It took a federal law to make it happen, but shareholders of Coca-Cola Co. will get their say on executive pay, starting at the company's annual meeting April 27.
The vote, to register either approval or disapproval of Coca-Cola's most recent executive pay packages, is advisory and non-binding. But Coke's 15-member board of directors said last week in an annual proxy filing that it will take the vote into account when considering pay packages in future years.
Last summer's Dodd-Frank Wall Street Reform and Consumer Protection Act brought to fruition an idea that had gotten little traction at Coca-Cola in recent years, despite the advocacy of a small group of shareholders.
The law requires public companies to seek a vote from shareholders -- a "say on pay" -- allowing shareholders to weigh in on the compensation of its top executive officers. Those votes can happen every one, two or three years.
In accord with the new law, United Parcel Service's shareholders will have a "say on pay" vote at their annual meeting in May, although the UPS board recommends such a vote only every three years. By contrast, the board of SunTrust Banks wants a vote every year.
The Congregation of Benedictine Sisters, owners of 500 Coca-Cola shares, advocated for such a vote each year from 2007 through 2010. Until this year, Coca-Cola's board recommended that shareholders vote against the proposals. Directors said the proposal would not produce meaningful, specific input and would be less effective than letters to directors, questions at the annual meeting or votes on equity compensation plans for executives.
Each year, shareholders followed the board's advice and rejected the nuns' idea.
The board changed its message last week, saying that an annual say on pay vote will complement the other mechanisms already available to shareholders who want to communicate with the board.
"As with all of these practices, our board will monitor the effectiveness of an annual advisory say on pay vote to ensure it remains a valuable tool for our shareowners," the company said in a regulatory filing.
About the Author
