Coke alters executive pay formula

Bizjournals.com

The Coca-Cola Co. is undergoing a major executive pay change, resulting from a two-year-long debate with the Securities and Exchange Commission about increased compensation disclosure.

Ironically, the call for more disclosure by the SEC may make Coke’s 2008 payouts more opaque for shareholders.

The discussion centers around how the world’s biggest beverage bottler discloses and computes its annual pay bonuses for its highest ranking executives, leading to a Feb. 23 change of its 2008 pay practices.

Coke’s annual bonus pay plan is typically the largest cash payout Coke makes to its most senior executives. In 2007, the company paid $15 million collectively to its five senior executives, according to its 2008 proxy statement.

Corporate governance experts are questioning if the SEC is pushing too far.

“Too much specificity is incredibly common right now,” said Paul Lapides, director of Kennesaw State University’s Center for Corporate Governance. “The ultimate question becomes: How much do shareholders need to know before it starts to hurt the business?”

Instead of using established formulas to compute this year’s payout, Coke’s compensation committee will determine the payouts at its own discretion.