Tuesday, April 18, 2006

Things Won't Go Better With Coke Board Pay Plan: Graef Crystal


Things don't always go better with Coke.

And they might go even worse for Coca-Cola Co.'s shareholders if the company sticks with a new pay plan for its outside directors.

In a misguided bid to burnish its pay-for-performance credentials, Coca-Cola's board has just promised its members a chance to earn $175,000 a year in free shares if certain performance goals are met over a three-year performance period.

For the initial performance period, the goal is an 8 percent annual compounded increase in earnings per share. If the goal is met or exceeded, the outside directors will each receive the then value, in cash, of the free shares.

If the goal isn't met, the directors receive no pay at all. A new three-year performance period begins each year.

Previously, Coca-Cola's outside directors received $125,000 a year in a combination of fees and free shares of Coca-Cola stock.

See full Article.