Warren Buffet manages to persuade The Coca Cola Company (NYSE:KO) to revisit pay plan

Coca-Cola cancelled its plans to give their top executives 340 million shares worth 13 billion dollars after investors raised hue and cry and their biggest shareholder dubbed the whole plan as ‘excessive’. The beverage company has now revised its pay plan and will now give small shares for long term equity awards to the top single percent of their management instead of big cash bonuses. The staff will also receive fewer stock options from now on.

Buffet, who holds the most shares in the drink company, said that with such a pay plan all the investors would eventually pull out and there would be absolutely no room for profit. If the company is feeding its executives and management with the profit they make, what is the whole point of hard work then? The Coca Cola Company (NYSE:KO)’s compensation committee chairman said that that the suggestions and input given by the investors is worth appreciating.

Given the vital nature of the whole problem, investors have directed the company well. Although it is being said that the long term monetary rewards and incentive targets for 6500 managers will stay the same, albeit depending upon the company’s performance in the market. They said that the rewards are given on pure merit. It isn’t quite clear whether it’s a victory for Warren, as the executives will now be compensated with cash instead of stock.

There’s a theory that Warren has a reputation of eliminating imminent threats immediately. If that is the case, then it might play against The Coca Cola Company (NYSE:KO) and executives might leave or launch a negative inside campaign against the very company they work for. This can prove very fatal as the Coca Cola Company (NYSE:KO) is in a big beverage war with many different companies and people will capitalize on that loophole for sure.

Investors agree with Buffet’s approach saying that it’s a message to the customers and the market that The Coca Cola Company (NYSE:KO) is in a habit of wasting money and giving their executives an overly lavish style. Everything begets from the performance of the company and if sometimes the company is not doing too well then measures have to be taken. There are simply a lot of finances and big reputations at stake.

9.1% stake holder of Coke, Warren Buffet previously stated that his vote was never against The Coca Cola Company (NYSE:KO) but their pay structure that they had devised for their executives needs to be addressed now. He further said that he is loyal and committed to see to the fact that The Coca Cola Company (NYSE:KO) remains the best beverage provider in the world.

Coke’s revenue slipped one percent as compared to last year to 12.6 billion dollars, while their net income dropped by 3 percent in three months. The decreases might have proved as a precursor to the seemingly pay cuts now but the investors have been very disappointed with the financial performance for quite some time now.