire Hathaway .

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In a separate letter to Buffett-whose Berkshire Hathaway owns a 9.1 percent stake in Coke and is its largest shareholder-Winters said: "The excessive compensation of management and the expense it imposes upon long-term shareholders has been a topic you have frequently touched upon."

"You have often decried how excessive compensation is so difficult to reign in precisely because shareholders have no direct voice in the negotiation with management and because Compensation Committees are often comprised of lap dogs rather than Dobermans....We believe Coca-Cola is setting a poor precedent with regard to corporate pay practices with this proposal, and as a leading global corporation, others will inevitably and unfortunately follow their lead," Winters wrote.

Last year, Coca-Cola CEO Muhtar Kent was paid $20.4 million, down 33 percent from total compensation in 2012, according to a filing from Coke on March 7.

The beverage giant is expected to hold its annual shareholder meeting on April 23 in Atlanta.

Although Wintergreen affirmed its commitment to Coke and is brands, its confidence in the business and economics of the company, the company said the equity plan will "harm Coca-Cola as an investment."

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"At a time when Coke is facing slowing growth in both sales and profit, we do not believe it is in the best interest of shareholders to compound the company's headwinds by significantly diluting shareholders," Winters wrote.

He noted that Coca-Cola has been buying back its shares as a way to offer shareholders a great share of the company's profits, but the proposed equity plan will reduce the effectiveness of this program.

-By CNBC's Sara Eisen contributed to this report.

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