Coca-Cola Chief Executive Muhtar Kent took a big pay cut last year — down 42 percent to $14.6 million — as he struggled to prop up the beverage company’s falling revenue.
But after refusing a $2.5 million bonus in 2014 in the midst of job cuts at the company, Kent got a $4.6 million performance bonus in 2015.
That resulted in a near-quadrupling of his cash compensation of salary and bonus compared to the previous year, to $6.6 million, according to Coca-Cola’s proxy statement, disclosed Thursday.
Most of the drop in Kent’s total compensation, from $25.2 million in 2014, came from significant cuts in his stock and stock option awards. Kent’s combined stock-based compensation was $7.7 million in 2015, down from $15.8 million in 2014.
Kent’s pay reflected both tweaking of the company’s pay formulas and, Coca-Cola said, the CEO’s above-target performance in some areas.
"Mr. Kent led the company to deliver solid financial results in 2015, including meeting or exceeding key performance metrics, while at the same time accelerating strategic actions," Coca-Cola said in its proxy.
Coca-Cola’s revenue fell 4 percent last year, to $44.3 billion, but profit increased 4 percent, to almost $7.4 billion.
Coca-Cola tweaked its pay formula to de-emphasize a key growth measure in terms of soda volume sales — a sore point in recent years for the company — in favor of revenue and before-tax profit measures.
Coca-Cola said Kent’s mileposts included pushing the company toward refranchising its bottlers — a reversal from its 2010 decision to buy Coca-Cola Enterprises’ North American bottling operations for $12 billion. Coca-Cola also cited Kent’s appointment of a new president and chief operating officer, James Quincey, and acceleration of the company’s “productivity initiatives.”
Coca-Cola began last year with a $3 billion productivity plan that reportedly included about 1,800 job cuts — about 500 local.
Kent’s 2015 pay was also down because Coca-Cola reported zero growth in the value of his pension benefits, rather than the $7.1 million increase reported in 2014. Coca-Cola estimated that Kent’s future retirement benefits were worth $40 million in 2015, unchanged from 2014.
The value of a CEO’s pension reported in a company’s proxy typically goes up with each extra year of his or her seniority, but it also swings widely from year to year because of changing accounting estimates that don’t affect his or her future retirement benefits.
