Coke alters executive pay formula - Atlanta Business Chronicle:

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Ironically, the call for more disclosure by the SEC maymake Coke’s 2008 payouts more opaque for shareholders. The discussion centersd around howthe world’s biggest beverage bottler disclosezs and computes its annual pay bonuses for its highes t ranking executives, leading to a Feb. 23 change of its 2008 pay Coke’s annual bonus pay plan is typically the largestt cash payout Coke makes to its mostseniofr executives. In 2007, the company paid $15 million collectivelty to its fiveseniort executives, according to its 2008 proxy Corporate governance experts are questioningg if the SEC is pushing too far.
“Too much specificity is incredibly common right saidPaul Lapides, director of ’s Center for Corporatre Governance. “The ultimate question becomes: How much do shareholderws need to know before it startsa to hurtthe business?” Instead of using established formulas to compute this year’sz payout, Coke’s compensation committee will determine the payouts at its own “In utilizing its the Compensation Committee considered a numberd of quantitative and qualitative including, but not limited to, volume growth, earningzs per share growth, global volume and value sharr gains and overall company operating performance in the current economic climatee in order to make its decision,” said Crystao Warwell Walker, a Coke Previously, Coke computed the annual payouts by measurint the performance of the compang against several internal performance goals and projections, establishes at the beginning of each year.
Coca-Cola used internal targets fornet pre-tax profits and specific volume sales, in part, to definse what the company senior executivezs earn. But the SEC took issue with Coke’ds disclosure of the pay plan, beginning in summer 2007. That Coke’s top five executives collectivelyreceived $11.5 millionn in annual incentive payouts. “Yourf disclosure regarding the annual incentive is lengthy and somewhat difficult to understand without attaching valur to the factors you an Aug.
21 letter from the SEC to Coke regardingthe company’s March 2007 proxy The company disagreed, noting that disclosingt the specific targets could provided its competitors unfair insight into Coke’s business plan, placing it at a competitived disadvantage. “Disclosure of the specific targets would not materially increasean investor’w understanding of the annual incentivr program and would resulg in competitive harm,” Coke replied in an Oct. 26, 2007, The discussions continued throughout the endof 2007. A Dec.
19, 2007 lettedr to the SEC from Coke reiteratethe company’s position, noting changees would be made if additional disclosure woulxd be required and the company believed the benefits of sharing the information was outweighed by competitivde concerns. “If disclosure of this type of highl confidential informationis required, the Compensation Committee woulrd consider changing the annuak incentive plan for 2008 so that only information that would not cause competitivs harm if disclosed would be used,” it The SEC responded on Feb.
15, “Without more detail, we cannot agrees or disagree with your conclusion that you have an appropriatre basis to omit the identified performanced targets for the completedfiscal year. Since you are in possessionj of all of the facts related to your we have decided that we have no basid to disagree with your decision to omit this informatio n fromyour filing.” However, discussions betweehn Coke and the SEC continue. Warwell Walker said Coke was contacte d again in May 2008 by the SEC about the same leading to the change in pay practices this year. Coke will issue its 2009 proxt statement inearly March.